HomeMy WebLinkAbout270-22 RESOLUTION113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Resolution: 270-22
File Number: 2022-1009
PEACE AT HOME FAMILY SHELTER SUBRECIPIENT AGREEMENT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF THE
EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO
APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act
(ARPA) invited non-profit organizations to submit proposals for projects to fund with the available
ARPA funding; and
WHEREAS, the Peace at Home Family Shelter submitted an application requesting $686,500.00 in
American Rescue Plan Act funds for the expansion of the safety shelter for survivors of domestic
violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which will allow
Peace at Home to provide safe, emergency shelter to approximately 60 additional adults and children
fleeing domestic violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of $686,500.00 for
the rehabilitation and construction costs.
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 Peace at Home Family Shelter to provide the amount of
Page 1 Printed on 11/16122
Resolution: 270-22
File Number: 2022-1009
$686,500.00 in American Rescue Plan Act funds to fund the expansion of the emergency shelter.
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 11/15/2022
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Kara Paxton City Clerk Treasu�•• '9
Page 2 Printed on 11116122
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701
(479)575-8323
Text File
File Number: 2022-1009
Agenda Date: 11/15/2022 Version: 1 Status: Passed
In Control: City Council Meetinq File Type: Resolution
Agenda Number: C.5
PEACE AT HOME FAMILY SHELTER SUBRECIPIENT AGREEMENT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT
WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF THE EMERGENCY
SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING AMERICAN RESCUE PLAN
ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) invited
non-profit organizations to submit proposals for projects to fund with the available ARPA funding; and
WHEREAS, the Peace at Home Family Shelter submitted an application requesting $686,500.00 in American
Rescue Plan Act funds for the expansion of the safety shelter for survivors of domestic violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which will allow Peace
at Home to provide safe, emergency shelter to approximately 60 additional adults and children fleeing domestic
violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of $686,500.00 for the
rehabilitation and construction costs.
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 Peace at Home Family Shelter to provide the amount of $686,500.00 in
American Rescue Plan Act funds to fund the expansion of the emergency shelter.
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 1 Printed on 1111612022
Legistar ID No.: 2022-1009
AGENDA REQUEST FORM
FOR: Council Meeting of November 15, 2022
FROM: Council Member Sarah Bunch
ORDINANCE OR RESOLUTION TITLE AND SUBJECT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION
OF THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE
UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF
$686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT
APPROVED FOR AGENDA:
13tlDmUe�( lJ(1 P/Yla i
Ci y Council Me ber
Sarah Bunch
i
City Attorney it Williams
Approved as to form
46rc i.- I, zozo
Date
Batker, Jodi
From: Bunch, Sarah
Sent: Tuesday, November 01, 2022 11:21 AM
To: Batker, Jodi; Williams, Kit; Blake Pennington; Paxton, Kara
Subject: Re: Resolution
Jodi,
Sorry, I am just now getting back to you on this. Please consider this email my approval of the Resolution as
attached, and see that it gets added to our agenda. Call me if you need anything else.
Sarah Bunch
From: Batker, Jodi <jbatker@fayetteville-ar.gov>
Sent: Thursday, October 27, 2022 4:03 PM
To: Bunch, Sarah <sarah.bunch@fayetteville-ar.gov>
Cc: Williams, Kit <kwilliams@fayetteville-ar.gov>
Subject: Resolution
Sarah,
Attached the requested Resolution for the Peace at Home Shelter for your review. If there are no changes needed, I've
attached the Agenda Request for your signature.
Thank you.
Jodi Batker
Paralegal
113 W. Mountain St., Suite 302
Fayetteville, Arkansas 72701
Telephone: (479) 575-8313
jbatkerQfayetteville�.
Facebook I Twitter I Instaeram I YouTube
RESOLUTION NO.
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF
THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO
APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act
(ARPA) invited non-profit organizations to submit proposals for projects to fund with the
available ARPA funding; and
WHEREAS, the Peace at Home Family Shelter submitted an application requesting $686,500.00
in American Rescue Plan Act funds for the expansion of the safety shelter for survivors of
domestic violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which
will allow Peace at Home to provide safe, emergency shelter to approximately 60 additional
adults and children fleeing domestic violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of $686,500.00
for the rehabilitation and construction costs.
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 Peace at Home Family Shelter to provide the
amount of $686,500.00 in American Rescue Plan Act funds to fund the expansion of the
emergency shelter.
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 this 15th day of November, 2022.
APPROVED:
ATTEST:
By: By:
LIONELD JORDAN, Mayor KARA PAXTON, City Clerk/Treasurer
City of Fayetteville, Arkansas - Budget Adjustment Form (Legistar) 1 Errors
Budget Year Division Adjustment Number
Non -Departmental (800)
2022 /Org2
Requestor: Council Member Sarah Bunch
BUDGET ADJUSTMENT DESCRIPTION / JUSTIFICATION:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPI ENT AGREEMENT WITH PEACE AT HOME FAMILY
SHELTER FOR THE EXPANSION OF THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT.
RESOLUTION/ORDINANCE
COUNCIL DATE: 1 1 /15/2022
LEGISTAR FILE ID#: 2022-1009
KeA1&yvSprbng,e,r
1012 712 02 2 4:31 PM
Budget Director Date
TYPE: D - (City Council)
JOURNAL #:
GLDATE:
CHKD/POSTED:
TOTAL
Account Number
686,500 686,500
Increase / (Decrease)
Expense Revenue
Proiect.Sub#
Project Sub.Detl AT
v.20221019
Account Name
2246.800.9719-5315.00
686,500 -
20023 2021 EX
"Contract Services
2246.800.9246-4309.01
- 686,500
20023 2021 RE
Federal Grants - Operational
H:\BudgetAdjustments\2022—Budget\CITY COUNCIL\1 1-01-22\2022-1009 - BA ARPA PEACE AT HOME Expanding Safe Shelter.xlsm 1 of 1
CITY of CITY OF FAYETTEVILLE
FAYETTEVILLE
I 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
Requested (whole dollar)
[Minimum $50,000]
$686,500
Applicant/Organization
Name
Peace at Home Family Shelter
Mailing Address
(street, city, zip)
PO Box 10946, Fayetteville, AR 72703
Organization Website
www.peaceathomeshelter.org
DUNS Number
029494593
Organization FEIN/SSN
71-0552563
PART 2 APPLICANT CONTACT INFORMATION
Contact for Project
(name & title)
Teresa Mills, CEO
Contact Phone Number
479-444-8310
Contact Email
tmills@peaceathomeshelter.com
Signature Authority
(name, title & email address)
Teresa Mills, CEO
tmills@peaceathomeshelter.com
PART 3 PROJECT INFORMATION
Project Name
Expanding Safe Shelter for Survivors of Domestic Violence
Project Address
(street, city, zip)
3045 E Ivey Ln, Fayetteville, AR 72764
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
Yes No
member of that person's
immediate family, an
employee or elected official
of the City of Fayetteville
Blake Pennington, Assistant City Attorney
If Yes, above, please identify
(Peace at Home board member)
(
person and position with the
City
The ongoing COVID-19 pandemic has made it more difficult and
dangerous for victims of domestic violence seeking to flee
Project Summary
abusive homes. Peace at Home Family Shelter proposes a
(brief synopsis of proposed
renovation project to create 3 additional shelter bedrooms with
project)
bathrooms. This will allow Peace at Home to provide safe,
emergency shelter to approximately 60 additional adults and
children fleeing domestic violence each year.
As the first domestic violence shelter in the state of Arkansas,
Peace at Home Family Shelter has been providing safe,
Describe previous
emergency shelter to survivors of domestic violence and their
experience in providing
children since 1979. In addition to safe shelter, Peace at Home
similar services
also provides housing assistance, counseling, legal services
exclusively to survivors of domestic violence and their children. In
total, we serve over 1,000 individuals each year.
Programs will typically be
funded for a time period not
The requested project will be for rehabilitation and construction
to exceed 12 months from
costs in order to increase the physical capacity of our emergency
the signed date of the
shelter for survivors of domestic violence. We are already
subrecipient agreement.
working with an architect for this and other projects and would be
Please describe your
able to quickly begin construction to meet the limited time frame
organization's ability to plan
required.
and utilized requested funds
within that timeframe.
American Rescue Plan Act
PART 4 PROJECT BENEFICIARIES
Projected number of
Fayetteville beneficiaries 60 per year
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
Yes O No
Fayetteville
Will ALL beneficiaries meet
US Treasury Low to
Yes No
Moderate Income (LMI)
Guidelines (please see
Application Guide, Exhibit
A.
Will ALL beneficiaries have
been negatively impacted by
Yes 0 No
COVID-19
Does this request respond
to a negative COVID-19
Yes 0 No
impact?
If answering Yes to the
COVID-19 has made it more dangerous for victims of domestic
question above, please
violence to flee abusive homes and avoid homelessness. The
describe the COVID-19
Final Rule lists victims of domestic violence as a population
impact and how this
proposal will aid in
disproportionately negatively impacted by COVID-19 (page 19).
responding to the impact
This proposal will increase our community's capacity to provide
safe emergency housing for a vulnerable population.
Please indicate how the
As a project providing emergency housing assistance, this
proposed project meets
project is enumerated in the Final Rule as eligible to respond to
eligibility standards and
requirements described in
the impacts of the pandemic on households and communities.
the Department of
Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds
American Rescue Plan Act
3
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 (DWSRF),
or eligible projects as
described in Department of
Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds. See
Subrecipient Application
Guide for more information.
PART 4C ECONOMIC APPLICATIONS ONLY
Please describe the
residents or industry sector
This project will exclusively serve survivors of domestic violence
this grant request is intended
and their children in our community. As a project providing
to serve or benefit. Please
emergency housing assistance, this project is enumerated in the
indicate how the proposed
Final Rule as eligible to respond to the impacts of the pandemic
project meets eligibility
standards and requirements
on households and communities.
described in the Department
of Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds.
Does this request respond to
OYes O No
a negative COVID-19 impact
COVID-19 has made it more dangerous for victims of domestic
violence to flee abusive homes and avoid homelessness. The
Final Rule lists victims of domestic violence as a population
If yes, please describe the
disproportionately negatively impacted by COVID-19 (page 19).
COVID-19 impact and how
This proposal will aid in the City's economic recovery by meeting
this proposal will aid in the
City's economic recovery
temporary housing needs for a vulnerable population so they
have the stability to find or maintain employment and permanent
housing in our community and achieve self-sufficiency.
American Rescue Plan Act
I PART 5 FAYETTEVILLE BUSINESS LICENSE I
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.
f:
4 ( r✓•,,,_'. Teresa A. Mills CEO 3/29/2022
Name/Title/Date
American Rescue Plan Act
5
PART 7 ORGANIZATION DESCRIPTION Provide a brief description of your organization
and the services offered.
Year of Incorporation
1977
The mission of Peace at Home Family Shelter is to empower
victims of domestic violence to survive and thrive by nurturing
their self-determination and courage and to promote healthy
relationships and compassionate communities through
Philosophy, Purpose and/or
education, outreach, and advocacy.
Mission Statement
Peace at Home Family Shelter believes that everyone deserves
to feel safe in their own homes. We operate with an
empowerment philosophy centered on the rights of survivors of
domestic violence to be the decision makers of their own lives.
Provide a brief description of your organization including information about programs and/or
services other than the proposed project.
Peace at Home Family Shelter helps survivors of domestic violence and their children safely
escape abusive homes and rebuild their lives. In addition to providing immediate safe shelter, our
program connects survivors with the resources they need to transition out of shelter and into
long-term safe housing. Our programs have five components working together to help survivors
transition from homes of violence to homes of safety.
24 Hour Hotline -- First, Peace at Home operates a 24/7 crisis hotline and email inbox. Our crisis
hotline is available in Spanish and English and serves as the entry point for clients. Hotline
advocates assist callers with community referrals, safety planning, coming into shelter, and our
additional programs. In 2021, we received 1,205 calls from members of our community seeking
help.
Emergency Shelter -- The emergency shelter has 14 rooms available for women, men, children,
and any person escaping violence. Bilingual staff are available to provide onsite assistance to
clients. On average, families stay 45 days in shelter as they work on their individualized goals
(90 day maximum stay). Peace at Home was able to provide emergency shelter to 151
individuals in the community in 2021, a reduced capacity due to COVID-19 and renovations to
make the shelter safer for families during the on -going pandemic.
Advocacy -- While staying in shelter, clients are offered advocacy services to help them reach
their goals. Advocates meet daily with clients to develop and implement self-sufficiency plans.
American Rescue Plan Act
C.1
PART 7 ORGANIZATION DESCRIPTION continued
These plans are built around the current strengths of a survivor and provide steps to achieving
long-term goals such as employment or affordable housing.
The purpose is to empower survivors to overcome their unique barriers such as education skill
gaps, scarce work histories, unreliable transportation, career planning, affordable child-care, and
self-confidence. Peace at Home maintains partnerships with life -skill agencies such as the Credit
Counseling of Arkansas and Dress for Success. These agencies provide critical support for the
clients to meet the variety of employment and financial goals that they have towards achieving a
safe life. The Institute for Women's Policy Research indicates that 73% of respondents said that
they had stayed with an abusive partner longer than they wanted or returned to them for
economic reasons.
Working together, advocates eliminate barriers that might keep survivors economically or
emotionally dependent on a violent partner. These advocacy services are also open to
individuals in the community who are not currently living at our shelter but are survivors of
domestic violence in need of assistance.
Housing Assistance -- Survivors of domestic violence in our emergency shelter and in our
community also have access to support from our Home Restored and SHE housing assistance
programs. These program provides direct financial support, landlord advocacy, budgeting skills,
and case management to help families find permanent housing in the community that meets their
long-term needs. In 2021, Peace at Home was able to provide housing -related assistance to 160
families.
Legal Services -- Peace at Home has an onsite staff attorney and a bilingual advocate to assist
shelter residents and outreach clients with legal needs. Our legal services department enables
Peace at Home to provide survivors of domestic violence with legal representation for divorce
cases, child custody issues, and orders of protection as well as legal advocacy and financial
assistance for legal fees. In 2021, Peace at Home provided legal services to 537 clients.
Mental Health/Emotional Support Services - Peace at Home employs a full-time bilingual
counselor and partners with the University of Arkansas Doctorate Program in Psychology as a
site for doctoral candidates in clinical psychology. These mental health professionals provide
one-on-one and parent/child counseling to clients of Peace at Home free of charge. In 2021,
Peace at Home provided direct counseling services to 94 individuals in our community.
All of our services are free of charge, personalized to meet individual survivor needs, and
voluntary.
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.
Peace at Home Family Shelter - Rehabilitation Project to Add Capacity
Budget (based on estimates received from WER Architects):
Construction:
1000 sf ($235 per sf renovation costs) - $235,000
1250 sf ($300 per sf building addition costs) - $375,000
Escalation - $18,000
FF&E - $35,000
Design/Engineering/Surveys/Geotech - $23,500
TOTAL PROJECT BUDGET: $686,500
Spending by Project Date - The requested funds will be for a building rehabilitation project and will
be expensed within the project timeline on the above line items.
Other ARPAR Requests - Peace at Home Family Shelter has requested $25,000 in ARPAR
funding from the Emergency Food and Shelter Program to support emergency shelter operations.
American Rescue Plan Act
E�3
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.
What Project Will Do
This project will increase the capacity of the emergency shelter for survivors of domestic violence
by renovating and expanding a section of the existing shelter building to add three additional
client rooms and bathrooms. This project will involve converting an existing storage space into
client rooms while expanding out to replace the lost storage. Currently, Peace at Home Family
Shelter has capacity for up to 14 households (survivors and their children) at the emergency
shelter (40-55 people). This project would permanently increase that capacity to 17 households.
Allowing approximately 60 additional individuals to access emergency shelter every year.
COVID-19 has negatively impacted victims of domestic violence, as many individuals have lost
employment and social supports to help them successfully leave abusive relationships. In 2022,
Peace at Home received 1,205 calls from individuals seeking support in our community, an
increase from pre -pandemic 2019 numbers of 24%.
As more individuals are requesting shelter services, Peace at Home Family Shelter also had to
change shelter operations due to COVID-19. Now, clients no longer share rooms or bathrooms to
help prevent the spread of illness. While this change was necessary to protect the health of
families in shelter, it reduced capacity for emergency shelter. The completion of this project will
recover lost capacity and allow Peace at Home to safely shelter more families. Peace at Home
operates with a waiting list for emergency shelter due to insufficient capacity and high community
need.
This project is in alignment with the City of Fayetteville's Master Plan goals #1 and #6 as it
involves the rehabilitation of an existing building and increasing access to housing.
Execution of Project
This is a building rehabilitation project that will involve the addition of three additional family rooms
to Peace at Home's emergency shelter. If approved for funding, the construction would take place
within the 12-month timeframe and services would continue for families residing in the newly
expanded shelter. Peace at Home Family Shelter is already working with WER Architects on this
project and, if approved for funding, would be able to complete the rehabilitation within the
required time frame.
How Beneficiaries are Selected
Peace at Home Family Shelter advertises and operates a 24-hour crisis hotline, email help
address, and limited online chat for individuals in the community to reach out to us for assistance.
American Rescue Plan Act
9
PART 9 PROJECT DESCRIPTION continued
When a person contacts us for services, our only requirement is that they are a survivor of
domestic violence and have a need for services. For the emergency shelter, someone must be
either fleeing intimate partner violence or homeless as a result of recent intimate partner violence.
Our emergency shelter program defines `recent' as within the past three months. Per best
practices laid out by the National Network to End Domestic Violence, no additional verifications
are required. When a new client arrives at the shelter, they complete intake paperwork with an
advocate.
Services Provided
In addition to meeting immediate needs for shelter, each emergency shelter client is assigned to
a primary advocate who works with them to identify and work towards individualized goals for
self-sufficiency and recovery from domestic violence. These goals can include: acquiring
permanent housing, increasing income, rebuilding social support networks, legal needs, and
mental wellbeing. Many of these needs can be addressed through Peace at Home's in-house
programs, but advocates also offer robust community referrals to help clients connect with the
community at large.
Verification of Final Rule Qualification
As a project providing emergency housing, this project is an enumerated in the Final Rule as a
qualifying project. While there is no income requirement for emergency shelter services for
victims of domestic violence, anyone seeking shelter at a domestic violence organization is
considered homeless under Housing and Urban Development (HUD) Category 4 definition and is
a presumed benefit clientele population assumed to be Low to Moderate Income according to
Community Development Block Grant HUD regulations.
Benefit of Project — Limited Assistance and Creating Self -Sufficiency
This project will enhance Peace at Home Family Shelter's capacity to provide immediate,
life-saving emergency shelter to survivors of domestic violence and their children at a time when
survivors are more in need of shelter and our capacity has been reduced (both because of the
ongoing COVID-19 pandemic). In addition to this immediate assistance, the individualized
advocacy provided to all residents of Peace at Home's emergency shelter allows individuals to
work towards and obtain self-sufficiency and thrive in our community.
How Project will Further Philosophy and Purpose
This project will further Peace at Home Family Shelter's philosophy and purpose by increasing
our capacity to provide client -centered safe shelter and supportive services to survivors of
domestic violence and their children in our community. With increased capacity, our emergency
shelter can serve more families in need every day and help make our community a safe and
thriving place for all of our neighbors.
American Rescue Plan Act
10
PART 10 PROJECT TIMELINE Provide a complete and specific timeline for all activities
related to proposed project.
Project Timeline
Upon Award Notification (0-3 months) - Finalize design details with WER Architects, receive bids
from construction contractors and select a contractor for the project.
3 Months-9 Months into Project - Complete construction and renovation of shelter space to add 3
additional client rooms with bathrooms and replace storage area.
9 Months - 12 Months (if not completed sooner) - Ensure all construction is completed and
payments are processed. Acquire and install all necessary furniture, fixtures, and equipment.
Complete inspection. Open rooms up to survivors of domestic violence seeking safe shelter.
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.
Data Collection and Maintenance:
Peace at Home Family Shelter utilizes a database system built for victim service organizations by
Osnium called WomensShelter for all client and program tracking information, including program
activities and client eligibility. This database is used to generate reports for any grant
requirements and to assess program effectiveness. Data is collected by advocate staff members
of Peace at Home at intake and on an ongoing basis throughout the client's stay.
Organizational Capacity
Peace at Home has extensive experience managing federal grants, including grants as a
recipient and sub -recipient from the Department of Justice, Department of Health and Human
Services, and the Department of Housing and Urban Development.
Peace at Home employs a full-time Chief Financial Officer (CFO) to oversee all finances,
including financial reporting for grants. The CFO is a certified public accountant and successfully
manages all necessary reporting for grants and ensure appropriate accounting for all restricted
funding.
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:
Objective: More survivors of domestic violence and their children have access to safe,
emergency housing in order to flee abusive homes.
Outcome: 60 more individuals will receive safe shelter in the 12 months following completion of
the rehabilitation than in the 12 months previous, increasing the shelter's capacity by 25%.
Method of Measurement: Shelter stays are logged in our database system and the previous 12
months before the rooms were added can be compared to a period of time after the additional
rooms are opened to measure an increase in capacity for safe shelter.
Objective: More survivors of domestic violence will have access to individualized advocacy and
support to help them overcome barriers to independence.
Outcome: Peace at Home advocates will provide an average of 14 hours of individualized
advocacy services to each household staying in the shelter, providing support in commonly
identified needs, including: safety planning, emotional support, resource referrals, legal support,
budgeting, and transportation.
Method of Measurement: Hours of advocacy services are logged in the database system and
can be pulled in aggregate for all shelter clients.
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.
Yes, the project could proceed with partial funding. Given the limited 12-month time frame, the
project would need to be funded at a minimum of 75% in order to move forward. The impact of
partial funding could potentially be redirecting needed funds away from important programs
serving survivors of domestic violence in our community in order to fill the budget gap and move
forward.
Line Item Breakdown - All line items are equally necessary for funding as all are necessary
aspects of the rehabilitation project.
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
ZAccessibility Narrative
Board of Directors
ZBylaws
❑✓ Certificate of Good Standing
ZFinancial Audit (see Application Guide for more information)
ZIntake Forms
ZNon-Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-EZ, etc.]
�✓ Resumes
❑✓ System Award Management (SAM) registration
❑✓ Status of Funding (if applicable)
�✓ Additional Documentation Checklist (this page)
Additional Information
American Rescue Plan Act
15
Peace At Home Family Shelter Subrecipient Agreement
City of Fayetteville Staff Review Form
2022-1141
Legistar ID
N/A ARCHIVED
N/
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 Peace At Home Family Shelter in
the amount of $686,500.00 to provide funding from the American Rescue Plan Act to expand the emergency
shelter. Resolution 270-22 passed on 11/15/22 as a walk-on item included the funding arrangements and
authorized Mayor Jordan to sign the subrecipient agreement.
Account Number
Project Number
Budgeted Item?
Does item have a cost?
Budget Adjustment Attached?
Purchase Order Number:
Change Order Number:
Original Contract Number:
Comments:
Budget Impact:
Fund
Project Title
Current Budget
Funds Obligated
Current Balance
Item Cost
Budget Adjustment
Remaining Budget
Previous Ordinance or Resolution #
Approval Date: 12/07/2022
CITY OF
FAYETTEVILLE
ARKANS
ARKANSAS
TO:
Mayor
THRU:
Susan Norton, Chief of Staff
FROM:
Steve Dotson, Internal Auditor
DATE:
November 30, 2022
SUBJECT: Subrecipient Agreement— Peace At Home Family Shelter
STAFF MEMO
RECOMMENDATION:
Recommend Mayor Jordan's signature on the Peace At Home Family Shelter subrecipient
agreement.
BACKGROUND:
Resolution 270-22, passed and approved on 11/15/22, authorized Mayor Jordan to sign a
subrecipient agreement with the Peace At Home Family Shelter for the expansion of the
emergency shelter for survivors of domestic violence in the amount of $686,500.00.
DISCUSSION:
Peace at Home Family Shelter submitted a request for funding under the ARPA program as a
subrecipient, with the purpose of expanding the emergency shelter for survivors of domestic
violence. Resolution 270-22 authorized Mayor Jordan to sign the subrecipient agreement to
provide the amount of $686,500.00 in American Rescue Plan Act funds to fund the expansion of
the emergency sheher.
BUDGET/STAFF IMPACT:
The emergency shelter expansion will utilize American Rescue Plan Act funds.
Attachments:
ARPA Subrecipient Contract with the Peace At Home Family Sheller with Resolution 270-22
attached at the end of the subrecipient contract.
Mailing Address:
113 W. Mountain Street www.fayetteville-acgov
Fayetteville. AR 72701
CITY OF
FAYETTEVILLE
ARKANS
ARKANSAS
SUBRECIPIENT AGREEMENT for AMERICAN RESCUE PLAN
City of Fayetteville, AR
and
PEACE AT HOME FAMILY SHELTER, INC.
City of Fayetteville Subrecipient# ARPA-0005
This Subrecipient Agreement (Agreement) is entered into and effective on this 7th day of
December 2022 between the City of Fayetteville, hereafter referred to as ('the City') and Peace at Home
Family Shelter, Inc. (hereinafter referred to as "Peace at Home" or the "subrecipient").
WHEREAS, Peace at Home requested funding to increase the capacity of the emergency shelter for survivors of
domestic violence by renovating and expanding a section of the existing shelter building to add three additional
client rooms and bathrooms; 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 Peace at Home 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 Citys Federal award funding;
WHEREAS, the City notifies the subrecipient: (1) that this funding shall be considered a subaward of ARPA funds;
(2) subrecipient shall adhere to any and all compliance requirements for use of ARPA funds; and (3) any and all
reporting requirements for expenditures of ARPA funds; and
WHEREAS, this Agreement is reflective of requirements issued and identified with the Final Rule of the Department
of the Treasury; that capital expenditures, in certain cases, can be appropriate responses to the public health and
economic impacts of the pandemic; and
WHEREAS, an increase in the number of domestic violence victims is recognized as a significant negative public
health impact of the COVID-19 pandemic, and the City may use American Rescue Plan Act funds to address the
harm experienced by these victims through increasing capacity and expanding access to emergency housing
assistance.
NOW, THEREFORE, in consideration of the covenants and conditions hereinafter set forth, the City and subrecipient
agree as follows:
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1. INFORMATION REQUIRED BY THE UNIFORM GRANT GUIDANCE IUGGI b200 332,
a) Subreciplent Name (must match the name associated with its Unique Entity Identifier):
Peace at Home Family Shelter, Inc.
P.O. Box 10946
Fayetteville, AR 72703
EIN: 71-0552563
Subrecipient's Unique Entity Identifier (formerly known as DUNS number): LN3EUDU177W3
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: $686,500.00
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
SLFRP@treasury.gov
Telephone: 202-622-6415
Websfte: https://home.treasury.gov/policy-issues/coronavirus/ass stance -for -state -local- and -tribal-
governments/state-and-local-fisca I -recovery -fund
Contact Information for the City:
Paul A. Becker
Chief Financial Officer
113 W. Mountain
Fayetteville, AR 72701
Pbecker(@favetteville-ar.gov
Telephone: 479-575-8330
Contact Information for the Subreciplent:
Peace at Home Family Shelter, Inc.
ATTN: Teresa Mills, CEO
P.O. Box 10946
Fayetteville, AR 72703
Assistance Listings Numberand Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF) (AKA the American Rescue Plan Local Recovery Funds, hereinafter AREA) See
https:Zlsam.gov/fal/7cecfdef62dc42729a3fdcd449bd62b8/`view
This subaward is a program grant and not for Research and Development.
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e) indirect Cost Rate: (de minimis cost rate) maximum of 1096of 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 Local
Fiscal Recovery Funds, Action: Final Rule
c. Appendix C—Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds
3. SUBCONTRACTING: Subrecipient is permitted to sub -contract with third parties to complete the scope of work
identified in this contract. Any sub -contract or sub -sub recipient shall follow all federal, local and state
regulations. Subrecipient shall not be allowed to disperse funds in a subrecipient manner to another third parry
without prior written City approval.
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
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:
1. 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
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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:
a. 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 Polity 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 entity is not qualified for a Federal award). For 2 CFR Part 200, 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
25, 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 Information, 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.
d. OMB Guidelines to Agencies on Governmentwide 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 %II to Part 200 is hereby
incorporated by reference.
f. Govemmentwide Requirements for Drug -Free Workplace, 31 C.F.R. Part 20.
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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. §§ 4601A655) and implementing regulations.
i. Generally applicable federal environmental laws and regulations.
iii. Statutes and regulations prohibiting discrimination applicable to this award include without
limitation, the following:
a. Title A of the QVII 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 A 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 VIII of the Civil Rights Act of 1968 (42 U.S.C. §§ 3601
et sec.), which prohibits discrimination in housing on the basis of race, color,
religion, national origin, sex, familial status, or disability;
c. Section 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 Discrimination Act of 1975, as amended (42 U.S.C. §§ 6101 et sec.),
and Treasurys implementing regulations at 31 C.F.R. Part 23, which prohibit
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 seq.), 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, Treasurys 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.
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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
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. § 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. § 200.112.
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b. City and Other City Requirements (see §200 332(a)(3)1
1. 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 6th of
the month to the Contact for the City.
ii. Maintenance of and Access to Records:
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 (S) years after
all funds have been audited, the audit resolved, and all funds expended or
returned to Treasury, whichever is later.
Ill. Administrative Considerations. Where policies ofthe 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 parry is the agent, joint
venturer, partner, or employer of the other.
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 City's 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,
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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 -party 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
monitoring results of the Subrecipient necessitate adjustments to the its own record (see
§200.332(9)).
ix. 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 subrecipient] retain title resulting from this subaward, the federal
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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 agreesto provide the City
with all information requested bythe Cityto 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.
8. LIMITATION OF FUNDING AND COMPENSATION: It is expressly agreed and understood that upon executionof
the Agreement, the City agrees to allocate no more than the amount of $686,500.00 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 Appendix A in accordance with the following
procedures:
a. Subrecipient shall submit request to the City for the advance payment along with an invoice or other
documentation establishing the cost of the item.
b. The City willadvance funds to Subrecipient for the item.
c. Following Subrecipient's payment forthe 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
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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:
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 party, and subject to the prior
written approval of the City, as appropriate. Any such publicity shall credit the contributions of each
party.
b. Neither parry 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 parry.
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 Citys ARPA funding and to administer such funding in
accordance the United States Treasury Final Rule, 31 CFR Part 35, 87 FR 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 City's Purchasing
Division.
City of Fayetteville Procurement Thresholds:
a. $0 - $999: No quotes required
b. $1,000 - $2,499: minimum of 3 verbal quotes required
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c. $2,500 - $34,999: minimum of 3 written quotes required
d. $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 shall be submitted on the City provided form and 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
forfunding.
li. 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 flve 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;
iii. records required to determine the eligibility of activities;
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
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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 other actions 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.
g. 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
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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.
h. Closeout (see 200.332(a)(61): The City will 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).
H. 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 (1)).
v. The Subrecipient must permit the City and auditorsto have access tothe 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)).
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,
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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 parry, 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
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.
City of Fayetteville, AR and Peace at Home Family Shelter, Inc.
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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 Subrecipient's 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 EFFECT: 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
$686,500.00 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 minimum, Subrecipient shall maintain during the Agreement Term at least the following
types and limits of insurance coverage:
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;
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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 Subrecipienfs 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. 425-19-101 et. sec.). 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 Citys address or to the Subrecipient's address as listed below.
CITY OF FAYETTEVILLE, AR
ATTN: Mayor Lioneld Jordan
113 W. Mountain
Fayetteville, AR 72701
City of Fayetteville, AR and Peace at Home Family Shelter, Inc.
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SUBRECIPIENT
Peace at Home Family Shelter, Inc.
ATTN: Teresa Mills, CEO
P.O. Box 10946
Fayetteville, AR 72703
CITY OF
FAYETTEVILLE
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, covenantor 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 successorl, 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. Compliancewithi-a 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.
PEACE AT HOME FAMILY SHELTER, INC.
By:
�Tferesa—Milk, CEO
Date Signed:I E 11- 1e 12
uate bigneo: rmvmuae
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Appendix A: Scope of Work & Project Allocation
FAYETTEVILLE CITY OFFAYETTEVILLE
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
Requested (whole dollar)
[Minimum $50,000]
$686,500
Applicant/Organization
Name
peace at Home Family Shelter
Mailing Address
(street, city, zip)
PO Box 10946, Fayetteville, AR 72703
Organization Website
www.peaceathomesheiter.org
DUNS Number
029494593
Organization FEIN/SSN
71-0552563
PART 2 APPLICANT CONTACT INFORMATION
Contact for Project
(name & title)
Teresa Mills, CEO
Contact Phone Number
479-444-8310
Contact Email
tmills@peaceathomesheRer.com
Signature Authority
(name, title & email address)
Teresa Mills, CEO
tmills@peaceathomeshelter.com
PART PROJECT INFORMATION
Project Name
Expanding Safe Shelter for Survivors of Domestic Violence
Project Address
(street, city, zip)
3045 E Ivey Ln, Fayetteville, AR 72764
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
Blake Pennington, Assistant City Attorney
If Yes, above, please identify
(Peace at Home board member)
person and position with the
city
The ongoing COVID-19 pandemic has made it more difficult and
dangerous for victims of domestic violence seeking to flee
Project Summary
abusive homes. Peace at Home Family Shelter proposes a
(brief synopsis of proposed
renovation project to create 3 additional shelter bedrooms with
project)
bathrooms. This will allow Peace at Home to provide safe,
emergency shelter to approximately 60 additional adults and
children fleeing domestic violence each year.
As the first domestic violence shelter in the state of Arkansas,
Peace at Home Family Shelter has been providing safe,
emergency shelter to survivors of domestic violence and their
Describe previous
experience in providing
children since 1979. In addition to safe shelter, Peace at Home
similar services
also provides housing assistance, counseling, legal services
exclusively to survivors of domestic violence and their children. In
total, we serve over 1,000 individuals each year.
Programs will typically be
funded for a time period not
The requested project will be for rehabilitation and construction
to exceed 12 months from
costs in order to increase the physical capacity of our emergency
the signed date of the
shelter for survivors of domestic violence. We are already
subrecipient agreement.
working with an architect for this and other projects and would be
Please describe your
able to quickly begin construction to meet the limited time frame
organization's ability to plan
wired.
required.
and utilized requested funds
within that timeframe.
American Rescue Plan Act
PART 4 PROJECT BENEFICIARIES
Projected number of
Fayetteville beneficiaries 60 per year
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 ideMfies your project.
PART 4A SOCIAL SERVICES APPLICATIONS ONLY
Will ALL beneficiaries live,
work and/or go to school in
Yes O O No
Fayetteville
Will ALL beneficiaries meet
US Treasury Low to
IF) Yes ONo
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
COVID-19 has made it more dangerous for victims of domestic
question above, please
violence to flee abusive homes and avoid homelessness. The
describe the COVID-19
impact and how this
Final Rule lists victims of domestic violence as a population
proposal will aid in
disproportionately negatively impacted by COVID-19 (page 19).
responding to the impact
This proposal will increase our community's capacity to provide
safe emergency housing for a vulnerable population.
Please indicate how the
As a project providing emergency housing assistance, this
proposed project meets
eligibility standards and
project is enumerated in the Final Rule as eligible to respond to
requirements described in
the impacts of the pandemic on households and communities.
the Department of
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 (CWSRFI,
Drinking Water State
Revolving Fund (DWSRFl,
or eligible projects as
described in Department of
Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds. See
Subrecipient Application
Guide for more information.
PART 4C ECONOMIC APPLICATIONS ONLY
Please describe the
This project will exclusively serve survivors of domestic violence
residents or industry sector
this grant request is intended
and their children in our community. As a project providing
to serve or benefit. Please
emergency housing assistance, this project is enumerated in the
indicate how the proposed
Final Rule as eligible to respond to the impacts of the pandemic
project meets eligibility
standards and requirements
on households and communities.
described in the Department
of Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds.
Does this request respond to
Oyes O No
a negative COVID-19 impact
COVID-19 has made it more dangerous for victims of domestic
violence to flee abusive homes and avoid homelessness. The
Final Rule lists victims of domestic violence as a population
If yes, please describe the
disproportionately negatively impacted by COVID-19 (page 19).
COVID-19 impact and how
This proposal will aid in the City's economic recovery by meeting
this proposal will aid in the
temporary housing needs for a vulnerable population so they
City's economic recovery
have the stability to find or maintain employment and permanent
housing in our community and achieve self-sufficiency.
American Rescue Plan Act
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 employeelagent 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.
f
rW 1 ✓l,! Teresa A. Mills CEO 329/2022
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 11977
The mission of Peace at Home Family Shelter is to empower
victims of domestic violence to survive and thrive by nurturing
their self-determination and courage and to promote healthy
relationships and compassionate communities through
Philosophy, Purpose and/or education, outreach, and advocacy.
Mission Statement
Peace at Home Family Shelter believes that everyone deserves
to feel safe in their own homes. We operate with an
empowerment philosophy centered on the rights of survivors of
domestic violence to be the decision makers of their own lives.
Provide a brief description of your organization including information about programs and/or
services other than the proposed project.
Peace at Home Family Shelter helps survivors of domestic violence and their children safely
escape abusive homes and rebuild their lives. In addition to providing immediate safe shatter, our
program connects survivors with the resources they need to transition out of shelter and into
long-term safe housing. Our programs have five components working together to help survivors
transition from homes of violence to homes of safety.
24 Hour Hotline -- First, Peace at Home operates a 2417 crisis hotline and email inbox. Our crisis
hotline is available in Spanish and English and serves as the entry point for clients. Hotline
advocates assist callers with community referrals, safety planning, coming into shelter, and our
additional programs. In 2021, we received 1,205 calls from members of our community seeking
help.
Emergency Shelter -- The emergency shelter has 14 rooms available for women, men, children,
and any person escaping violence. Bilingual staff are available to provide onsite assistance to
clients. On average, families stay 45 days in shelter as they work on their individualized goals
(90 day maximum stay). Peace at Home was able to provide emergency shelter to 151
individuals in the community in 2021, a reduced capacity due to COVID-19 and renovations to
make the shelter safer for families during the on -going pandemic.
Advocacy -- While staying in shelter, clients are offered advocacy services to help them reach
their goals. Advocates meet daily with clients to develop and implement self-sufficiency plans.
American Rescue Plan Act
PART 7 ORGANIZATION DESCRIPTION continued
These plans are built around the current strengths of a survivor and provide steps to achieving
long-term goals such as employment or affordable housing.
The purpose is to empower survivors to overcome their unique barriers such as education skill
gaps, scarce work histories, unreliable transportation, career planning, affordable child-care, and
self-confidence. Peace at Home maintains partnerships with life -skill agencies such as the Credit
Counseling of Arkansas and Dress for Success. These agencies provide critical support for the
clients to meet the variety of employment and financial goals that they have towards achieving a
safe life. The Institute for Women's Policy Research indicates that 73% of respondents said that
they had stayed with an abusive partner longer than they wanted or returned to them for
economic reasons.
Working together, advocates eliminate barriers that might keep survivors economically or
emotionally dependent on a violent partner. These advocacy services are also open to
individuals in the community who are not currently living at our shelter but are survivors of
domestic violence in need of assistance.
Housing Assistance -- Survivors of domestic violence in our emergency shelter and in our
community also have access to support from our Home Restored and SHE housing assistance
programs. These program provides direct financial support, landlord advocacy, budgeting skills,
and case management to help families find permanent housing in the community that meets their
long-term needs. In 2021, Peace at Home was able to provide housing -related assistance to 160
families.
Legal Services — Peace at Home has an onsite staff attorney and a bilingual advocate to assist
shelter residents and outreach clients with legal needs. Our legal services department enables
Peace at Home to provide survivors of domestic violence with legal representation for divorce
cases, child custody issues, and orders of protection as well as legal advocacy and financial
assistance for legal fees. In 2021, Peace at Home provided legal services to 537 clients.
Mental Health/Emotional Support Services - Peace at Home employs a full-time bilingual
counselor and partners with the University of Arkansas Doctorate Program in Psychology as a
site for doctoral candidates in clinical psychology. These mental health professionals provide
one-on-one and parent/child counseling to clients of Peace at Home free of charge. In 2021,
Peace at Home provided direct counseling services to 94 individuals in our community.
All of our services are free of charge, personalized to meet individual survivor needs, and
voluntary.
American Rescue Plan Act
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.
Peace at Home Family Shelter - Rehabilitation Project to Add Capacity
Budget (based on estimates received from WER Architects):
Construction:
1000 sf ($235 per at renovation costs) - $235,000
1250 of ($300 per sf building addition costs) - $375,000
Escalation - $18,000
FF&E-$35,000
Design/Engineering/Sumeys/Geotech - $23,500
TOTAL PROJECT BUDGET: $686,500
Spending by Project Date - The requested funds will be for a building rehabilitation project and will
be expensed within the project timeline on the above line items.
Other ARPAR Requests - Peace at Home Family Shelter has requested $25,000 in ARPAR
funding from the Emergency Food and Sheller Program to support emergency shelter operations.
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 project.
What Project Will Do
This project will increase the rapacity of the emergency shelter for survivors of domestic violence
by renovating and expanding a section of the existing shelter building to add three additional
client rooms and bathrooms. This project will involve converting an existing storage space into
client rooms while expanding out to replace the lost storage. Currently, Peace at Home Family
Shelter has capacity for up to 14 households (survivors and their children) at the emergency
shatter (40-55 people). This project would permanently increase that capacity to 17 households.
Allowing approximately 60 additional individuals to access emergency shelter every year.
COVID-19 has negatively impacted victims of domestic violence, as many individuals have lost
employment and social supports to help them successfully leave abusive relationships. In 2022,
Peace at Home received 1,205 calls from individuals seeking support in our community, an
increase from pre -pandemic 2019 numbers of 24%.
As more individuals are requesting shelter services, Peace at Home Family Shelter also had to
change shatter operations due to COVID-19. Now, clients no longer share rooms or bathrooms to
help prevent the spread of illness. While this change was necessary to protect the health of
families in shelter, it reduced capacity for emergency shelter. The completion of this project will
recover lost capacity and allow Peace at Home to safely shatter more families. Peace at Home
operates with a wafting list for emergency shelter due to insufficient capacity and high community
need.
This project is in alignment with the City of Fayetteville's Master Plan goals #1 and #6 as it
involves the rehabilitation of an existing building and increasing access to housing.
Execution of Project
This is a building rehabilitation project that will involve the addition of three additional family rooms
to Peace at Home's emergency shatter. If approved for funding, the construction would take place
within the 12-month timeframe and services would continue for families residing in the newly
expanded shelter. Peace at Home Family Shelter is already working with WER Architects on this
project and, if approved for funding, would be able to complete the rehabilitation within the
required time frame.
How Beneficiaries are Selected
Peace at Home Family Shelter advertises and operates a 24-hour crisis hotline, email help
address, and limited online chat for individuals in the community to reach out to us for assistance.
American Rescue Plan Act
PART 9 PROJECT DESCRIPTION continued
When a person contacts us for services, our only requirement is that they are a survivor of
domestic violence and have a need for services. For the emergency shelter, someone must be
either fleeing intimate partner violence or homeless as a result of recent intimate partner violence
Our emergency shelter program defines 'recent' as within the past three months. Per best
practices laid out by the National Network to End Domestic Violence, no additional verifications
are required. When a new client arrives at the shelter, they complete intake paperwork with an
advocate.
Services Provided
In addition to meeting immediate needs for shelter, each emergency shelter client is assigned to
a primary advocate who works with them to identify and work towards individualized goals for
self-sufficiency and recovery from domestic violence. These goals can include: acquiring
permanent housing, increasing income, rebuilding social support networks, legal needs, and
mental wellbeing. Many of these needs can be addressed through Peace at Home's in-house
programs, but advocates also offer robust community referrals to help clients connect with the
community at large.
Verification of Final Rule Qualification
As a project providing emergency housing, this project is an enumerated in the Final Rule as a
qualifying project. While there is no income requirement for emergency shelter services for
victims of domestic violence, anyone seeking shelter at a domestic violence organization is
considered homeless under Housing and Urban Development (HUD) Category 4 definition and is
a presumed benefit clientele population assumed to be Low to Moderate Income according to
Community Development Block Grant HUD regulations.
Benefit of Project — Limited Assistance and Creating Self -Sufficiency
This project will enhance Peace at Home Family Shelter's rapacity to provide immediate,
life-saving emergency shelter to survivors of domestic violence and their children at a time when
survivors are more in need of shelter and our capacity has been reduced (both because of the
ongoing COVID-19 pandemic). In addition to this immediate assistance, the individualized
advocacy provided to all residents of Peace at Home's emergency shelter allows individuals to
work towards and obtain self-sufficiency and thrive in our community.
How Project will Further Philosophy and Purpose
This project will further Peace at Home Family Shelter's philosophy and purpose by increasing
our capacity to provide client -centered safe shelter and supportive services to survivors of
domestic violence and their children in our community. With increased capacity, our emergency
shelter can serve more families in need every day and help make our community a safe and
thriving place for all of our neighbors.
American Rescue Plan Act
10
PART 10 PROJECT TIMELINE Provide a complete and specific timeline for all activities
related to proposed project.
Project Timeline
Upon Award Notification (0-3 months) - Finalize design details with WER Architects, receive bids
from construction contractors and select a contractor for the project.
3 Months-9 Months into Project - Complete construction and renovation of shelter space to add 3
additional client rooms with bathrooms and replace storage area.
9 Months - 12 Months (d not completed sooner) - Ensure all construction is completed and
payments are processed. Acquire and install all necessary furniture, fixtures, and equipment.
Complete inspection. Open rooms up to survivors of domestic violence seeking safe shaker.
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.
Data Collection and Maintenance
Peace at Home Family Shelter utilizes a database system built for victim service organizations by
Osnium called WomensShelter for all client and program tracking information, including program
activdies and client eligibility. This database is used to generate reports for any grant
requirements and to assess program effectiveness. Data is collected by advocate staff members
of Peace at Home at intake and on an ongoing basis throughout the client's stay.
Organizational Capacity
Peace at Home has extensive experience managing federal grants, including grants as a
recipient and sub -recipient from the Department of Justice, Department of Health and Human
Services, and the Department of Housing and Urban Development.
Peace at Home employs a full-time Chief Financial Officer (CFO) to oversee all finances,
including financial reporting for grants. The CFO is a certified public accountant and successfully
manages all necessary reporting for grants and ensure appropriate accounting for all restricted
funding.
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:
Objective: More survivors of domestic violence and their children have access to safe,
emergency housing in order to flee abusive homes.
Outcome: 60 more individuals will receive safe shelter in the 12 months following completion of
the rehabilitation than in the 12 months previous, increasing the shelter's capacity by 25%.
Method of Measurement: Shelter stays are logged in our database system and the previous 12
months before the rooms were added can be compared to a period of time after the additional
rooms are opened to measure an increase in capacity for safe shelter.
Objective: More survivors of domestic violence will have access to individualized advocacy and
support to help them overcome barriers to independence.
Outcome: Peace at Home advocates will provide an average of 14 hours of individualized
advocacy services to each household staying in the shelter, providing support in commonly
identified needs, including: safety planning, emotional support, resource referrals, legal support,
budgeting, and transportation.
Method of Measurement: Hours of advocacy services are logged in the database system and
can be pulled in aggregate for all shelter clients.
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 projectIf NO the project will not be considered for partial funding
Yes, the project could proceed with partial funding. Given the limited 12-month time frame, the
project would need to be funded at a minimum of 75% in order to move forward. The impact of
partial funding could potentially be redirecting needed funds away from important programs
serving survivors of domestic violence in our community in order to fill the budget gap and move
forward.
Line Item Breakdown - All line items are equally necessary for funding as all are necessary
aspects of the rehabilitation project.
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
0
Accessibility Narrative
Board of Directors
Bylaws
❑✓ Certficate of Good Standing
Financial Audit (see Application Guide for more information)
Intake Forms
ZNon-Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-EZ, etc.]
QResumes
❑✓ System Award Management (SAM) registration
❑✓ Status of Funding (if applicable)
✓0 Additional Documentation Checklist (this page)
❑✓ Additional Information
American Rescue Plan Act
15
Appendix 1k Department of the Treasury Final Rule
4338 Federal Register/Vol. 87, No. IB/Thursday, January 27, 2022/Rules and Regulations
DEPARTMENT OF THE TREASURY
31 CFR Part 35
BIN 1505-AC77
Coronavirus State and Local Fiscal
Recovery Funds
AGe aCY: Department of the Treasury.
ACTION: Final rule.
s11k1MAtay: The Secretary of the Treasury
(Treasury) is adopting as final the
interim final rule published on May 17,
2021, with amendments. This rule
implements the Coronavirus State Fiscal
Recovery Food and new Coronavirus
Local Fiscal Recovery Fund established
under the American Rescue Plan Act.
RAres: The provisions in this final vale
are effective April 1, 2022.
FOB R1B M INFORMATION COIFTAOT:
Katharine Richards, Director,
Coronavirus Stale and Local Fiscal
Recovery Funds, Office of Recovery
Programs, Department of the Treasury,
(844)529-9527.
SUPPLEMENTARY NFORMATION:
I. Introduction
Overview
Since the first case of coronavtros
disease 2019 (COVID-19) was
discovered in the United States in
January 2020, the pandemic has caused
severe, intertwined public health and
economic crises. In March 2021, as
these crises continued, the American
Rescue Plan Act of 2021 (AAPA) e
established the Coronavirus State and
Local Fiscal Recovery Foods (SLFRFJ to
provide state, local, and Tribal
governments 2 with the resources
needed to respond to the pandemic and
it. economic effects and to build a
stronger. more equitable economy
during the recovery. The U.S.
Department of the Treasury (Treasury)
issued an interim final role
implementing the SLFRF program on
May 10, 2021 s and has since disbursed
over $240 billion to slate, local, and
Tribal governments and received over
1,500 public comments on the interim
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
h Public law 117-2. hap://www.anRrom.Rov/
f 7/pluwd,wbIHPL1W-lrrpubopd{
InarouBbout this Supplementary Information.
Tnauq unce hate, local, and Tribal
Nvemmenm"a '4eclpi®tn" to color Basally to
governments recavinB SURF foods: this includes
ease. I ... ltmiu.lHbil Bevanmena, countla.
..,.poll. onto, and ..... tillement unite of
heal govonnmeart.
^e6 FIR chain (May 17, 2a21).
makes several changes to the provisions
oftha interim final rule, summarized
below in the section Executive
Summary of Major Changes.
Since Treasury issued the interim
final rule 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
COVID-19, including a historic
vaccination campaign that has reached
over 80 percent of adults with at least
one does and is reaching millions of
child.. es well.^ However, the disease
continues to present An imminent threat
to public health, especially among
unvaccinated individuals. As the Delte
variant spread across the country this
summer and fall, the United State. faced
another severe wave of cases, death.,
and strain on the healthcare .yet.,
with the risk of hospitalization and
mortality exponentially greater to
unvaccinated Americans. COVID-19 has
now infected over 50 million and killed
over 800,000 Amaricens since January
2020; tens of thousands of Americans
continue to be infected each days Even
as the nation recovere, 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, testing, and
other services.
The economic recovery similarly has
made tremendous progress but faces
cautioned risks from the disease and the
disruptions it has caused. In the early
months of the pandemic, the United
States experienced the sharpest
economic downturn on record, with
unemployment spiking to 14.8 percent
in April 2020.0 The economy has
gradually added back jobs, with growth
accelerating in the Cunt half of 2021.7
However, as the Delta variant spread,
the intensified health risk. and renewed
disruptions slowed growth,
demonstrating the continued risks from
the virus. By fall 2021. the economy had
.Caw, for wear cannot and Preventta,
COVM onr'tlacbe COw0.19 Vaccinations In the
United Stereo, hapd1wrod.encs-lard id at
unn,Mwcehh., Pw slow Ixrmbm al.
Unit,
'Cesar, err Rleaa canna and Provision.
COVIn Res Tracker, hapdAna-mvid.edu8w/
rovid-dam.erndnr/xentrnnndmnnrrin (tat visited
Decorator 2. 2m11.
-US. soon of IeMr Slnwtia. Uneropbyomt
Rate IUNRATSI, reWoved scan I=. Federal
Reserve Bank dSl. ironic sup:/QrM.
90oaw,hdoeR/ariw1UNRATE Out vietad
Deambolt, 202ll.
'/era
exceeded its pre -pandemic size 6 and
unemployment had fallen below 5
percent"but despite dlis progress, lac
many Americans remain unemployed,
out of the labor force, or unable to pay
that, bills, with this pain particularly
acute among lower -income Americans
and communities of color. Again,
moving forward, state, Imal, and Tribal
governments will remain on the
fronllines of the economic response and
rebuildine a sMo." economy in the
However, as state, local, and Tribal
governments continue to face
substantial needs to respond to public
health and economic conditions, they
have also axpmteoced severe impacts
from the pandemic and rasoiling
recession. Stale, 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.10 As the Great
Recession demonstrated, austerity
among stale, local, and Tribal
governments can hamper overall
economic growth and severely curtail
the ability of governmens to serve their
constituents.
Recognizing On. imperatives, the
SLFRF aroma. provides vital resources
s and to replace revenue
ublic health emergency,
to eavernment services.
health
I U.S. Bunco of economic Analysis. Real Grow
Wrrlk Present firs I, whiioved hem Far..
FMenl Reactive Bucket St. lnuie, hops://(rod.
dloulvfedag/eerieelCnFCI gal vfeaed December
7,2021).
•U.S. Ru con of Labor Sututice. sup. was B.
w U.S. Bmau of Laos Statistics. All blnployea.
Stria Govemmont (CESN020WO11 and All
unpleyom. Local cowswunl KES90930000011.
reMevul berm FRBD, Twist Reserve RankofSt.
Iquis hap:/lfibei tlathfed..,lura/
cessih ossismandthe '1fiw l.W,Admg/
arler/CEacce Oee1 fr. vimul umber r.
2ocit
hh The ARPA adds section aoz or the Sala
Ssuriq Act, which aeaas the State Fiscal
Recovery Pond, and —11un e03 of the social
Security Act, which creau the teal Fiscal
so—so, Fond (lose be,, SIFRn. Sections fins and
603..rein auloccahelly slmiler diglble toes: the
,Amery dier-ce baw®n the two well .. is that
noun, aa9 uhtbil.h ..loud Far ele. , watolr.
can
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a Pond for mampolitan cities noweenalwonat um,
oil...I govpnaenl, and courow.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4339
public health emergency by providing
premium pay to eligible worker.:
(c) For the provision of government
services to the extent of the reduction in
revenue due to the COVI0.19 public
health emergency relative to revenues
collected in the most recent full fiscal
Year prior to the emergency; and
(d) To make necessary investments in
water, sewer, or broadband
infrastructure.
In addition, Congress specified two
types of ineligible uses of funds: funds
may not be used for deposit into any
pension fund or, for states and
territories only, to directly or indirectly
offset a reduction in net tax revenue
resulting from a change in law,
regulation, or administrative
interpretation.
Issued May 10, 2021, Treasury's
interim final rule provided further detail
on eligible uses of funds within the four
statutory categories, ineligible uses of
fund., and administration of the
program. The interim final rule
provided state, local, and Tribal
governments substantial Flexibility to
determine how best to use payments
from the SURF program to mart the
needs of their communities. The interim
final rule aimed to facilitate swift and
effective implementation by establishing
a framework for determining the types
of programs and services that are
eligible under the ARPA along with
examples of eligible uses of funds that
state, leash and Tribal governments may
consider.
State. local. and Tribal governments
are already deploying SURF funds to
make an impact in their communities.
The SLFRF proTom ensures that state,
local, and Triba�governments have the
resources needed to fight the pandemic,
sustain and strengthen the economic
recovery, maintain vital public services,
and make investments that support
ling -term growth, opportunity, and
equity. Treasury looks forward to
supporting and engaging with state,
local, and Tribal governments as they
use these funds to make transfore ative
investments in their communities.
Finally, with ao many pressing and
effective ways to use SURF funds, there
is no excuse for waste, fraud, or abuse
of these funds.
Treasury received over 1,500
comments spanning nearly all aspects of
the interim final rule. The final rule
considers end responds to comments,
provides clarification to many aspects of
the interim final rule, and makes several
changes to eligible uses under the
program, summarized immediately
below.
Executive Summary afMajor Changes
and GI.H)"lcnffons
The final rate provides broader
Flexibility and greater simplicity in the
program, in response to public
comments. Among other clmdfrcatton.
and changes, the final rule provides for
the following:
• Pubirefloollhand Negative
Economic Impacts: In addition to
programs and services, the final rule
clarifies that recipients may use funds
for capital expenditures that support an
eligible COVIO-19 public health or
economic response. For example,
recipients may build certain affordable
housing, cbildcace facilities, schools,
hospitals, and other projects consistent
with the requirements in this final into
and the Supplementary Information.
In addition, the final rule presumes
that an expanded set of households and
communities are "impacted" or
"dispropartionetely impacted" by the
panddemic, thereby allowing recipients
to provide responses to a broad set of
households and entities without
requiring additional analysis. Further,
the final role provides a broader set of
enumerated eligible uses available for
these communities as part of COVII -19
public health and economic response,
including making affordable housing,
childcare, and early learning services
eligible in all impacted communities
and making certain communally
development and neighborhood
revitalization activities eligible for
disproportionately impacted
communities.
Further, the final rule allow. for e
broader set of uses to restare and
support government employment,
including hiring above a recipient's pre -
pandemic baseline, providing funds to
employees that experienced pay cuts or
furloughs, avoiding layoffs, and
providing retention incentives.
• Premium Pay: The final rule offers
mare streamlined options to provide
premium pay, by broadening the .haze
of essenOel workers who can receive
premium pay without a written
juslificetion while maintaining a focus
on lower -income and frontline essential
workers.
• Revenue Loss: The final rule offer,
a standard allowance for revenue loss of
up to $10 million, not to exceed a
recipient's SURF award amount,
allowing recipients to select between a
standard amount of revenue loss or
complete a full revenue loss calculation.
Recipients that select the standard
allowance may use that amount for
government services.
• Water, Sewed and lroadband
Infrastructure: The final rule
significantly broadens eligible
broadband infrastructure investment. to
address challenge. with broadband
access, affordability, and reliability, and
adds additional eligible water and sewer
infrastructure investments, including a
broad range of lead remediation and
stormwater management projects.
Structure ofthe Supplementary
Information
In addition to this Introduction, this
Supplementary Information is organized
into four sections: (1) Eligible Uses, (2)
Restrictions on Use, (3) Program
Administration Provisions, and (4)
Regulatory Analyses.
The Eligible Uses section describes
the standards to determine eligible uses
of fund. in each of the four eligible use
cate�gories:
(1) Responding to the public health
and negative economic impacts of the
pandemic (which includes several sub-
rategoriel)
(21 Providing premium pay to
essential workers
(3) Providing government services to
the extent of revenue loss due to llm
pandemic, and
(41 Making necessary, investments in
water, sewer, and broadband
in&avtructum.
Each eligible use category has
separate and distinct standards for
assessing whether a use of funds is
eligible, Standards, restrictions, or other
provisions in one eligible use category
do not apply to the others. Therefore,
recipients should first determine which
eligible use category a potential use of
fonds fits within. than assess whether
the potential use of funds meets the
eligibility standard or criteria for that
category. In the case of uses to respond
to the public health and negative
economic impacts of the pandemic,
recipients should also determine which
sub -category the eligible use fits within
(i.e., public health, assistance to
households, assistance to small
businesses, assistance to nonprofits, aid
to Impacted industries. or public sector
capacity and workforce), then assess
whether the potential use of funds
meets the eligibility standard for that
subcategory. Treasury does not pre,
approve uses of funds; recipients are
advised to review the final rule and may
pursue eligible projects under it.
In some sections of the rule, Treasury
identifies specific uses of funds that ore
eligible, called "enumerated eligible
uses"; for example, Treasury provides
many enumerated eligible was of funds
to respond to the public health and
negative economic impacts of the
pandemic. Uses of funds that are not
specifically named as eligible in this
4340 Federal Regiater/Vol. 89, No. I8/Thursday, January 27. 2022/Rules and Regulations
final rule may still be eligible in two
indirectly a reduction in at tax revenue
summarizing opinions expressed in
ways. First, under the revenue loss
resulting from a change in state or
public comments. Statements using the
eligible use category, recipients have
territory law.
term "encourage" refer to
broad latitude to use funds for
s For all recipients except Tribal
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
deposits into a pension fund.
potential use of funds that does not fit
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 reserves.
a All recipients must also comply
Bac and
k&'o
can food up to their amount of revenue
will' three general restrictions. First, a
recipient may not use SURF funds for
Since the first case of COVID-19 was
I.... For example, transportation
infrastructure projects are generally
P 1 8 Y
a program, service, or capital
discovered in the United States in
2020. the disease has infected
ineligible as response to the public
expenditure that catolorawith
se
n s the purpose of
contravARPA,
over6omillion and killed ever e00,0o0
over 50
e ve however,economic r impacts
a d pandemic;
ofthepandemic; howevega recipient
ARPA, including A program, s or
Americans.rs The disease --end
necessary measures to respond —have
could fund these projects as a
could P 1
government service up to its amount of
capital expenditure that includes a term
expeturetogmcludes a
or condition that undermines efforts to
had An immense public health and
economic impact on millions of
revenue lass, provided that other
restrictions on use do not apply. See
stop the spread of use S RI Second,
violations may not use SLFRF funds in
Americans across many areas of life, as
detailed below in the respective sections
sections Revenue Loss and Restrictions
on Use for further information. Second,
violation of the conflict-o4interest
requirements contained in the Award
an Public Health and Negative
Economic Impacts. Since the release of
the eligible use category for responding
to the ublic health and ne live
P 8a
Term. suit Conditions, Including any
self -dealing or violation of ethics ruins.
the interim final rule in May 2021, the
country has made major progress
economic impacts of the pandemic
nonexhauses, Bst of
y. recipients should w aware that
Lastly,
federal state, and local laws end
fighting the disease and rebuilding the
g
provides a
enumerated eligible uses, which means
regulations, outside of SURF program
requirements, also apply, including for
economy but faces continued risks, as
illustrated by the spread of the Delta
that the listed t eligible uses include
some, but not all. of the uses of funds
example, environmental laws and
variant and the resulting slowdown in
the economic recovery. The SURF
that could vi eligible. The Eligible Uaee
section
civil rights and
federalnondiscrimination requirements, which
rem, and Treasury's interim final
progrule. )'
P
ingif provides of
determining if other calls of funds,
include rohibitions on discrimination
include prohibitions
P
the basis of vice, color,
rule. provide substantial flexibility to
recipients to res and to andemic
P P
beyond those a specifically nt enumerated,
aaIfs recipient like to
on
al orient
origin,saxde (including ), disability,
identity],
in
impacteyisesignel to help e.
flexibility is designed to help aadop
pursue a use of funds that is net
pursue
specifically enumerated, the recipient
end gender religion,
religion,
age, or familial status (having children
total, and Tribal ernmanmt. adapt to
health
should use the standard and other
under the age of 16)
The Program Administration
lie emergency
the evolving public.
and tailor their respunae as nceds evolve
guidance provided in the section Public
Health and Negative Economic Impacts
Provisions section describes the
and to the particular local needs of their
to asaeas whether the use of funds is
Processes and requirements for
communities.
eligible.
administering the program on an
Indeed, state, local, and Tribal
Neal, the Restrictions on Use section
ongoing basis, specifically as relates to
governments face continued ounce to
describes limitations on how funds may
the following: Distribution of funds,
respond at at. to the public health
be used. Treasury has divided the
timeline for using funds, transfer of
emergency. This includes continued
Restriction on Use section into (A)
funds from a recipient to different
public health efforts to slow the spread
statutory restrictions under the ARPA,
organizations. use of funds for program
of the disease, to increase vaccination
which include (1) effecting a reduction
administration, reporting on use of
rates and provide vaccinations to new
in net tax revenue, and (2) deposits into
funds, and remedial on and mcoupment
populations ea they become eligible, to
pension funds, and (B) other restrictions
o! funds used for ineligible purposes. Of
protect individuals living in congregate
on use, which include (1) debt service
note, SURF funds may only be used for
facilities, and to address the broader
and replenishing reserves, (2)
costs incurred within a specific time
impacts of the pandemic on public
Settlements and judgments, and (3)
period, beginning March 3, 2021, with
health. Similarly, while a strong
general restrictions. These restrictions
ell funds abligace ted by Dember 3 1,
economic recovery is underway, the
apply to all eligible use categories;
2024 and all funds spent by December
economy remains 3.9 million jobs below
however, some restrictions apply only
31, 2026. Recipients are advised to also
its pre -pandemic level, pointing to the
to certain types of recipient
consult Treasury's Reporting and
continued need for response efforts,
govarmnents, and recipients are advised
Compliance Guidance for additional
with low-income workers and
to review the f 1 rule to determine
information on program administration
communities of color facing elevated
which restrictions apply to their type of
processes and requirements, including
vitas of unemployment and economic
government fog., state, territory, Tribal
appplicabilityy of the Uniform Guidance.
hardship.13 Lang -standing disparities in
government, county, metropolitan city,
Fhardly, lha section Regulatory
health and economic outcomes in
or re entitlement unit of government).
Analyses provides Treasury's analysis of
To reiterate, for recipient governments
the impacts of this rulemaking, as
, ales yrpiso..a �ntivl and rma,.um.
covered by a specific restriction, that
required by several laws,regulations,
covm Dnn Trwwke, hhpY1w comd.Mcgw/
restriction applies to all eligible use
categories slid any use of funds under
and Executive Orden.
Throughout this Supplementary
avid rem -arks Adamtwrhenhomstics voile
li.sebar at, mvl.
the SIPRF am. Specifically:
Pro&'Tool
Information, statements using the terms
U.S.11 ouesv of labs stnuano. An Eeplopm.
Nonfarm l➢AY®Aal hnpa�1omai.
s Far Sunni and territories only, funds
"should" or "must" refer to
91nn fadmg/un diAYBMS (lee vianed
may not be used to offset directly or
requirements, except when used in
Dexater z zszrl.
Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4341
inilerearved+e communities, that
amplified and exacerbated the impacts
of 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
communities, these governments are
also confronting the need to rebuild
their own capacity. Facing severe
budget challenges during the pandemic,
many state, local, and Tribal
governments have been forced to make
cuts to services or their workferces,
including cutting over 1.5 million jobs
from Fableary to May 2020, or data,
state, local, and bibs] government
employment remained over 950,000 jobs
below pre -pandemic levels.'s he the
recovery from the Great Recession, cuts
to state, local, end Tribal governments
became a meaningful drag on economic
growth for several yews, and the SI.FRF
program provides the resources needed
to re -invest in vital public services and
workers to avoid this outcome.'"
1. General Provisions: Structure and
Standards
Background: Sections 602(c)(1)(A)
and 603(c)(lfA) of the Social Security
Act establish that recipients may use
funds "to respond to the Dublin health
small bustmeass, and on afire, or aid
to impacted industries such as tourism,
travel, and hogpitality." The interim
Real rule established three categories
within this eligible use: (1) Public
health responges for those impacted by
the pandemic, including the general
public: (2) responses to the negative
economic impacts that were
experienced by those impacted as a
result of the pandemic; and (3)
additional services, either as a public
health response or a response to the
negative economic impacts of the
mIr
^'fieryCordon.State othrs olonie. Budgo. and Ue
crave aem,eiaq amutlngw rneiitueon mac it,
2mrl,lrtryrvand the one-ove srog. NwlnreaM
bmlLodgtsond Uegreor�rece„ion.
pandemic, for disproportionately
impacted communities.
The interim final rule established the
method to determine which specific
programs or services may be eligible to
respond to the public health emergency
or to respond to the negative economic
impacts of the public health emergency
within this framework. The interim fins]
rule included multiple enumerated uses
that are eligible within each of these
categories when provided to eligible
populations, including populations that
the interim final rule presumed to have
been impacted (in the case of public
health responses and responses to
under this category, the recipient should
seems whether, and the extant to which,
there has been an economic harm, such
as loss of warnings or revenue, that
resulted from the COV10.19 public
health emergency and whether, and the
extent to which, the use would respond
to or address this hem, 17 A recipient
should first consider whether an
economic harm exists and whether this
harm was caused or made wrong by the
COVE) I9 public health emergency."
The interim final role went on to say
that: "In addition, the eligible use must
respond to' the identified negative
economic im ct n^^^^^^^^— -•
pit
related and reaor.
the case the extent and ivo
impacted or disproportionately
impacted. The standards for each of
these criteria under the interim final
role are discussed below.
To assess, whether a program or
service would be eligible to respond to
the public health emergency or its
negative economic impacts, the interim
final role stated that, "the recipient Ifs
required] to, first, identify a need or
negative impact of the COVID-19 public
health emergency and, second, identify
how the program, service, or other
Intervention addresses the identified
used or impact I . . . . I IElligible uses
under this category must be in response
to the disease itself or the harmful
consequences of the economic
disruptions resulting from or
exacerbated by the COVI0.19 public
health emergency." The enumerated
eligible uses ware presumed to meet this
criterion.
With respect to uses not specifically
enumerated in the interim final rule as
eligible public health responses, the
interim final rule stated that, "plo assess
whether additional uses would I.
eligible under this category, recipients
should identify an -Reel of COVID-19
on public health, including either or
both of immediate affects 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
enumeratod in the interim foal rule as
eligible responses to a negative
economic impact of the public health
emergency, the interim final rule stated
that "lelligible, uses that respond to the
negative economic impacts of the public
health emergency most be designed to
address an gmo fr c hero resulting
from or exacerbated by the pubhc health
emergency. In considering whether a
program or service would be eligible
Throughout this final role. Towb ury
reface to households. communities,
small businesses, nonprofits, and
Industries that experienced public
health or negative economic impacts of
the pandemic as "impacted." The first
section in the interim final rule under
this eligible use category included
public health responses for these
impacted classes. The second category
in the interim final rule order this
eligible use category included responses
to the negative economic impacts that
were experienced by these impacted
classes as a result of the padem nic.
The interim final rule further
recognized that certain populations
have experienced 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 role
recognized that the negative economic
effects of the pandemic were
particularly pronounced among lower -
income families, who were more likely
ce to experienincome loss and more
likely to have a jab that required m-
person work. The interim final rule
recognized the role ofpre-existing social
vulnerabilities and disparities in driving
the disparate health and economic
outcomes and presumed that programs
designed to addresa these health or
economic disparitee 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
"in woos arms. a „n may be pinterstate ado,
mother eligible us, nwxgo ,even if it ins sonde
the awls, of sadion is WIM of anion am and con
afo. yodel Sewriry AM
4342 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
presumed to be disproportionately
impacted, it also empowered recipients
to identify other disproportionately
impacted households, population,
communities, or small businesses. The
interim final rule provided that, in
identifying these disproportionately
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
fine phic areas to be aervad.
Throughout this final rule, Treasury
refs. to those 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 role under this eligible use
included public health responses and
responses to the negative economic
impacts for these disproportionately
ionp�end classes.
The interim final rule provided
significant flexibility for recipients to
determine which households,
populations, communities, or small
businesses have been impacted and/or
disproportionately impacted by the
pandemic and to identify appropriate
espoases. The interim final rate
included several provisions to provide
simple methods for recipients to
identify impacts and design programs to
address these impacts. First, the interim
fund rule allowed recipients to
demonstrate a net economic
impact on a population or class and
provide assistance to households or
small businesses that fall within that
population or class. In such cases, the
m 'pienl need only demonstrate that an
individual household or business is
within the class that experienced a
negative economic impact, rather than
requiring a recipient to demonstrate that
each individual household or small
business experienced a negative
economic impact, because the impact
was ahaedy, identified for the class.
Second, in the interim final rule,
Treasury presumed that certain
populations have been impacted or
disproportionately impacted and am
thus eligible for services that respond to
these impacts or disproportionate
impacts. Specifically, the interim final
rule permitted recipients to presume
that households that experienced
unemployment, increased food or
housing insecurity, or are low- or
moderstaincome experienced a
negative economic impact from the
pandemic. The interim final rate also
permitted recipients to presume that
certain services provided in Qualified
Ceases Trecis (QCr.), to individuals
living in QGfs, or by Tribal
governments are responsive to
disproportionate impacts of the
pandemic. 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, as well as
other populations, households, or
geographic sees that are
disproportionately impacted by the
pandemic.
Third, mentioned previously, the
interim final
al role included a non-
exhTreasury i eat of fled as of funds that
Treasury identified as responsive to the
impacts or disproportionate impacts of
the pandemic.Treasury esto these
as " us
enumerated eligible uses."
To summarize, the interim final rule
identified certain populations that are
impact) and populations that are
presumed to be disproportionately
impacted by the pandemic (and specific
eaumemled uses of funds that are
responsive to those disproportionate
impacts). In addition, the interim final
rate provided standards for recipients to
assess whether additional uses of funds,
beyond the enumerated eligible uses.
are eligible for impacted and
disproportionately impacted
populations and permitted recipients to
identify other households or classes that
experienced impacts of the pandemic in
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 rule to be
confusing or difficult to navigate. Other
commenters indicated that they
understood the enumerated uses to be
the only eligible uses settler the
presumed eligible populations to be the
only eligible populations. Several
commenters expressed frustration about
the number of eligible uses specifically
enumerated in the interim Beal rule,
which they considered we few, and
commenters proposed a wide range of
additional enumerated eligible uses (for
further discussion, see the section
Public Health and section Negative
Economic Mpacts). Commenters
expressed concern with pursuing uses of funds not explicitly enumerated in
the eligible use section or uncertainty
regarding the broad Flexibility provided
under the interim final rule to pursue
additional programs that respond to the
public health or negative economic
impacts of the pandemic or the process
for doing a..
Treasury Response: 'Treasury
recognizes that many commenters felt
the structure of the interim final role
could be clarified. These comments are
that Treasury has received from
recipients, which requested clarification
regarding the category their desired
response fits into, Treasury observes
that these comments and questions
i enerelly fall into feu rstegmies: (1)
how to taennty wiles a particular use
is eligible, (3) how to identify an
impacted or disproportionately
impacted class, and (4) whether an
enumerated use can be provided to a
class other than those presumed
impacted or disproportionately
impacted. In response to comments,
Treasury is adjusting the structure of the
public health and negative economic
impacts eligible um section of the final
rule to improve clarity and make it
easier for recipients to hourp st and
apply the final rule.
Specifically, Treasury is restructuring
the rule to aid recipients in determining
whether a particular map.. is eligible
and how the particular reapp nse might
be eligible under a particular category.
This restructuring reinforces the
fundamental criteria that a use of fund.
is eligible based on its responsiveness to
, small
or imp.
rule easier to navigate and to
implement, including any or
conditions on particular user
to clarify the enumerated eligible uses
described in the interim final rele. The
reorganization Itself is not intended to
closings the scope of the enumerated
uses that were included in the interim
final rule or that were allowable ruder
the interim final rule. In some cases,
specific enumerated uses are being
altered, and those changes are discussed
•e use reel moan baeineeee, mnpmete, end
InduAnee may elw function ee auheedple m. Fel.
addiunnd infamuEau an there distinctions me
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amendm,ee
Federal Register/Vol. 87, No. I8/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 are 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)
C0VR-19 mitigation and prevention,
(2) medical expenses, (3) behavioral
health care, and (4) preventing and
responding to violence. Under this
approach, eligible uses to respond to the
negative economic impacts of the public
health emegency am organized based
on the type of beneficiary: (1) Assistance
to households, (2) assistance to small
businesses, and (3) assistance to
nonprofits, alongside a fourth
standalone eligibility category for aid to
travel, tourism, hospitality, and other
impacted industries. The first these
categories, assistance to households,
small businesses, and 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 funds
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 a use of funds,
beyond those specifically enumerated as
eligible, might be en eligible public
health response. For example, many
commenters submitted questions asking
whether specific uses of funds 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. For example, a
commenter requested more clarification
around exactly what and whose medical
expenses can be covered. These
comments ranged in their specificity
and covered the full range of the
enumersted eligible uses.
Treasury Response: Treasury is
clarifying that when asses dng whether
a program or service is an eligible use
to respond to the public health impacts
of the COVID-19 public health
emergency, the Department will
consider the two eligibility
re immusents discussed below. These
standards apply to all proposed public
health uses.
First, there must be a negative public
health impact or harm experienced by
an individual or a class. For ease of
administration, the interim final rule
allowed, and the final rule maintains
the ability for, recipients to identify a
public health impact on a population or
group of individuals, referred leas e
"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 are
addromad by providing prevention and
mitigation services, such a class could
reasonably include tie general public.
Second, the program, service, or other
intervention must address or respond to
the identified impact or berm. The final
rule maintains the interim Real We
requirement that eligible uses under this
category must be in response to the
dieeaze itself ur other public health
berms 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 must also be related and
reasonably proportional to the extant
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.
Reasonably proportional refers to the
scale of the response compared 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. In evaluating whether a
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, cost, cosl-
efibetionem, and time to delivery of the
respponse.
IEa recipient intends to fund capital
expenditures in response to the public
health impede of the pandemic,
re
cipients should refer to the section
Capital
l Expenditures far details shout
the eligibility of capital expenditures.
Standards: Designating a Negative
Economic Impact
Public Comment: Many commenters
expressed uncertainty about how to
determine whether uses of funds,
beyond these specifically enumerated as
eligible, might be eligible responses to
negative economic impacts. For
example, many commenters submitted
questions asking whether specific uses
f funds would be eligible. Others
described what they co lidenad 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 addidonal detail m 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 commenters
asked for clarification about what types
of food assistance would be considered
eligible. Another commenter requested
that the establishment of outdoor dining
be eligible. Many commenters inquired
about homeless shelters as an eligible
use of SLFRF funds.
Commenters also expressed
uncertainty about the ability to establish
classes, including geographic aaas, that
experienced a negative economic import
or disagreed with the requirement that
an individual entity be impacted by the
pandemic in order to receive assistance.
For exempla, a commenter argued that
interventions should not be limited to
individuals or businesses that
experienced an economic Impact and
should instead be usad broadly to
support economic growth. These
commenters argued that an expenditure
that sugorts a mom robust economy
may he p 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 impact during the pandemic.
Treasury Response: The final Is
maintains the standard articulated in
4399 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
the interim final Dole. For clarity, the
final rele er-artimdatee that when
assessing whether a program or service
is an eligible use to respond to the
negative economic impacts of the
COVID-19 public health emergency,
Treasury will consider the two
eligibility requirements discussed
below.
First, there meat 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 has been
an ec000mlc harm, such as loss of
earnings or revenue, Uninhibited from
the COVID-19 public health emergency.
A recipient should first consider
whether an economic harm exists and
than whether this harm was mused or
made worse by the COVM -19 public
health emergency Phis approach is
let.
with the text of the atatem,
whichro pvides that funds in this
category must be used to "respond to
the public health emergency with
respect W. its negative economic
r am 1"
While economic impacts may either
be immediate or delayed, individuals or
classes that did net 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 ar housing insecurity, or ere low -
or moderetalocome experienced a
negative economic impact from the
pandemic. For discussion of the final
rule'. approach to this presumption, see
section Populations Presumed Eligible.
The final role 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 harm. For example, the interim final
demonstrate
impact on e
referred to a,
assistance be
need only demonstrate that the
household, small business, or nonprofit
is within the class that experienced a
negative economic impact, see section
Standards: Designating Other impacted
Classes. This would allow, for example,
an iniernet access assistance program
for all households with children to
support those households' ability to
participate in healthcare, work, and
educational activities like extending
learning opportunities, among other
critical activities. In that cese, the
recipient would only need to identify is
negative economic impact to the class of
"households with children" and would
not need to document or otherwise
demonstrate that each individual
household served experienced a
negative economic impact.
Second, the response must be
designed to address the identified
economic harm or impact resulting from
emergency. In selecting resposes n, the
recipient must assess whether, and the
extent 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
"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
be..ficialies (e.g., households or small
businesses).
Responses must be reasonably
designed to benefit the individual or
clew that experienced the negative
economic impact or he. 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
as erlenced by that benefrciary.2n
Responses must also be related and
reasonably proportional to the extent
and type of harm experienced; uses that
bear no relation or ere grossly
disproportionate to the type or extent of
harm experienced would not be eligible
uses.'' Reasonably proportional refers
to the scale of the response compared 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 be
reasonably proportional for a cash
assistance program to provide assistance
in a very small amount to a group that
"For example, egmnew such as enoweve
wmpetrese. to emph ve, z.,wnxe which
have ninety been mbnbenad chorale another
federal proamm, ma Dot reneonnmy dmianad to
nddces-,fieeewnomo versus roe
Ise—idery.
r' Far exmnpre, a poamm or suvi. that imposes
candisimm me pi.mdlennn m ar.aceplance of flu
xevlm that would undermine votes 1. slap the
spread of LOVm-m m deramn5a atoplianm with
pnpmn In line with cot auimnce for arappiy
the spews of CXI0 in out n permissible um of
funds.
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm. In
evaluating whether a 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, cost, cost-effectiveness, and
time to delivery of the response.
Finally, recipients should be aware of
the distinction between beneficiaries of
through subleciplents that did not
experience a negative economic impact,
see section Distinguishing Subracipiems
versus Eanefirieries. That is, a recipient
may award SLFRF funds to an entity
that did net 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, small businesses,
nonprofits, or impacted industries that
did experience a public health or
negative economic impost.
Determining the Appropriate Eligible
Use Category
Public Coat .t: Some commitments
expressed uncertainty about how to
analyze negative economic impacts to
different entities (e.g., households, small
businesses, nonprofits). For example,
commentere asked whether is nonprofit,
which did not experience a neggative
economic impact itself, could he 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 Crete more job
opportunities for unemployed workers
who experienced negative economic
ausumppacts.
r Treasury
Responses that
the recipnalients
role,
Treasury is clarifying than recipients
should assess a potential use of funds
based on which beneficiary, experienced
the negative economic impact, in other
words,the ses, nonprofits,
small
businesses, non xparie or impacted
industries that experienced the negative
economic impact.
Treasury notes [het recipients may
award SLFRF funds to many different
types of organizations to carry out
eligible uses of in title 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 Subrecipient
versus a Beneficiary). Far example, A
recipient may grant funds to a nonprofit
organization to provide food assistance
(an eligible use) to low-income
households (the beneficiaries).
Recipients only need to assess whether
the benefclaries experienced a negative
economic impact and whether the
eligible use respands to that impact,
consistent with the two-part framework
described above; the organization
carrying out the eligible nse does not
need to have experienced a negative
economic impact if it is serving as the
vehicle for reaching the beneficiaries.
When making determinations about
how to implement A program, recipients
should consider whether that method of
program implementation is an effective
and efficient method to implement the
program and do so in accordance with
the Uniform Guidance previsions that
govern procurements and sub-grantlng
of federal funds, as applicable.
As noted above, recipients should
analyze eligible ua. based on the
beneficiary of the assistance or the
entity that experienced a negative
economic impact. Assistance to A small
business or to an impacted industry
must respond to a negative economic
impact experienced by that small
business or industry. Recipients may
not provide assistance to small
businesses or 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
example, a recipient could provide
assistance to households via A contract
with A business to create subsidized jobs
for the long-term unemployed; in this
case the business is A subeecipiant and
need not have m nedenced A negative
connection between the assistance
provided and addressing the negative
economic finpact experienced by the
unemployed households. The recipient
could, for instance, document the
subsidised jobs created under the
contract and their reservation far 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 easy use those funds in
many ways, potentially including hiring
or retaining 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 far
,,.employed workers would 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
atlatersh d from and thus not reasonably
designed to benefit the households that
experienced the negative economic
presumed to be impacted by the
pandemic.
Treasury Response: The final rule
maintains the presumpptions identified
in the interim final ale 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 law- and moderate -income
based an thresholds eateblished end
used in other federal programs.
Definitions. The final rule defines A
household as low income if it has (i)
income at or below 185 percent of the
Federal Poverty Guidelines (FPGI for the
sere of its household based an the most
recently published poverty guidelines
by the Department of Health and Human
Services (HHS) or (it) income at or
below 40 percent of the Area Median
impact.
Income (AM II (or its county and size of
It. Populations Presumed Eligible
household based on the mast recently
published data by the Department of
Presumed Eligibility: Impacted and
Housing and Urban Development
Disproportionately Impeded
Households and Communities
(HIID].aa
The final rule defines a household as
Background: As noted shave, the
interim final role 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
Deal rate, 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
Impede resulting from the pandemic,
and recipients may provide services that
respond to these impacts.
The interim final rule also recognized
thaI
preexisting health, economic, and
social disparities contributed to
disprapar irate pandemic impacts in
certain communities soil allowed for a
broader list of enumerated eligible uses
to respond to the pandemic in
disproportionately impacted
communities. Under the interim final
rule, reripieats were allowed to
presume that families welding in QCTs
or receiving services provided by Tribal
governments were disproportionately
impeded by the pandemic.
Definition of Low- and Moderate.
Income
Public Command: As noted earlier,
many commenters sought a definition
for olow- and moderate -income" to
provide recipients greater clarity on
which specific households could be
e at
for the
runty and
the most
HUD.-
-A whether to
For
Internet access, A childcare p ogram)
may measure income at the household
level. Recipients providing a service
that reaches a general geographic area
(e.g., a park) may measure median
income of that area.
Further, recipients should generally
use the income threshold for the else of
the household to he served (e.g., when
providing childcare to A household of
five, recipients should reference the
income threshold far A household of
five); however, reelp"ous may use the
income threshold for A default
household size of throe if providing
to Ahn Is oleo A. refm,ed coo as median bratty
in me fpr tM nw. Since AM le ryoonymoea with
ow warm and need more wersty, the had mic
mime to AMi.
21 Fee the six New Ireland ashma of;wmacMmt.
Maine. Mumdemante. New Hampshire. abode
Gland, and Vloome, HUD pmvldee AM fin towns
rather IMn cammea. Awpienn in them melee
Avoid oae the AM a,moepoeding to one, man
when donations flowholds far bath low and
modanelncome.
4346 Federal Rooter/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
services that reach a general geographic
area or if doing 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 serve ll.
Note that recipients can also identify
and serve other classes of households
that experienced negative economic
impacts or disproportionate impacts
Force the pandemic; recipients can
identify these classes based on their
income levels, including above the
levels deffmd as low- and moderate -
income in the final rule. For example,
a recipient may identify that homehold.
in their community with incomes above
the final rule threshold for low-income
nevertheless experienced
itisprope rtionste impetus from the
pandemic suit provide omponaive
servima. See section General Provisions
Standards for Identifying Other Eligible
Populations for details on applicable
standards.
Applicable levels. For reference, the
FPG is commonly refereed to as the
federal poverty level (FPLI and is
related to- although distinct from —the
U.S. Census Bureau's poverty threshold
The final rule uses the FPG when
referring specifically to the HFIS
guidelines, as these are the quantitative
metrics used for determining low -and
readerate-income households.
The FPG by household site for 2021
is included in the table below.
Recipients should refer to IRIS Poverty
2021 FEDERAL POVERFV GUIDEUNES
Guidelines for this information, which
is updated annually and available on
the HHS webeite.24 For calculating the
th1'esholds of 40 percent and 65 percent
of AMI, recipients should refer to the
annual HUD Section 8 50 percent
income limits by county and household
size published by HUD and available on
the HUD websile; 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 itmee the 50 percent
income limit �s Finally, for median
income of Census Tracts and other
geographic areas, recipients should refer
to the most recent American
Community Survey 5-year estimates
available through the Census website.26
Household she
se contlgtpus
stems antl Me
Dlstrkl of
Columbia
Als lot
Hawaii
1...................................................................................................................................................
$12,890
$16.000
$14,820
2............................................ ..................... .......... .... ....... .................. ..... ._.......... ..... ...................
17,420
21.770
20.040
3...................................................................................................................................................
21,960
27.450
25260
4.................................................. ............ ..... ........ ......... ................... ...... ............ .........................
26.500
W'Iso
30.480
5................................................................... ._...... ..... ............._....... ........... ................................
31.040
38.810
35.700
B...............................................................................................................................................
35.590
44.490
40.920
7.............. _..................................... ..... _........ _.............. ._..... .._............ ...... ..... .........................
athin
50,170
46.140
8...................... ....................... ..... ........ ....... ............................ ._....... ............................................
M'sage
m,850
51.360
For familita households wits more Men 8 persons, aed Me following amounts for each additional prosaic
48 Contiggmw States and the District of Columbia: $4,540.
Alaska: $5,680.
Patent:$5,220.
Sovion, 'HKS Poverty OWdelines for 2021;' available at nllpsl/asps.tths.govAnpw4povedy-awnomicmaWtlry/paveM9taterfame
Rationale. In defining low income, the
final rule uses both the FPG and AMI I4
account for national tmnds and regional
differences. The metric of 185 percent of
FPG aligns with some other programs;
for instance, 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 se an
indicator of low-income status under
Title 1-A of the Elementary and
Secondary Educed on Act. Eligibility for
other programs, such as the Federal
Communications Commission's a -Rate
nwfmwe at
W.
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 $49,025,
which is approximately the wage
earnings for a two -earner household in
which both eamera receive the median
wage in occupations, such as welfare
and weltresew and hotel clerks, that
were heavily imported by COV10.19.21
This measure is targeted toward these at
the bottom of the income distribution
and thus; help to promote use of SLFRF
funds towards populations with the
greatest needs. At the same time, with
Slate aad Meeop lft n Ara, ovollable a1 Nlpv://
www.nndnaerVvlparralldaMsetsliilil2llaren'
deLniina-1722,pd)
•^The U.S. Gmuus Bortid Stevan proves an intmmMiw
map:US.G atus B... Medial Household
Nmsne Slate SnI,e ion Met,.—hathe at hoard/
dnta.censuxaov/eeda ilsap'/q=MedNn
%2elloumhuld%.hn—aa,,.Uvg a0US
%2Orm0%NucJs M-AC$STv Y20r9. S1Saxon'
SI001 Lb1_012hasam,e4m8 va. The U.S. Ca
aunnu also provides an int ranive table: Us,
Canaus Bmesu. Medan navehold Income In The
Put 12 MonMs 6n 20191nllatinn-A4Nsled Dollar).
approximately one -quarter of Americans
below 185 percent of the poverty
threshold, this approach is broad
enough to facilitate use of SLFRF funds
..as many ju allictions.ul Bramme
regions have different cast and income
Levels, this definition also allow. for
upward adjustment based on AMI for
those regions where 40 percent of AMI
exceeds 185 percent of FPG. The metric
of 40 percent of AMI is based on the
midpoint of values often used to
designate certain categories of low-
income households; specifically, it is
the midpoint of the 30 percent income
limit and the 50 percent income limit
uwilaWeor hap 11threo.eansuxgavhydx'1/MLIe?�
e19a13aad=AG50T5Y2039.61so13anidePieviee-
wr.
++See U.S. Bweeu of Lelms SrnW a.
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hnw://e»w.Ns.gov/oeslnsrrmrt/aes-ire aan Iim
visited Oxambar T. 2mf 1.
"U.S. Grove arueau, PovelYSlalusbY Slate,
anpsllwwwanw.gwldatdmMrttimasariesl
demo
visited /InBacteria,wme.ia,1. u cprPovlpw 984md MasiBacteria,r. 02f1.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4347
used in programs such as the
Community Development Black Grant
(CDBG) 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 emang 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 ocoupalions.30
Moreover, the metric of 300 precool of
FPG covers households that, while
above the poverty line, often lack
economic security.3+ Treasury
determined the AMI threshold for
same ratio
income. This anchors the threshold to
the existing definitions of moderate
income from the literature while taking
into account geographical variation in
income and expenses in the same
manner as the definition of low income
Eligibility Presumptions
Public Comment: Many commenters
believed that a broader range of groups
should be considered presumptively
impacted and disproportionately
impacted, arguing that many
households had bean affected by the
pendemtc and that broader presumed
eligibility would help recipients provide
assistance quickly and effectively.
Treasury also received many
comments on the presumption that
families living in QCrs or receiving
services from Tribal governments were
disproportionately impacted by the
pandemic. While many commenters
supported the interim final ride's
recognition of disproportionate impacts
of the pandemic on low-income
communities, many commenters
disagreed with treating QCrs as the only
presumed eligible group of
d iaproporiionetely impacted
households, apart from households
served by Tribal governments. While
acknowledging a potential increase to
administrative burden, commenters
recommended that Treasury presume
other households or geographic areas, in
addition to QCrs, were
disproportionately impacted;
suggestons included all low- and
moderate -income households,
geographic areas designated as
Opportunity Zones, Difficult
Development Areas (DDAsl areas with
a certain amount of Real Estate
Advantage Program (REAP) recipients,
or use of eligibility miteria from the
Community Reinvestment Al. One
commenter generally recommended that
e clearer definition of
"disproportionately impacted" should
be provided and [ha[ any definition
should include communities elector
and people of limited means. Another
recommended specific eligibility for
People that had reconty interacted with
Tribal
on use of
aggregate population of eligible tracts.
One commenter noted that these areas
should be considered the same as QCrs
for the purpose of SURF funds. Some
commenters e�Bued that rural counties
typically have few QCfs despite high
levels of poverty and disruption caused
by the COVID-19 pandemic Other rural
commenters recommended that the
designation he by county rather than at
a more granular level, arguing that the
QCf 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
Ti that governments respond to
disproportionate impacts.
Treasury Response
Summary: While households residing
in QCrs or served by Tribal
governments were presumed to be
disproportionately impacted, Treasury
emphasizes that under the interim final
rule recipients could also identify other
households, populations, or geographic
mess that were disproportionately
impacted by the pandemic and provide
eervicex to respond.
The final rule maintains the
presumptions identified in the interim
final rule, as well as recipients' ability
to identify other impacted or
disproportionately impacted classes.
The final role also allows recipients to
presume that low-income households
.a d'upropml tionately impacted, and
as discussed above, defines low- end
moderate-memer. Finally, under the
final role recipients may else presume
that households residing m the U.S.
Invited. or receiving services from
territorial governments were
disproportionately impacted.
Households presumed to be impacted:
Impacted households are those that
experienced a public health or negative
economic terpact from the pendemtc.
With regard to public health impacts,
red less may presume that the general
public experienced public health
impacts from the pandemic for the
purposes of providing services for
COVID-19 mitigation and behavioral
health. In other words, recipients may
provide a wide ranee of enumerated
it tens of million;
uts to prevent an,
of the disease are
Further, the stress of the pandemic and
resulting recession have affected nearly
all Americans. Accordingly, the final
rule presumes that the general public
are impacted by and eligible for services
prevention needs, as well as behavioral
health needs.
With regard to negative economic
impacts, as with the interim final rule,
under the final rule 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.
Tha final ride's definition of low- and
to simplify
impacted
is that experienced a
4348 Federal Register/Vol. 87, No. 1.8/Thursday, January 27, 2022/Rules and Regulations
disproportionate, or meaningfully mom
m severe, impact frothe pandemic. As
discussed in the interim final rule, pre-
existing disparities in health and
economic outcomes magnified the
impact of the COVm-19 public health
emergency on certain households and
communities. As with the interim final
.Is, under the final role recipients may
Mpres�ume that households residing in
QCfs or receiving services provided by
Tribal governments were
disproportionately impacted by the
pandemic. In addition, under the final
rule recipients may presume that low-
income households were
disproportionately impacted by the
pandemic. Finally, under the final rule
recipients may also presume that
households residing in the U.S.
territories or receiving services from
territorial governments were
dispproportionately impPacted.
Was eury ncaes that households
presumed to be disproportionately
impacted would also be presumptively
impacted, as these households have not
only experienced pandemic Impacts but
have experienced disproportionate
pandemic impacts; as a result, these
households are presumptively eligible
for responsive services for bath
impacted and disproportionately
impacted houaelsolds.
Many different geographic, income -
based, or poverty -based presumptions
could be used to designate
disproportionately impacted
populations. The combination of
permitting recipients to use QCfa, low-
income bouseholds, aad services
provided by Tribal or territorial
governments as presumptions balances
these varying methods. Specifically,
QCrs are a commonly used designation
of geographic areas based on low
Incomes or high poverty miss of
households in the cemmunity; for
recipients providing gongraphically
targeted service
s, QGTs may provide a
simple metric with readily available
maps for use. However, Treasury
recognizes that QCIs do not reprove all
underserved populations, including for
masons noted by commenters. By
allowing recipients to also presume that
low-income households were
disproportionately imCpaal Died, the fin
role provides greater flexib8ity to serve
underserved households or
com ounities. Date on household
incomes is also readily available at
varying levels of geographic granularity
(e.g., Census Tracts, counties), again
permitting flexibility to adapt to local
circumstances and needs. Finally,
Treasury notes that, as discussed further
below, me! tents may also identify
0ther households, populations. and
communities disproportionately
impacted bythe pandemic, in addition
to those presumed to be
disp -Fort"m tel impacted.
Additionally, Tnbel end territorial
governments may face both
disproportionate impacts of the
pandemic and administrability
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 most
territodea?' as well as a lack of poverty
guidelines developed for these
jurisdictww,a' it may be highly
challenging m assess disproportionate
Impact in these communities according
to an income- or poverty -based
standard. Similarly, data on incomes in
Tribal communities are not readily
available.34 Finally, as described in the
sections on Public Health and Negative
Economic Impacts, Tribal communities
have faced particularly severe health
and economic impacts of the pandemic.
Similarly, available weeerch suggests
that preexisting health and economic
disparities in the territories amplified
the impact of the pandemic on these
communities.'"
Categorical Eligibility
Public Comment: Several commenters
suggested that the final rule permit
recipients to rely on a beneficiary's
eligibility for other federal benefits
programs as an.aily administrable
proxy for identifying a grog 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
administration that can significantly
ease administrative burden on both
program administrators and
beneficiaries.
Treasury Response: Treasury agrees
that allowing reripiente 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 the pandemic, this approach
is also consistent with the process
allowed under the final role far
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 cites. For these reasons,
the final rule recognizes categorical
eligiblI ty for the fol lowing programs
and populations:
• Impacted households. Treasury will
recognize a household as impacted if it
otherwise qualifies for any of the
following programs:
o Children's Health Insurance
Program (CHIP)
o Childcare Subsidies through the
Child Care and Development Fund
(CMF) Program
o Medicaid
o National Housing Trust Fund
(HTF), for affordable housing programs
only
Home Investment Partnerships
Program (HOME), for affordable housing
impacted if it otherwise qualifies for any
of the following programs:
o Temporary Assistance for Needy
Families(TANF)
0 Supplemental Nutrition Assistance
Program (SNAP)
n Free and Reduced -Price Lunch
(NSLP) and/m School Breakfast (SBP)
programs
o Medicare Part D Low-income
Subsidies
o Supplemental Security Income
(SS8
o Head Start and/or Early Head Start
o Special Supplemental Nutrition
&p rom for Women. Infants, and
Children (WIC)
o Section 8 Vouchers
o Low -Income Home Energy
Assistance Program (LIHEAP)
o Pell Grants
o For 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 echoolsw As
likely to be responsive to the harms
interpretive framework discussed above,
disproportionately impacted and
identified. That is,. the group of
including presumptions ofgmup.
responsive services that support the
entities being served by a program has
disproportionately impacted, as well as
school generally or support the whole
a wider set of fact patterns, or the type
the ability to identify other
school as eligible
Of entities, their circumstances, or their
differ
disproportionately impacted
c. Standards for Identifying Other
Eligible Populations
pandemic experencee more
substantiallyy it may be mme difficult to
get
populations, households, or geographies
(referred to here as disproportionately
Standards: Designating Other Impacted
dot.!. the class has actually
experienced the same or similar
fin acted ss acted claes).
As discussed in the interim final rule,
Classes
negative economic impact and that the
in identifying other disproportionately
Public Comment: Treasury received
multiple comments requesting
additimnal clarification about how
classes of impacted individuals may be
designated, as well as questions asking
whether recipients must demonstrate a
specific public health or negative
economic impact to each utility served
(e.g., each household mrsiving
assistance under a program). There were
several comments requesting that
specific geographic designations, like a
county or hoped Zone, be eligible to
use as a determining boundary.
Treasury Response: The interim final
rule allowed, and the final rule
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 beneficiaries included in
sections 602(c)(1)(A) and 603(c)(11(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 each
cases, the recipient used only
demonstrate that the household, small
business, or nonprofit is within the
relevant class. For example, a recipient
could determine that restaurants in the
downtown area had generally
experienced a negative economic impact
and provide assistance to those small
businesses to respond. When providing
this assistance, the recipient would only
need to demonstrate that the small
rea eurants in the downtown area. The
demonstrate that each restaurant served
experienced its own negative economic
impact.
In identifying an impacted class and
responsive program, service, or capital
expenditure, recipients should consider
the relationship between the definition
.fill. class and proposed response.
Larger and less -specific classes are less
likely to have experienced similar
harms and than the responses am less
.e IIde leii ficha schonb mum veFoole eligible to
rwarac yco. undersection Stl30f Ish. 1. not
A of the 8l. .'and Secondary adocolon Act
d aim, as emended(W USG 9313). Iodating
act—]. awed undo sarlbn 1113@In11C of that
Ad
response is appropriately tailored to Impacted classes, recipients should be
address that impact. able to support their determination that
Standard: Designating Other
Disproportionately Impacted Classes
Summary ofhatenm Final Rule: As
noted above, the interim final rule
provided a broad art of enumerated
eligible uses of funds in
disproportionately impacted
communities, including to address pm -
existing disparities that contributed to
more severe pandemic Impacts in these
communities. The interim final rule
presumed that these services are eligible
uses when provided in a QCT, to
families and individuals living in QCT.,
or when these services are provided by
Tribal governments. Recipients may also
provide these services to "other
populations, households. or geographic
areas disproportionately impacted by
the pandemic" and, in identifying these
disproportionately Impacted
commonifim. should be able to ammort
health or economic outcomes to the
groupp identified.
Pir fic Comment: A significant
number of commenters expressed
uncertainty regarding the pr000ss for
determining eligibility for
disproportionately impacted
communities beyond QCTs. A
commander noted that a clearer
definition of"disnronortinnateb
limited means. Some commenters
suggested a template or checklist to sea
if an area meets the standard for
disproportionately impacted
communities outside of QCTs. Some
commenters slated that QCT and non-
QCT beneficiaries should be treated the
soma.
Treasury Response: Under the interim
final rule, presuming eligibility for
services in QCTs, for populations living
in QCTs, and for Tribal governments
was intended to ease administrative
burden, providing a simple path for
recipients to offer services in
undereerved communities, end is not an
exhaustive list of disproportionately
impacted communities. To further
clarify, it,. final hale codifies the
disproportionate public health or
armum is outcomes to the specific
populations, households, or geographic
areas to be served. For example, the
interim final role considered date
regarding the rate of CDVID-I9
infections and deaths in low-income
and socially vulnerable communities,
noting that these communities have
experienced the moat severe health
impacts, compared to national averages.
Similarly, the interim final Is
considered the high concentration of
low-income workers performing
essential work, the reduced ability to
socially distance, and other pre-existing
public health challenges, at of which
correlate with more severe COVII 19
outcomes. The interim final rule also
considered the dismoponfouste
citing, for example, the rate of job
among low -Income persons as cm
to the general population. The int
final Is than identified QCrs, A
common, readily accessible, end
Emigre hically granulm method o
identifying communities with a If
1n other words, the interim final rule
identified disproportionately impacted
papulatimlls by assessing the impacts of
the pandemic and finding that some
populations experienced meaningfully
more severe impacts than 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 the pandemic in
their local area, state, or nationally.
Recipients may identify rimses of
households, communities, small
businesses, nonprofits, or populations
that have experienced a
disproportionate impact based on
academic ressan:h or government
research publications, through analysis
of their awn 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. 18/Thursday, January 27, 2022/Rules and Regulations
feedback ftom relevant state and local
agencies, such as public health
departments or social services
departments. In both came. recipients
should consider the quality of the
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 then 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., aurvey data on
levels dissident support for various
potential resporues) is not a substitute
for an assessment of the impact
experienced by a particular class. Data
about the appropriateness or desirability
of a response may be used W assess the
ro nftmibluva a 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 ease of novel
cornerstone 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 services have seen
significant influxes of patients; response
personnel have faced shortages of
congregate living facilities like nursing
homes have seen rapid spread.
Since the initial wave of the COVIDY
19 pandemic, the United Sale , has
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
wave throughout fall and winter 2020
impacted communities in almost every
region of the country as the virus
reached a point of uncontrolled spread
and over 3,000 people died per day due
to COVID-19.se
•r Pro Hole".. Gnlme an Di —Control and
Pwontion. First Tmvcbmldr Gee of 2019 NWd
Caronavwe (Tadao m UKRW state. flan. 21.
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edVm on. Tnid., T... ds in Nembee or COV10.
In December 2020. the Food and Drug
Administration (FDA) authorized
COVID-19 vaccines for emergency as,
and wan thereafter, maa. vaccination in
the United States began. At the time of
the interim final role publication in May
2021, the number of daily new
infections was steeply declining as
rapid vaccination campaigns progressed
across the country. By summer 2021,
COVID-19 cases had fallen to then
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 SARSCoV-2 virus, sparked yet
another surge. From June to early
September, the seven-day moving
average of reported cases rose from
12,000 to 185,000se
As of December 2021, COVID-19 in
total has infected over 50 million and
killed over 800,000 Americans. -
Preventing and mitigating the spread of
COV[0.19 continues to require a major
public health response from federal,
State, local, and Tribal government..
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 dow, with
more than 470 million total dome
administered.'' Additionally, more than
15 culture children over the age of 12
have mceived at least one dose of the
vaccine and over 47 million people have
received a booster dose.4z 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
00VID3 19 mitigation strategies will be
a critical component of the public
health response.
In sally 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
19 Gee and OnNn In on, US anpoded to CDC,
by Statenemtory, hmysd1 ovid.edc.ov1nn,*1am-
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newnber 7.2091).
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ri,
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
needs.41 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.44
State, local, and Tribal governments
have also continued W execute other
aspects of s wide-ranging public health
responm, including increasing access to
COVID-19 testing and rapid at-home
tests, contact tracing, support for
individuals in isolation or quarantine,
enforcement of public health orders,
new public communication efforts,
public health surveillance (e.g.,
monitoring case trends and gam mic
sequencing for variants), enhancement
to health care capacity through
alternative care facilities, and
enhancement of public health data
systems to meet new demands or scaling
needs.
State, local. and Tribal governments
have also supported major efforts to
Prevent COVID-19 spread through
safety measures at key settings like
Imrsing homes, schools, congregate
living acttings, dense worksites,
incarceration settings, end in other
public facilities. This less Included, for
example, implementing infection
prevention measures or making
ventilation improvements.
In particular, state, local, and Tribal
governments have mounted significant
efforts to safely reopen Schools. A key
factor in school molesting is the ability
to implement COVID-19 mitigation
other
air
and a number of other meesums.4+ 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 COVJD-19 in
achoals. Those investments include the
increasing school nurses and social
Federal Register/Vol. 87, No. 18/Thureday, January 27, 2022/Rules and Regulations 4351
workers, improved ventilation systems,
and other health and safely measures.
The need for public health measures
to respond to C0V10.19 will continue
moving forward, This includes the
continuation of vaccination campaigns
for the general public, booster doses,
and children. This also includes
monitoring the spread of COVI0.19
variants, understanding the impact of
Pass
variants, developing eppproeclue I.
respond, and monitoring global COVID-
19 trends. Finally, the long-term health
impact. of COVI0.19 will continue to
require A public health response,
including medical services for
individuals with "long COVID " and
research to understand how C0VI0.19
impacts future health needs and raises
risks for the tens, of millions of
Americana who have been infected.
The COVID-19 pandemic also
negatively impacted other areas of
public health, particularly mental health
and substance use, In January 2021. over
40 percent of American adults reported
symptoms of depression or anxiety, up
from 11 percent to the first half of
2019.4e The mental health impacts of
the pandemic have been particularly
acute for adults ages 18 W 24, facial and
ethnic minorities, wregivara for adults,
and essential worker., wtth all reporting
significantly higher rates of considering
suidde.47 The proportion of children's
emergency department visits related to
mental health has also risen
noticeably.411 Similarly, rates of
substance use and overdose deaths have
spiked: preliminary data from the CDC
how a nearly 30 percent increase in
drug overdose mortality from April 2020
to April 2021, bringing the estimated
overdose death tall for a 12-month
period over 100,000 for the first time
ever.`° The CDC also found that ]3
percent of adults started or increased
"Mmorder Panclul at al., The Implieraw s of
COV10.1e for Mental.11h end Substance Abuse
IFnb. 10, IDa,), htlpsl/wwwYfJargkwonrner—
'dtuil ease-W:a//@simplimsimaa}mmAxa
foram rial-heaNh end-aubamrta sae/Y:-.rexl=
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cast m al., Mental neaps. Subs'tmce Abuse, and
Sudtldel lderaden pods, COVl0.19 Pmdmnio—
Untied Some. June 2 O 2020, Most. Moral.
Wed, mrP 601321: 3(m9o7 lung. 14, 2020). h0p$Y1
.Negev/mmwr/valumee/69/wN
mmfeceen.A.
Id.
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0ad, Is, Department Worml Vibe Amm,g Qlldrwr
Ages Ae vum Wdng N. COVmPud.mio-
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ManeLWkly.Rep .el.In to nee e/sWo3, 30201.
M1npe:/iwww.arkaw/mmwrholumaelae/Del
can Center
t r fusee PreueMf a and vamona,
MR, Crl Cnntm tar h Courts,
ts, hatin, Provo cao,
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MAY a Demmber e. zoxv.
substance use to cope with stress related
to COVID-19 and 28 percent reported
having symptoms of trauma- and
stresaorrelated disorder (TRSEq related
to the pandemie.so
Another public health challenge
exacerbated by the pandemic was
violent crime and gun violence, which
increased during the pandemic and has
disproportionately imported low-
income commemitfes." According to
the Federal Bureau of Investigation
(FBI), although the property crime rate
fell 8 percent in 2020, the violent creme
one increased 0 percent in 2020
compared to 2019 data.°' In particular,
the estimated number of aggravated
oaseoil offenses rose l2 percent. while
murder and manslaughter increased 30
percent firm 2019 to 2020.as The
proportion of homicides committed
with firearms rose from 73 percent in
2019 to 78 percent in 2020.e4 Exposure
to violence can create serious short-term
and long-term harmful affects to health
and development, and repeated
exposure to violence may be connected
to negative health outcomes.es
Addressing community violence es A
public health issue may help prevent
and even reduce additional harm to
individual., households, and
communities.
Many communities are using SLFRF
funds to invest in holistic approaches in
violence prevention that are rooted in
targeted outreach and addressing root
.a.. For example, the City mist.
Louis is planning to invest in expanding
a "community respponder" model
designed to provtde clinical help and to
divert non-violent calls away from the
police department. Additionally, the
city will expand acmes to mental health
services, allowing residents to seek
support at city recreation centers,
e°Pnmend. outer mle ea; Mark 9, MovInrel at,
supmnotew.
o The white Drum, FACT SneFP; More "Rolle
An the Bider -Harris Administrator's treatments
in CmmmNty Violeuelnmmntiam (gpol ].
xOxxl, httprl/umw.wbifuhouse.grv/bdefingmwn/
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Violence gpldamic QAmc6 xore), httpel/gigaNa.
mentuna a-forCcearpef. 9/OVHevling-
CdainpdJ.
libraries, and other public spaces."'
Similarly, Los Angeles County will
further invest in its "Care First, Jails
Last' program which seeks to replace
"arrest and incarceration" responses
with health interventionsse
While the pandemic affected
communities across the country, it
disproportionately impacted some
demographic groups and exacerbated
health inequities along racial, ethnic,
and socioeconomic lines.'" The CDC
has found that racial and ethnic
minorities are at increased risk for
infection, hospitalisation, and death
from COVID1 19, with Hispanic or
Latino and Native American or Alaska
Native patients at highest risken
Similarly, low-income and socially
vulnerable communities have seen the
most severe health impacts. For
example, counties with high poverty
rates also have the highest rates of
infection. and deaths, with 308 deaths
per 100.000 compared to the U.S.
average of 238 deaths par f00,000, as of
December 2021.81 Counties with high
social vulnerability, as measured by
factors such as poverty and educational
attainment, have also fared more poorly
then the national average, with 325
deaths par 100,000 as of December
2021?r Over the course of the
wol C ntm for Disease Control and Preaenem,
COVID MI. Ter.km Tvndx it MRIEDI8 Came
and
and DmIh.In It.
holadw
c,mmum
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 COVIO-l9 infections,
mina than triple the rate of
hosphalirations, end more than double
the death ]rote compared to White
Amedcans.aa Low-income and minority
communities also exhibit higher rates of
pre-existing conditions that may
contribute to an incrossed risk of
COVI0.19 martality.ss In addition,
individuals living in low-income
communities may have had mane
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 face greater risk of exposure.°°
Social distancing measures in
,..an. to the nandem is may have also
time at
levels
contributed to more severe public healt
outcomes of the pandemic within these
communities, resulting in an
exacerbation of pre-a<uting dispariliw
in health outcune.gr
Vulneraliiliry Index, Mips://cwid.Negav/mad
dma-trmler/apa,,-famonjam/dmtds Ilea vbad
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gen vLRed ceremAv r. Vol).eal.
Summary of the Interim Final Rule
Approach to Public Ilealth
Summary: As discussed above, the
interim final rule provided flexibility for
recipients to pursue a wide range of
eligible uses to "respond to" the
COVID-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 other impacts of the
pandemic on public health. The interim
final rule implemented these provisions
by identifying a non-isdim ative list of
programs or services that may be funded
as responding to COVI0.19
("enumerated eligible uses"), along with
considerations for evaluating other
potential uses of funds not explicitly
listed. Enumerated eligible uses are
discussed below. Far guidance on how
to determine whether a particular use is
allowable, beyond those enumerated,
sae section Standards: Identifying a
Public Health Impact.
Enumerated eligible uses under this
section built and expanded upon
permissible expenditures under the
Coronavirus Relief Fund; far clarity, the
interim final rule expressly listed as
eligible uses the ism permissible under
the Caronavirus Relief Fund, with
minor exceptions.- The interim fiml
rule also recognised that the nature of
the COV10.19 public health emergency,
and responsive policy mmsures,
programs• and services, had changed
over time and is expected to continue
evolving.
The interim final rule categorized
numerated eligible uses to respond to
the public health emergency into several
categories: (1) COVID-19 mitigation and
prevention, (2) medical expenses, (3)
behavioral helth rare, (c) public health
and safety staff, (5) expenses to improve
the design and execution of health and
public health programs, and (6) eligible
uses to address disparities in public
health micomse. For each category in
turn, this section describes public
comments received and Treasury's
response, m well as comments received
proposing additional enumerated
al i bleuses*
eorganfzoames andCmss-
References: In some cases, enumerated
eligible uses included in the interim
final rule under responding to the
public health emergency have been re.
categorized in the organization of the
final rule to enhance clarity. For
discussion of eligible uses for public
health and safety staff and to imrove
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
Imp ds.
Canvemely, discussion of eligible
assistance to .all businesses and
nonprofits to respond to public health
impacts has been moved from
Assistance to Small Businesses end
Assistance to Nonprofits in Negative
Economic Impacts to this section. This
change is consistent with the interim
final rule, which provides that
appropriate responses to address the
public health impacts of COVID -19 may
be provided to any type of entity.
a. COVM-19 Mitigation and Prevention
COVID-19 public health response and
mitigation tactics. Recognizing the
broad range of services and
programming needed to contain
COV10.19, the interim final rule
provided an extensive list of
enumerated eligible come to prevent and
mitigate COVID-19 and made clear that
the public health response to the virus
is expected to continue to evolve over
time, necessitating different use of
funds.
Enumerated eligible was of funds in
this category included: Vaccination
programs; medical care; testing; contact
tracing; support for isolation or
quarantine; supports for vulnerable
populations to access medical ar public
health services; public health
surveillance (e.g., monitoring case
trends, generate sequencing for
variants); enforcement of public health
orders; public communication efforts;
enhancement in health care capacity,
support far
prevention,
in conglega
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
Rublic health data systems; other public
ealth responses; and capita[
uses that can adapt to local needs, as
well as evolving response needs and
in CDC guidance for stopping the spread
ofCOVl0.19isnot apermissible use of
lmvestioure to public facilities to ..at
pandemic operational needs, such as
developments in understanding of
transmission of COVID-19. Treasury
funds. In other words, recipients may
not use funds for a program that
physical plant improvements to public
hospitals and health clinics or
adaptations to buildings
emphasizes how the enomeated
eligible uses can adapt to changing
undermines practices included in the
CDC's guidelines and recommendations
public to
implement COVID-19 mitigation tactics,
circumstances. For example, when the
interim fiml rule was.].,and, national
forstoppinginespreadoommendtio
This includes programs that impose a
Thean mom uses are consistent
wise th guidance from public health
daily COVID-19 cases were at relatively
low levels and declining; e9 as the Delta
condition to discourage compliance
with practices in line with CDC
authorities, including the CDC.
Public Comment: Many commenters
variant spread and cases peaked in
many areas of the country, particularly
guidance (e.g., paying off fines to
businesses Incurred for violation of
were supportive of expansive
enumerated eligible was for mitigating
those with low vaccination rates,
government response needs andtactics
COVW-19 vaccination or safety
requirements), as well as programs that
and preventing COVID-19, noting the
wid ha
evolved, and the SLFRF funds provided
require households, businesses,
e range o acUv ilea t t
governments may undertakeand the
continued changing landscape of
pandemic response. Some commentan,
requested that Treasury engage in
ongoing consideration of and
consultation on evolving public health
needs end resulting eligible expenses.
Some commenters noted that their
jurisdiction does net have an oMci.1
public health program, for example
smaller jurisdictions or these that do not
have a health department, and mregqowball
clarification an whether their public
health expenses would still be eligible
and prevent COVID-19, given
responses." Note that the final rule
discusses several of these enumerated
used in more detail helow.
Treasury is further clarifying that
when providing COVID-19 prevention
and mitigation services, recipients ten
identify the impacted population as the
general public. Treasury presumes that
all enumerated eligible uses for
programs and services, including
programs and services, are reasonably
proportional responses to ilia harry
identified unless a response is grossly
disproportionate to the tyge or extent of
harm part ad. Note that capital
expenditures ere not considered
"programs and services" and are not
presumed to be reasonably proportional
responses to an identified harm except
as provided in auction Capital
Expenditures in General Previsions:
Other. In other words, recipients can
provide any COVD-19 prevention or
mitigation service to members of the
general public without any further
analysis of impacts of the pandemic on
those individuals ..it whether the
servcee re responsive.
This approach gives recipient
governments an extensive set of eligible
the ability to quickly and nimbly adapt
to new public health needs. Treasury
also notes that funds may be used to
up art compliance with and
Implementation of COVID-19 safety
requirements, including vaccination
requirements, testing progmme, or other
Mad practices.
Recipient governments do not need /o
have an official health or public health
program to order to ufill. these eligible
uses; any recipient can pursue these
eligible uses, though Treasury
recommends consulting with health and
public health professionals to support
rival role and
The
decurestances of COVI0.19 and
provides a broad range of permissible
uses for mitigating and preventing the
agreed of the disease, to a manner
consistent with CDC guidelines and
recommendations.
The purpose of the SLFRF funds is to
mitigate the fiscal effects stemming (ram
the COVID-19 public health emergency,
including by supporting efforts to at
the spread of the virus. The interim net
rule and final rule implement this
objective by, in part, providing that
recipients may use SLFRF funds far
COVID-10 mitigation and prevention.71
A program or service that imposes
conditions on participation in or
acceptance of the service that would
undermine efforts to stop the spread of
COVID-19 or discourage compliance
with recommendation. and guidelines
as sae Cemen for nmeaee Control and Revaeewa,
COVm nare T agile.. he,,11-eed o&gael-ves-
dalo-1m voxnads_da1,,e .thee, olted
Ikcenese r. xazll.
.a See Cantme for Ineeaa limed and Preession.
CM10-19, hdgndMxw.M[gwlmnnaehayzola
n hadiex.aangiast visited Novembor s, xsvJ.
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Final Rocwary parolees FR 9 M7M
nonprofits, or other entities not to use
practices in line with CDC guidance as
a condition ofmceiving funds (e.g.,
requiring that businesses abstain from
requiring mask use or employee
vaccination as a condition of receiving
SLFRF funds).
Vaccination progmme and vaccine
incentives. At the time of the interim
Real rule release, many vaccination
programs were using mass vaccination
tactics to rapidly reach Americans an
mass. for first vaccine dwas.72 Since
that time, the FDA has authorized
booster vaccine doses fro certain groups
and certain vaccines and has also
authorized vaccines for youths 7a 7+The
inclusion of "vaccination programs" as
an eligible use allows for adaptation as
the needs of programs changge or new
groups become eligible for diffevenl
types of vaccinations.
Public Comment: Since the release of
the interim final role, any recipient
governments have also requested
clarification on whether vaccine
incentives are a permissible use of
funds.
Treasury Response: Treasury issued
guidance clarifying that "[vaccine]
programs that provide incentives
reasonably expected to increase the
number of people who choose to get
vaccinated, or that motivate people to
get vaccinated sooner than they
otherwise would have, she an allowable
"crates car Oi,mm control and pmention.
(xn'10 Dea Rader. COV10.19 Vaminalions In the
United Show. Ships 11nual Nngawmved.dab-
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' U.S. Food and tau, Administration.
C onavYna(WO 19) Update: MA Talwa
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Aumariwa Usew Ciri Teeh COvlo-uI Vaeaut far
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4354 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
use of funds so long as Such coats are equipment (e.g., emergency response Treasury Response: These are
reasonably proportional toerm
the expected radio systems); pissible uses of funds under the
public health benefit."" This use of • Installation and improvements of interim final role and remain eligible
funds remains permissible under the ventilation systems; under the final rule.
final role.
Capital Expenditures
Public Comment. Many commenters
requested clarification around the types
needs; ventilation
care
Treasury Response: For clarity,
Treasury has addressed the eligibility
standard for capital expmelitmea, 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
the COV10.19 public health response,
Treasury enumerates that the following
pmjects are examples of eligible capital
• Improvements or construction of
COVI0.19 testing sites and laboratories,
and acquisition of related equipment;
• Improvements or construction of
COVID-19 vaccination sites;
• Improvements or construction of
medical facilities generally dedicated to
COVIo-19 treatment and mitigation
(e.g., emergency rooms, intensive care
units, telemedicine capabilities for
COVI0.19 related treatment);
• Expanses of establishing temporary
medical facilities and other measures to
increase COVI0.19 treatment capacity,
Including related construction casts;
• Acquisition of equipment for
COV10.19 prevention and treatment,
including ventilators, ambulances, and
other medical m emergency services
squipmerit;
• Improvements to or construction of
emergency operations centers and
acquisition of emergency response
"Commavimv State eed Lceal Fbcil Recovery
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• Costs ofesteblishing public health
data systems. including technology
infiaslruchrre;
• Adaptations to rongregete 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
COVIO-19 in the facility); and
• Mitigation measures in small
businesses, nonprofits, and impacted
industries (e.g., developing outdoor
space$).
Other clarifications on COVW-19
mitigation: Medical care, supports for
vulnerable populations, data systems,
camemi settings. Based on public
comments and questions received from
recipients following the interim final
role, Treasury I. making several further
clarifications on enumerated eligible
uses in this category.
Public Comment: Several commenters
eq sated clarification on eligible roes
of Ponds for medical care; Treasury
addresses thane comments in the section
Medical Expenses below.
Public Comment: Recipients 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 was should be considered in
the context of the eligible use category
or section where they appear; in this
cam,"supports for vulnerable
populations to access medical or public
health services" appears in the section
COVIO-19 Mitigation and Prevention.
As such, these eligible uses should help
vWnemble or high -risk populations
access services that mitigate COVID-19,
for example, transportation assistance to
reach vaccination sites, mobile
vaccination or testing programs, or on -
.its vaccination or testing services for
homebound individuals, those in group
homes, or similar settings.
Public Comment: Some commenters
asked whether "enhancement of public
health data systems" could include
investments in software, databases, and
other information technology resources
that support responme to the COVID 19
public health emergency but also
provide benefits for other use no. and
long-term rapacity of public health
departments and systems.
Assistance to Businesses and Nonprofits
To Implement COVID-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
categurised some uses 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,
COVID-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 COVID-19 mitigation and
prevention strategies was categorised in
the respective sections within Negative
Economic Impacts. The final rule
consolidates ell COVI0.19 mitigation
and prevention within Public Health.
Public Comment: Treasury has
received multiple comments and
questions about which eligible use
permits the recipient to provide
assistance to businesees and nonprofits
to address the public health impacts of
COVID-19.
Treasury Response: In the final role,
these services have been re tagorimd
under COVIO-19 mitigation and
prevention to reflect the fact that this
assistance responds to public health
impacts of the pandemic rather than the
negative economic impacts to a small
business, nonprofit, or impacted
industry. When providing COVID-19
mitigation and prevention services,
recipients can identify the impacted
entity as small businesses, nonprofits, or
businesses in impacted industries in
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 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 Section Capital
Expenditures in General Provisions:
Other. In other words, recipients can
provide any COVI0.19 prevention or
mitigation service to small businesses,
nonprofits, and businesses in impacted
Federal Register/Vol. 87, No. III/Thursday, January 27. 2022/Rules and Regulations 4355
industries without any further analysis
of impacts of the pandemic on those
entities and whether the service is
responsive.
in some mass, this means that an
entity not otherwise eligible to receive
assistance to respond to negative
economic impacts of the pandamic, for
example an entity that did not
experience a negative economic impact,
me y still be eligible to receive assistance
under this category for COVID-19
mitigation and prevention services.
Uses of funds can include loans,
grants, or in -kind assistance to small
businesses, nonprofits, or other entities
to implement COVID-19 prevention or
mitigation tactics, such as vaccination;
testing; contact tracing programs;
physical plant changes to enable greater
use of outdoor spaces or ventilation
improvements: enhanced cleaning
efforts; and barriers or partitions. For
example, this would include assistance
to a restaurant to establish an outdoor
Petio, given evidence showing much
ower risk of ODVM-19 transmission
outdoors.+s Uses of funds can also
Include, aid to travel, tourism,
hospitality, and other impacted
industries to implement COVID-19
mitigafion and prevention measures to
enable safe reopening, for example,
vaccination cr testing programs,
improvements to ventilation, physical
barriers or partitions, sgnage m
tecilihos social distancing, provision of
masks M personal p elective equipment.
or consultation with infection
prevention professionals to develop safe
reopening plans.
Recipients providing assistance to
smell businesses, nonprofits, or
impacted industries that includes
capital expenditures (i.e., expenditures
on property, facilities, or equipment)
should also review the section Capital
Expenditures in General Provisions:
Other, which desmibes eligibility
standards for these expenditures.
Recipients providing aselatences in the
form of loans should review the section
Treatment of mans Made with SLPRF
P ands in General Provisions: Other.
Recipients should also be aware of the
difference between beneficiaries of
assistance and subrecipients when
working 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 impacted
by the COVID-19 disease itself and is
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eligible for services that mitigate or
prevent COV10.19 spread. As such, a
smell business, nonprofit, or impacted
industry receiving assistance to
implement COVID-19 mitigation
measures is a beneficiary of assistance
(e.g., granting funds to a small business
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
(ag., contracting with a small business
to operate COVID1 19 vaccination sites).
For further information on
diaturT�gu'lehing between beneficiaries
and ev, recipients. as well as the
impacts of the distinction on reporting
and other requirements, see section
Distinguishing Submcipients versus
ne Beficiaries.
b. Medical Expenses
Background: The interim final Mle
also included es an enumerated eligible
use medical expenses, Including
medical care and services M address the
near -term and potential longer -term
impacts of the disease on individuals
infected.
Public Comment: Some commentere
sought clarification on the types 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 wrote., end coals to a selt-
funded health insurance plan (e.g., a
county government health plan) for
COVID-19 medical care.
Treasury Response: In the fetal rule,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers costs related to medical cam
provided directly to an individual due
to COVID-19 infection (e.g., tmournim)
or a potential infection (e.g.. testingi.
This con include medical costs to
uninsured individuals; deductibles, co -
pays, or other coats not covered by
insurance; costs for uncompensated core
at a health provider; emergency medical
response torts; and, for recipients with
a self-Cunded health insurance plan,
excess health insurance costs due to
COVI0.19 medical care. These are
medical expenses due to COV10.19 and
distinguish this category of eligible uses
from other related eligible uses, like
COVID-19 mitigation and prevention
and health insurance expenses to
households. to provide greater clarity
for recipients in determining which
category of eligible uses they should
review to maress a potential use of funds
For discussion of eligibility for
programs to expand health insurance
coverage, see section Assistance to
Households.
c. Behavioral Health Care
Background: Recognizing that the
public health emergency, necessary
mitigation measures like social
distancing, and the economic downturn
have axsearbated mental health and
substance use challenges for many
Americana, the interim final rule
included an enumerated eligible use for
mental health treatment, substance use
treatment, and other behavioral health
services, including a non -exhaustive list
of specific services that would be
eligible under this category,
Public comment: Many commenters
expressed support for the interim final
rule's recognition of behavioral health
impacs of the pandemic end eligthin
uses under this category. Several
commenters requested clarification con
the types of eligible services under this
category, specifically whether bath
acute sort chronic care we included as
well as services that often do not
directly accept insurance payments, like
peer so port groups. Some cemmentare
bighliglued the importance of cultural
emapatence in providing effective
behavioral health services. Some
reconsiders auggggested that funding
should he available broadly and quickly
for this purpose, recommending that
funding available for behavioral health
not be tied to the amount of revenue
loss experienced by the recipient.
Treasury Response: in the final rate,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers an expensive array of services
for prevention, treatment, recovery, and
harm reduction for mental health,
substance use, and other behavioral
health challenges caused or exacerbated
by the public health emergency. The
specific services listed in the interim
final rule also remain eliaeible.rr
Treasury is further clarifying that
when providing behaviors( health
services, recipients con identify the
impacted population as the general
public end, as with all imemerated
eligible uses, presume that all programs
and services ere 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
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4356 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
considered "promggrems and services" and
are not prosumed to be reasonably
proportional responses to an identified
harm except as provided in section
Capital Expenditures in General
Provisions : Other.
In other words, recipients ran provide
behavioral health services to members
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, crew behavioral health challenges
or exacerbation of pre-existing
challenges, including new barriers to
accessipg treatment.
Services that respond to these impacts
of the public health emergency may
include services across the continuum
of rare, including both acute and
chronic we, such as prevention,
outpatient treatment, inpatient
treatment, misis care, diversion
programs (e.g., from emergency
departments or criminal justice system
not yet engaged in treatment, harm
induction, and supports for long-term
recovery (e.g., poor 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 rates of behavioral health
challenges for youths, mental health
Ban responder or law willomement-
mental health co -responder programs to
divert individuals experiencing mental
illness from the criminal justice system,
or services for pregnant women with
substance use disorders or infants horn
with neonatal abstinence syndrome.
Finally, recipients may use funds for
programs or services to support
equitable access to services and reduce
racial, ethnic, or socioeconomic
disparities in access to high -quality
treatment.
Eligible was of funds may include
services typically billable to
insurance re 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
Lifeline or other hotline services.
Recipients may also use funds In
conjunction with other federal grace or
programs (see section Program
Administration Provisions), though
-tiwevu, StPaP funds mey not be used m
imburx a eervor not we Abe billed In
a.m..—
eligible services under SLFRF are act
limited to those eligible under existing
federal programs.
Given the public health emergency's
exacerbation of the ongoing opined and
overdose crI.ts, Treasury highlights
several ways that funds may be used to
respond to opioid use disorder and
prevent overdose mortality.79
Specifically, eligible uses of funds
include programs to expand access to
evidence -based treatment like
medications to treat opioid use disorder
(e.g., direct costs or incentives for
emergency departments, prisons, jails,
and outpatient providers to offer
medications and low -barrier treatment),
.rezone 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
related to behavioral health that
Treasury recier mes as eligible include
equipment (e.g., inpatient or outpatient
mental health or substance use
treatment facilities, crisis centers,
diversion centers), as long as they
adhere to the standards detailed in the
Capital Expenditures section.
d. Preventing and Responding to
Violence
Basakk��oound: The interim final rule
highlighted that some types of violence
had increased during the pandemic and
that the ability of victims to access
services had decreased, noting as as
example the challenges that individuals
affected by domestic violence face in
accessing services. Accordingly, the
interim final role enumerated as an
eligible use, in disproportionately
impacted communities, evidence -based
community violence intervention
programs. Following the mleasn of the
Interim final rule, 9tswery received
several recipient questions regard
mg
whether and how fund. may be used to
respond to an increase in crime,
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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 support
violence reduction efforts, including
robbing public sector staff, behavioral
health services, and services to address
negative economic impacts of the
pendants that may aid victims of crime.
The guidance also identified an
expanded not of enumerated eligible
uses to address increased gun violence.
Public Comment Several wmmenters
expreaed suppport for this use of funds.
7}eoemy Aesponse: In the final rule,
Treasury is maintaining enumerated
eligible uses in this as and clarifying
how tp apply eligibility standards.
Throughout the final rule, enumerated
eligible uses should respond to an
identified impact of the COV10.19
public health emergency in a reasonably
proportional manner to the extent and
type of harm experienced. Many of the
enumerated eligible uses —like
behavioral health services, services to
improve employment opportunities, and
disparities in disproportionately
impacted communities —that respond to
the public health and negative economic
impacts of the pandemic may also have
benefits for reducing crime er aiding
victims of crime. For example, the
pandemic exacerbated the Impact of
domestic violence, sexual assault, and
human traf8clong; 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 Comment: Several commenters
expressed support for community
violence intervention programs or
argued that traditional public safety
approaches had negatively impacted the
social determinants of health in their
communities. Several commenters
recommended inclusion of approaches
like mental health or substance use
diversion programs.
Treasury Response: Treasury
recognizes 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
Rued rule. Given the increased rate of
violence during the pandemic, Treasury
has determined that this enumerated.
Federal Register/Vol. 87, No. la/Thursday, January 27, 2022/Rules and Regulations 4357
eli ible use is res lIt
I g ponsve to t e mpacts
of the pandemic in all communities,
The final rule incorporates guidance
issued her the interim final rule on
Specifically types of services eligible,
including:
a Evidence -based practices like
focused deterrence, street outreach,
violence interrupters, and hospital -
based violence intervention models,
complete wits wraparound services
such as behavioral therapy, trauma
recovery, job training, education,
housing end relocation services, and
financial assistance; ..it
• Calamity -building efforts at
programs nim funding more
intervention workers, increasing their
pay, providing training and professional
development for intervention workers,
and hiring and training workers to
administer the programs.
Public Comment: Some commenters
sought further clarification on whether
same of the enumerated eligible uses are
considered responsive to all crime,
violent crime, or gun violence.
Treasury Response: Enumerated
eligible uses that respond to an increase
in gun violence may be pursued in
communities experiencing An increase
in gun violence associated with the
pandemic levels—u
where the funds are
reduce
guns, as well as collaborative federal,
state, and local eff" to identify and
address gun trafficking channels, and (3;
investing in technology and equipment
to allow law enforcement to mare
efficiently and effectively respond to the
rise in gun violence resulting tram the
pandemic, for example technology to
metal in the identification edgers
whose serial numbers have been
damaged.
3. Negative Economic Impacts
a. Assistance to Households
Background
While the 11S. economy is now on the
path to a strong recovery, the public
health emergency, including the
necessary measures taken to protect
public health. resulted in sr'gnificant
economic and Bnuncfal It 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 and April 2020?u One
year later, in April 2021, the economy
still remained over a million jobs below
its per -pandemic pesk,el and the
unemployment ate hovered around E
percent to
In the months since Treasury issued
the interim final rule in May 2021, the
economy has made large strides in its
recovery. The economy gained over 4
million jabs in the seven months from
May to November 2021; e3 the
unemployment rate fell mare than 1.5
percentage points to 4.2 percent, which
is the lowest rate More February 2020; as
surpassed the pre -pandemic peak in the
second quarter of 2021 as
While the economy has made
immense progress in its recovery since
May 2021, the economy has also fared
setbacks that illustrate the cautioned
risks to the recovery. As the Delta
variant spread amass the country this
summer and fall, the United States faced
another severe wave of cases, deaths,
and strain on the healthcare system,
which contributed to a slowdown in the
pace ofrecovery in the third quarters«
Supply chain disruptions have also
demonstrated the difficulties of
restarting A el bat monomy.sr
Moreover, a though many Ameri ens
have returned to work as of November
2021. the economy remains 3.9 million
jobs below its pre -pandemic. peaksa and
2.4 million workers have dropped out of
the labor market altogether relative to
February 2020.8o Thus, despite much
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progress, there is a continued used to
respond to the pandemic's eeonomic
effects to ensure a full, broad -based, and
equitable recovery.
Indeed, the pandemic's economic
impacts continue to affect some
demographic groups mom than others.
Rates of unemployment remain
particularly severe among workers of
color and workers with lower levels of
educational attainment; for mmrmple, the
overall unemployment rate in the
United States was 4.2 percent in
November 2021, but certain groups saw
much higher moss: E.7 percent for Black
workers, 5.2 percent for Hispanic or
lather workers, and 5.7 percent for
workers without a high school
diploma.- Job losses have also been
particularly steep among low -wage
workers. with these workers remaining
furthest from recovery as of the and of
2020.91 A severe recession, end its
concenterted impact among low-income
workers, has amplified food and
housing insecurity, with an estimated
nearly 20 million adults living in
households where them Is sometimes or
often not enough food to eat and an
estimated 12 million adults living in
households that were not current on
rent o,
While economic effects have been
seen Across many communities, them
are additional disparities by race and
income. For example, approximately
4356 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations
half of low-income, Black, and Hispanic
parents reported difficulty covering
costs relatad to food, housing, utility, or
medical care.0s Over the enema of the
pandemic, inequities also manifested
along gender lines, as schools closed to
in -parson activities, leaving many
working families without childcare
during the day.ea Women of color have
been hit especially herd: The lahor force
participation rate for Black women has
fallen by 3.6 percentage points as during
the pandemic as compared to 1.3
percentage paints far Black menaa and
1.7 percentage points for White
women.-,
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
rehired.-8 In addition to the labor
marks[ consequences for unemployed
workers, recessions can also reuse
longer -term economic challenges
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These potential long-term economic
consequences underscore the continued
need for robust policy support.
Low- and moderate -income
households, those with income levels at
or below 300 percent of the federal
poverty level (FPL), 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 FIT, are several
Omes mare likely to have reported
struggling with food insecurity
compared to households with income
above 300 percent FPL.+-' Similarly,
low- end moderate -income households
reported being housing insecure 102 at
rates more than twice as high as higher.
income households, and low- and
moderate -income households reported
housing quality hardship 103 at rates
statistically significantly greater than
the rate for higher -income
households.+00 The economic crisis
caused by the pandemic worsened
economic outcomes for workers in many
low -and moderate -income households.
Industries that employed low -wage
workers experienced a disproportionate
level of job loss. For example, from
February 2020 to February 2021, the
hospitality and leisure industry lost
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d hlh to pmblolne whh a roolde ooking oulfor el
dwelling: Pane aad/w lnnas; looking .1st
=ailing, Wad-uhralhahue a.broken or cam ahoy;
expend doMcel wimp: broke. Pltling. g Your:
ba water,ven (lu holm ga well¢. =ailing, afloat
o appl fauna Irehigema or atavvl: and no them
(of my4ivdl.
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a Could and Tasksrda. I. Law-wago.law-
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morsioa: The Slay, of Waking Ao' buis0a0
omPbYtnmt Most, P'onamlu Polity Imyitute IMey
entire industry was impacted, 72
percent of the job lasses occurrad in the
lowest wage service occupations
compared to only a 6 percent rate of job
loss in the highest wage management
and finance jobs.+re Similar trends exist
in other heavily impacted industries. In
public education, the lowest wage
occupations, ..vice and transportation
jobs, new a job loss late of 20 and 26
percent, respectively.+ar During that
same time period, the highest wage
occupations in public education,
management, acNally saw jobs increase
by 7 ppeercent.+00
While many households suffered
negative economic outcomes as a result
of the COVID-10 pandemic and
economic recession, households with
low incomes were impacted in
disproportionate and exceptional ways.
From January 2020 to March 2021, low -
wage workers experienced job loss at a
rate five times higher than middle -wage
workers, and high -wage workers
actually experienced an increase in jab
opporlmities'0- 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 aconorate hardships like
trouble paying utility bills, affording
mot or mortgage payments, purchasing
food, and paying for medical
expenses 110 The disproportionate
aevativa imnaM.a the pandemic has had
financial insecurity. For example, low-
income families have reported higher
levels of social Isolation, stross, and
other negative mental health outcomes
during the pandemic. While over half of
all U.S. adults report that their mental
health was negadvely 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.+++
2021), available at into: Ilwww.aPa.ap/Publentaovl
roeu2020entploymena-report/.
fd.
erld.
a ld.
Im R. Chary. J. FlYedtnm, N. Hendren. M.
Mental Hea
Foundalon
and f metal hardship.
&P.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4359
Summery of Interim Final Rule end
Final Rule Structure
Summary: The interim final role
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 as a standard far
assessing whether uses of funds beyond
those enumerated are eligible.
The interim final rule described
enumerated eligible uses far assistance
to households in several categories: (1)
Assistance to unemployed workers, (2)
state Unemployment Insurance Trust
Funds, (3) assistance to households, and
(4) expenses to improve the efficacy of
economic relief. Note that the interim
final rule posed several questions to the
public on enumerated eligible uses for
assistance to households; comments me
these questions are addam eeit in the
relevant subject mattm section below.
In addition, m racoge gentian that pre-
existing health, economic, and social
disparities contributed to
disproportionate pandemic impacts in
certain communities, the interim final
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 nd
eighborboods,(2) addressing
educational disparities, and (3)
promoting healthy childhood
environments. In the interim final rule,
under the Public Health section,
recipients no. also provide services to
address health disparities and increase
acce"tube thand 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 rule to respond
which households and communities are
presumed eligible for services; and how
to identify eligible households and
communities beyond those presumed
eligible, see section General Previsions:
Structure and Standards.
Reorgimar-0ions sad Crass.
References: The final rule reorganizes
all enumerated eligible uses for
impacted and disproportionately
imparted households into the section
Assistance to Households, with the
exception that expenses to improve the
efficacy of economic relief has base re -
categorized into a different section of
the final rule far increased clarity; for
discussion of that use category, we
eection 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
impacts experienced by impacted
households. In the final rule, these uses
have been moved from
"disproportionately impacted" to
"Impacted" households accordingly,
making these services available to both
disproportionately impacted and
impacted households. These uses
include assistance applying for public
benefits or services; programs or
services that address or mitigate the
impacts of the COVIU-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 syetem
d foster youth; programs to address
the impacts of lost fnstrocdone] time for
students; 112 and programs or services
that address housing insecurity, lack of
affordable housing, or homelessness.
The following activities remain
enumerated all this f
Enumerated Eligible Uses for impacted
Households
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,
weetherization, or other needs; internal
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
the negative economic impacts of
COVIO-19.
This section addressee each of these
numerated eligible uses in into, with
the exception of job training, which has
been re -categorized for increased clarity
to the eligible use for "assistance to
unemployed and underemployed
workers." In general, commenters
supported inclusion ofthese
enumerated eligible uses to address key
economic needs among households due
to the pandemic, end Treasury I.
maintaining these eligible uses in (be
final rule, in line with commenters'
recommendations.
1. Food assistance. The interim final
rule included an enumerated eligible
use for food assistance. Soma
commenters expressed support for this
eligible use and emphasized the
importance of aid to address food
insecurity. Some commenters raised
gcreations 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 -
tog
negativeeconomicimpactsci
uses or
disproportionately impacted
the
awarded to these organizations.
households. Asa reminder, recipients
households: Remediation of lead paint
Treasury Dose:Treasu s
i
may presume that a household or
or other lead harards; housing vouchers
m intTreatmn this enumerated eligible
population that experienced
unemployment, experienced increased
and assistance relocating to
neighborhoods with higher levels of
use witboutt change. Recipients may. .es
y
`rasa the case under the interim final
food or housinginsecurity, or is law or
Y•
moderate income experienced negative
economic opportunity; and programs or
services that address educational
rule, administer programs through a
wide range of entities, including
g g
economic impacts resultingfrom the
endemic, and recipients a
F p
disparities, including assistance [o high-
nonprofit and for -profit entities, to carry
out eligible uses on behalf of the
provide
Y P
services [o them that respond these
poverty school districts to advance
equitable funding across districts and
reef lent ovemmeat on
n tents
impacts, including these enumerated
a
ehgBit urea.
geographies and evidence -based
Dist rshin Subracla vlarsus
g p
Beneficiaries). Further, Treasury is
For guidance on how to determine
services to address the academic, social,
emotional, and mental health needs of
clarifying that capital expenditures
whether a particular use, beyond those
students.
related to food banks end other facilities
enumerated, is eligible; further detail an
primarily dedicated to addressing food
wwlicad.y/mroeoid19 ridaim)-h
^r For whieii xmipiemn may presume met any
mudont wlm&d nm bev.-vewca in-pasou
insecurity are eligible; recipients
see king to use funds for capital
111-/h1e-
lmplicunomaJmvidae)w-mentaFhmULanA-
innrucnon rmaeigniLcent petlud alm+w vu
expanditurec should afar to the section
aublarrceure/.
impacted by the paudwnic,
Capital Expenditures in General
4360 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
Provisions: Other far additional
eligibility standards that apply to uses
of funds for capital expenditures.
2. �mergencyJumemg assistance. The
interim final mle included so
enumerated eligible use for rent,
mortgage, or utility assistance end
counseling and legal aid to prevent
aviation or homelessness.
Public Comment: Several commenters
supported the inclusion of eviction
prevention activities as an eligible use
given the high number of households
behind on rent and potentially at risk of
eviction. Following release of the
Interim final rule. Treasury had also
received requests for elaboration on tire
types of eligible services in this
category. Some commenters also
recommended including assistance to
households for delinquent property
taxes. for example to prevent tax
foreclosures on homes, as an
enumerated eligible use.
Treasury Response: In response to
requests for elaboration on the types of
eligible services for eviction prevention,
Treasury has provided further guidance
that these services include "housing
stability services that enable eligible
households to maintain or obtain
housing, such as housing counseling,
fair housing counseling, case
management related to housing stability,
outreach to households at risk of
eviction or promotion of housing
support programs, housing related
services for survivors of domestic abuse
or human trafficking, and specialized
services far individuals with disabilities
an seniors that support thew ability to
scress or maintain housing," as well as
"legal aid such as legal services or
attorney's fees related to eviction
proceedings and maintaining housing
stability, court -based eviction
prevention or eviction diversion
programs, and other legal services that
help households maintain or obtain
housing." "- Treasury also emphasized
that recipients may work with court
systems, nonprofits, and a wide range of
other organizations to implement
strategies to support housing stability
and prevent evictions.
In the final rule, Treasury is
maintaining these enumerated eligible
uses, including those described in the
interim final mle and later guidance, in
line with commenters'
recommendations. To enhance clarity,
Treasury is also elaborating on some
types of services included under this
eligible use category: this remains a
—Se FAQ 711, eoeonavirue suits end Lau]
F4ce] Rasovary Funds, Frequently As"d
Questions, as of July le, dazr: naps://
Mme.aeoaury.rev/ly#emtPNs/1]a/SUA FAQpdj.
nonxxhamfive list of eligible services.
For example, eligible services under this
use category include: Rent, rental
arrears, utility costs or arrears (e.g.,
electricity, gas. water and sewer, trash
removal, and energy costs, such as fuel
oil), reasonable accrued late fees (if not
included in rental or utility arrears),
mortgage payment assistance, financial
assistance to al low a homeowner to
reinstate a mortgage or to pay other
housing -related costs related to a period
of forbearance, delinquency, or default,
mortgage principal reduction,
facilitating mortgage interest fate
reductions, counseling to prevent
foreclosure or displacement, relocation
expenses following eviction or
foreclosure (e.g., rental security
deposits, application or screening fees).
Treasury is clarifying that assistance to
households for delinquent property
taxes, for example to prevent ter,
foreclosures on homes, was permissible
under the interim final rule and
continues to he ao under the final rule.
In addition, Treasury is also clarifying
that recipients may administer utility
assistance or address arrears on behalf
of households through direct or bulk
pm ayents to utility providere to
facilitate utility assistance to multiple
consumers at once, so tang as the
me payments offset custor balances end
use caleeory also
transitional shelters (e.g., temporary
residences for people experiencing
homelessness) are eligible capital
expenditures. Recipients seeking to use
funds for capital expenditures should
refer to the section Capital Expere nditus
in General provisions: Other for
additional eligibility standards that
appI y to aces of funds for capital
expenditures.
Note that this enumerated eligible use
describes "emergency housing
assistance," or assistance for responses
to the immediate or near -term negative
economic impacts of the pandemic. The
final role also clarifies and expands the
ability of recipients to use SLFRF fonds
to address the general lack of affordable
housing and housing challenges
underscored by the pandemic. For
discussion of affordable housing eligible
uses, including services that primarily
increase access to affordable, high.
quality housing and support stable
housing and homeownership over the
long term, see the eligible use for
"pmrmati long-term housing security:
Affordable houaing and homelessness."
3. Emergency assistance for pressing
needs: ➢rrnals, home repairs,
weathwhation, or other needs. The
interim fine) rule included an
enumerated eligible use for emergency
wsistaoae for burials, he I.,
weatherizalic n, and other needs; these
types of programs may provide
emergency assistance for pressing and
unavoidable household needs. Treasury
did not receive comments on this
eligible use and is maintaining it in the
final rule.
Background on Home Hepafrs and
Weathenzatien: The economic
downturn has meant fewer households
had the resources needed to make
necessary home repairs and
improvements. In May 2021, 28 percent
of landlords reported deferring
maintenance and 27 percent oftenants
reported maintenance requests going
unanswered.114 While small and
cosmetic repairs can often wait,
deferring major repairs, such as
plumbing needs, can result in unsafe
and unhealthy living environments and,
eventually, the need for more expensive
repairs and fixes.
In addition to repairs, many homes
are in need of weatherization.
Weatherization assistance helps low -
and moderate -Income Americans save
energy, reduce their utility bills, and
keeps them and their homes safe. One
in three households is energy
inseeure,"s meaning they do not have
the ability to meet their energy needs."°
Weatherization efforts are particularly
important for low- and moderate -
income households. Households of
color, renters, end households with low
or moderate incomes are all more likely
to report energy insecurity.lrr These
2.21)
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4361
disparities are partially a result of
technology for daily activities and the
education, and argued that affordability
economic hardship but are also caused
movement by many businesses and
presents a major banter to broadband
by inequitable access He housing with
schools to operating remotely during the
adoption by households; in other words,
proper insulation, up to date heating,
pandemic, broadband has became even
many households live in areas that have
cooling, and ventilation systems, and
functioning and up to data lighting and
more critical for people across the
country W carry out their daily lives,
broadband infmatructure and service
available but are unable to purchase
applionew.r m While programs that
He.., even in areas where
service for their household due to the
address the effects of energy hardships,
broadband infrmstruclure exists,
high area. These commenters argued
like the Low-income Home Energy
broadband access may he out of reach
that broadband must he affordable to be
Assistance Program(LIHEAP), are
for million. of Americans because it is
accessible.
critical. weetherization attempts to
unaffordable, as the Untied States has
Commenters proposed several
address root causes by addressing issues
some of the highest broadband prices in
potential responses to affordability
that lead to energy insecurities.
the Organisation for Economic Co-
concerns, Some commenter.
4. Internet access or digital literacy
operation and Development (OECD)18O
recommended that building "gap
assistance. The interim final role
According to a 2021 Pew Research
networks;' or breakfasted networks built
included an enumerated eligible use for
assistance to households for internet
Center study, 20 percent of non-
broadband users say that the monthly
at low owl to provide affordable service
access or digital literacy assistance. This
cost of home broadband is the primary
in areas where it is lacking, be eligible
as assistance to households to respond
enumerated eligible use, which
reason they do not have broadband at
to the negative economic impacts of the
responds to the negative economic
home, snit 40 percent say that cost is
pandemic, even if they do not meet the
impacts of the pandemic on a household
by providing essistams that helps them
one reason for their lack of home
broadhand.e zt Further, according to
technical standards for eligibility under
secure internet access or increase their
another survey, 22 percent of parents
the eligible use category of broadband
infrastructure investment, especially the
ability to use computers and the
with homebound schoolchildren during
required speed standards for new
internet, is separate from the eligible use
category for investments in broadband
the COVID-19 pandemic say that it is
very or somewhat likely that their
service. Thane commenters argued that
ure
infrastruct, under Sections
children will have to rely on public wi-
the networks have shown promise as a
timely means to expand access to
602(c)(1)(D) and 603(c)(1)(D), which is
used to build new broadband networks
it to finish their schoolwork because
there is no reliable internet connection
affordable broadband internet during
through infrastructure construction or
at home; this percentage nearly doubles
the pandemic, even if they may not
provide service speeds needed for more
modernization. For discussion of
broadband infrastructure investment in
for lower -income parents, 40 percent of
whom noted that their children will
intensive internet use. Another
the final .Is, ass se tion Broadband
have to rely on public wi-B.+%s The
commenter requested eligible uses
include funding cellular Powers to
Infrastructure in Infrastructure.
same may showed that 36 percent of
decrease costs. One commenter
Background. The COVID-19 public
health emergency has underscored the
lower.incoare parents with homebound
children say their child will not be able
recommended that affordability should
importance of universally available,
high-speed, reliable, and affordable
to complete their schoolwork because
they do not have access to a computer
be addressed through other programs
Intl not SLFRF given that affordability
end availability may requin, nuanced
broadband coverage as millions of
rely on the internet to
at home.+as
Public Comment Many commenters
solutions that would be complex to
Participate in , among other critical
activities, school, healthcare, and work.
highlighted the importance of
broadband access during the pandemic,
combine.
bResponse: The interpretive
Recognizing the need for such
including for remote work and
framework end enumerated eligible uses
8
allow recipients flexibility to address
to make connectivity, sary investments funds ran be used
in
the amx for xealn-
identified demic im cts, includin
Pa g
bradbaninf.. rlsi
broadband infrastructure that increase
access over the ton term, as well as the
g
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throughsoutizissues in into hei account
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ew
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broadband internet service for every
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"odableabhapr✓/www.brwd___hnd/blog/
use for assistance to households far
and healthcare.tsa With increased use of
neenw, nwmcompmed-wadawide.
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programs in the final rate.
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rwhnvleff and-0sme-broadband-sanY,
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ofici.ii, cm improve law ierk-owaed
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Infrastructure to lemstracturs.
4362 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
Public Comment: Some commenters
also use the term "gap networks" to
refer to equipment installed as part of
wi-fi systems, such as routers, repeaters,
and access points; this equipment
provides consumer access to an existing
broadband network and does 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-fi networks,
free wA, in public housing
commurdlies, and other equipment that
offers internet access to end were by
utilizing existing broadband networks.
Other commenters recommended that
eligible uses in this category include
providing devices and equipment
necessary to access the internet, like
computers and routers, directly to low-
inmme households.
Treasury Response: Treasury has
determined that these services, which
expand internet access without
constructing new networks, are an
appropriate enumeoled 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 internet access and digital
literary, such as subsidies far the cost of
internet service, adrer programs that
Support adoption of internet service
where available. digital literacy
programs, or programs that provide
devices and equipment to access the
internet (e.g, proteins that provide
equipment like tablets, computers, or
to use funds for or
refer to the section
for some governments to support the
well-being of households and
individuals in then communities. Some
wmmentere, requested that Treasury set
a specific dollar amount for permissible
cash transfers, end Treasury has also
received recipient questions on whether
specific types of roosters, such as those
to a suhslamml shine 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 Is, in line with
commenters' recommendations. Because
the final rule is intended to provide
flexibility to recipients to respond to the
particularized pandemic imports in
their communities, which may vary in
type and intensity, setting a 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 drat
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
negative economic impact due to the
pandemic.
Recipients may also identify other
households or classes of households
that experienced a negative economic
impam of the pandemic and provide
cash assistance that is reasonably
to uses of funds for capital Pic
es (e.g., equipment, property, exr
es). the
5. Cash assistance. The interim final
role Included as An enumerated eligible
use cash assistance and provided that
cash transfers must be "reasonably
proportional" to the negative economic
impact they address and may not be
"grossly in excess of the amount needed
to address" the impact. In assessing
whether a transfer is reasonably
proportionate recipients may "consider
and lake guidance from the per person
amounts previously provided by the
Federal Government to response to the
COVIQI9 crisis," and trawlers
"grossly in excess of such amounts" are
not eligible.
Public Comment: Several commenters
expressed support for this eligible use,
noting that this is a common policy too]
to households e
identifying and
Far
these households.
Finally, Treasury has reiterated in the
final rule that responses to negative
economic impacts should be reasonably
proportional to the impact that they are
intended to address. Uses that bear no
rotation or are grossly disproportionate
to the type or extent of harm
experienced would not be eligible uses.
Reasonably proportional Pales to the
scale of the response compared to the
scale of the hero. It also infers to the
targeting of the response 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
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm.
B. Survivors benafts. The interim
final rule included an enumerated
eligible use for survivor's benefits to
surviving family members of
individuals who have died from
COVIO-19, 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 role.
Tmaeury Response: This use of funds
remains eligible under the final rule.
Consistent with the general
oarganization noted above, the final
rule organizes survivor's benefits under
assistance to households to alertfy that
households era the intended
beneficiaries of survivor's benefits.
f. Assistance accessing or applying
for public benefits or services.
Recognizing that eligible households
often face barriers to accessing public
benefits or services that improve health
and aoonomic outcomes, the interim
final role included as en enumerated
to assist community members
clarified in subsequent guidance after
the interim final rule that this eligible
use category would include outreach
efforts to increase uptake of the Child
Tax Credit.
Background: The under -enrollment of
eligible households in social assistance
programs is a well -recognized and
persistent challenge. There are many
reasons why a household may not be
receiving a particular benefit even
though they are eligible. For many
federal programs, enrollment processes
vary from stale -to -slate. Sometimes,
households are simply unaware that
they are eligible for a particular
banefit.rs+Far example. despite having
one of the highest miss of participation
of any benefits program, nearly 20
percent of eligible individuals do not
participate in the Supplementary
Nutritional Assistance Program
—Amy FmMsteln a Aallhms I Nome,id gle.
Take -UP and Tarxmine: expedmmrW evideme
rmm SNAP, Me Qw, mly lover a Fcammni®,
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www.nLer.argroaPmeMleask.
.duration on child development,
Positive parenting, coping skills, or
recovery for mental health and
substance use. The interim final .Is
also included an enumerated eligible
use for early lemming services in
disproportionately impacted
communities, to address disparities in
education.
Public Comment: Childcare end Early
Learning: Treasury received multiple
comments that were supportive of the
provision of childcare. Treasury has also
received multiple comments ..it
questions indicating that recipients have
identified a need for childcare for A
broader range of households and
communities, for example those that
may nced childcare in order to return to
work, in addition to households end
communities disproportionately
impacted by the pandemic. Several
commenters ma ressed uncertainty
about how childcare facilities should
Internet with the boundaries of a QCf.
Finally, one commenter recommended
that pre-K or early learning services
encompass care for infants and toddlers,
arguing that these types of care are often
more expensive or challenging to access
for families.
Background: Children, end Early
Learning: AS daycame and schools
closed in -person activities during the
pandemic, many working families were
left without daildedon during it. day. a eI
Although daycare centers and schools
have since reopened in many
communities, there remains a persistent
childcare shortage as childcare
employment levels have not fully
rebounded since the sharp decline in
childcare employment at lire beginning
of the pandemie.12n As a result, working
parents in communities across the
country, and more specifically women,
may face challenges entering or
reentering the labor forceil In
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4363
(SNAP1.t2s In other cases, policies like
public charge and asset testing can
discourage otherwise eligible
households.126 While the gap between
households that need assistance and the
number of households participating in
public benefit programs has always
existed, can owing that gap and
ensuring households receive the support
they used is critical to mitigating the
negative economic impacts of the
pandemic.
Public Comment: Treasury has also
received feedback from recipients and
stakeholders noting the need to increase
awareness and uptake of assistance
programs, including gaps that remain in
enrollment of eligible households in
programs to address the negative
economic imports of the pandemic.'27
T.Rury Response: Treasury has
determined that this impact of the
pandemic is widely exparimund across
many jurisdictions and programs or
services to increase awareness and
uptake of assistance programs would
respond to the pandemic's negative
economic impact in all communities. As
such, in the final rule, this use is eligible
for any impacted household or class of
households, not only in
disproportionately impacted
communities.
8. Promoting healthy childhood
environments. The interim final rule
included plogmma end services that
promote healthy childhood
environments as an enumerated eligible
use for disproportionately impacted
households. The interim final role listed
three programs or services included
under this use: Childcare; programs to
provide home visits by health
professionals, parent edvcatom, end
social Service profeasionals to
individuals with you rrg children to
provide education end assistance for
economic support, health needs, or
child development; and services for
child welfare -involved families end
foster youth to provide support and
Low-income households are also more
likely to lase access to quality
childcare.+" The widespread closure of
childcare centers combined with A lack
of access to paid family leave means
parents in low-income households are
moo likely to experience a reduction of
income or leave their Jobs due to a lack
Of childcare options t22
Additionally, childcare providers
serving primarily low-income families
were less likely to remain open during
the pandemic because of tighter profit
margins and general community
financial insecurity, compared to
childcare providers serving primarily
hil:h-income families.'+1114
hit
addition to disruptions to
childcare, early learning services were
also significantly impacted by the
pandemic, and the disruption of these
services had widespread ramifications
foe teaming lass. parental support, and
equity. Early Is filing centers have seen
declined enrollment amosa the board,
though there was a larger dip in
enrollment for law -income
households. tea This lower enrollment
coincides with a diminishing workforce,
as similarly to childcare, early
childhood educetors have been leaving
the profession due to long boon,, low
pay,lsa and health and safety
conmens.tsr As a result, children's
school readiness has suffered, leading to
potential long -tern impacts on life
outcomes'°' The impact else extended
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4364 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
to parents. Parents. especially mothers,
weeks)."° In addition to heightened
COVID-19 on pregnant and recently
may face challenges reentering or
health risks from COVID-19, pregnant
pregnant individuals, Treasury is m-
remaining in the workforce if early
individuals may have experienced
caregortzing home visiting Services w an
for impacted communities.
learning services we unavailable.
significant changes to their planar et care
eligible use
Treasury Response: Childcare an al
during the pandemic 141 or may also
not just disproportionately impacted
Earlyleuming Services: Treasury agrees
have experienced increased mental
communities. Under the final rule, thee.
with commenters' analysis that
health challenges, including high levels
eligible uses are available to impacted
challenges accessing or affording
of depressuu, aax,,y, loneliness, and
households or classes of households.
childcare have been widespread during
post -traumatic stress during the
Public Comment: Child Welfare:
the pandemic, affecting many
panda mire.+•%
While the interim line] rule noted that
jurisdictions and populations across the
Home visiting services provided to
certain types of welister ce, particularly
country. Disruptions to early cme and
families, particularly new mothers and
around child development and
learning services similarly have had
newborns, feature regular home visit.
parenting, were eligible for child
broad impact and likely result in
from trained nurses, social workers,
welfare -involved families, Treasury has
negative impacts for young children and
and/or counselors who provide health
received some recipient questions
their parents. As such, these
rare, mental health resources, positive
asking whether financial, educational,
enumerated eligible uses are generally
parenting support, support in making
housing, or other supports and services
responsive to the negative economic
personal health decisions. and
are eligible uses for facer youth,
impacts of the pandemic in all
awareness of other potentially helpful
Including those aging out of the system,
communities, not just in
services. These functions have become
and child welfare -involved families.
disproportionately impacted
even more essential at mitigating
Other commenters asked about whether
communities. Under the final rule,
negative factors associated with the
funding for kinship rare would be
childcare and early learning services are
pandemic. Home visits give
eligible,
available to impacted households or
professionals a chance to Rag potential
Background: Gild Welfare: The
class.. of households, not just those
domestic violence, which has risen
COVR)-19 pandemic placed meaningful
disproportionately impacted. These
worldwide over the course of the
strain on the child welfare and faster
eligible uses can include new or
expanded services, increasing access to
pandemic.143 Racial health disparities
ran also be driven down by home visits.
care system. Court hearings were
cam system essential mental here care
essentialheals c
delawas ed,145hifted es
services, efforts to bolster, support, or
preserve existing providers and services,
For example, Black women are more
likely to avoid hospitals during the
a env]
end stmtlar activities.
pandemic, and home visitors can help
in
and attendance and performance to
am
school among faster children dropped
Further, Treasury is clarifying that
either assuage concerns around
scho l Additionally. there was a
improvements /o or new construction of
hospitals or give effective advice for
nationwide rise of new children
childcare, daycare, and early learning
alternative methods of chtldbirth.144
entering the foster erne system and
facilities are eligible capital
expenditures. Recipients seeking to use
Given the diaprap0rtianeta affect of the
pandemic on people of color, home
man tales placed ternporary mmetoria
foster
funds for capital expenditures should
visits as an essential equity tool that
on children aging out of the care
system.148 As these temporary moratoria
refer to the section Capital Expenditures
tackle major negative effects of the
expire, additionalsu
ppport will be
in General Provisions: Other for
additional eligibility standards that
pandemic. These are just a few
pandem
selections from the evidence that
needed rd assist lrtldren exiting the
apply to uses of funds for capital
expenditures
suggests many home visiting models can
have a positive effect on maternal
system.
Additionally, finandel and material
Public Comment: Home Visiting:
Treasury has also received questions
physical and mantel health.145
Treasury Response: Home Visiting:
hardship are causal factors in the
increase of new children entering the
about whether the provision of home
Given the widespread impact of
foster rare system, whether through loos
visiting services would be responsive to
of a caregiver, domestic violence,149 or
the health and mental health needs of
10 fee
other associated casts of the pandemic
Imparted new mothers, citing the
positive mental health impacts shown
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increase positive outcomes for youth
outcome. for Chi ldren.
evvy or xsle pregnant women. M illAery.
Background: Home Visiting: Pregnant
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Federal Register/Vol. 87. No. TB/Thursday, January 27, 2022/Rules and Regulations 4365
and families that may otherwise become
involved in the child welfare system.
Treasury Response: In the final rule,
Treasury is clarifying that services to
foster youth, including those aging out
of d. system, and child welfare -
involved families may encompass a
wide army of financial, educational,
child development, or health supports,
or other supports necessary, including
supports for kinship care.
9. Addressing the impacts of lost
instructional Mrs.
Public Comment: The interim final
Interventions or services that address
the impact of lost 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
rule included an enumerated eligible distance education, and administering
use to address educational disparities in and using high -quality assessments to
disproportionately impacted assess students' academic roes
communities, recognizing that
undereerved students have been more
severely impacted by the pandemic and
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
and districts
pmg
among others. In designing services
under this eligible use, recipients may
wish to reference guidance from the
Department of Education on stretwim
that communities. This eligible use includes
ruts of services to address disparities in
educational outcomes that predate the
the pandemic and amplified its impact an
underserved students; these include, for
ten example, enhanced funding to high -
poverty districts and providi
l.
evidence -based services to adea the
academic, social, emotional, and mental
n-peron msrruction or
lemented remote learning, the shift
not immediate or without
aquence. Children who received
[a] only or combined remote and an-
on instruction were more likely to
A experiencing negative mental-
Fhysmal health outcomes than
ran who received in -person
Treasury Response: Under the final
refs, addressing the impact of lost
instructional time and/or learning loss
is an enumerated eligible use for
impacted households. When providing
services to address foal instructional
time, recipients may presume that any
K-12 student who lost access to in -
person instruction for a significant
period of time has been impacted by the
pandemic and is thus eligible for
responsive services.
—velmdan lv, Pampan S, Rnufa ry M a nl.
A.d. ian 0LAYdmn'c Mode ofach..]
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vice. for children
to respond to the
ric on mental
issues. When providing behavioral
health services, recipients may presume
that the gamest 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
...]ysle of imparts of the pandemic on
those individuals and whether the
service is responsive.
W. Pamedinglong-term housing
security: offordable housing and
homelessness. Under the interim final
rule, recipients may use SLFRF funds to
provide a set of housing services to
communities that have been
disproportionately impacted by the
pandemic. Specifically, the interim Real
le provided that programs or services
that address housing insecurity, lack of
affordable housing, or homelessness,
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were responsive to the negative
economic impacts of the pandemic
when provided to disproportionately
impacted households and cemm unities.
The enumerated new included
supportive housing or other prrooggrams or
services to improve screw to atable,
affordable housing among individuals
who am homeless and development of
affordable housing to increase supply of
affordable and high -quality living units.
Many recipients have already
announced plane 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 are responsive to the needs of
imparted populations, not only
dhsprop army at.ly impacted
populations. This final rule reflects this
clarification and builds on the
objectives stated in the interim final rule
to improve access to stable, affordable
housing, including through
interventions that increase the supply of
affordable and highquality living units,
improve housing security. and support
durable and sustainable
homeownership
Finally, note that "emergency housing
assistance," or assistance for responses
to the immediate negative economic
impacts of the pandemic through
services like financial assistance far
rental arrears or mortgage payments, is
aim 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 vouchere and
assistance relocating to neighborhoods
with higher levels of economic
opportunity remains an eligible use
under assistance to disproportionately
impacted households; for discussion,
we the eligible use for "housing
vouchers and assistance relocating"
below.
Background: Affordable Housing: it is
clear 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.us2
"uCasenwe Pamncul Pmlemlon Bureau,
nwaing Inaxunly and Iho Mean-1. Pander
u,sr—d
4366 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
The combination of a large naniber of
higher -income households who have
weathered the pandemic without
significant income losses, law interest
rates, and housing supply constraints
exacerbated by the pandemic, have
driven a sharp increase in the sale price
of homes.rsa Meanwhile, many low-
income renters and homeowners ere
struggling with lost employment and
income and are behind on their housing
pa mends.h54
Public Comment Affordable Housing
Outside of low -Income Geographies: A
major theme in comments was that
affordable housing interventions,
especially development ofaffordable
housing. should be allowed outside of
Wt., as concentrating the supply of
affordable housing in law -income
geographies can have the effect of
increasing both concentrated poverty
and recial and economic segregation,
while locking lower -income households
in need of housing support out of high -
opportunity neighborhoods with access
to employment and amenities.
Treasury Response: Affordable
Housing Outside Low -Income
Geographies: As previously stated,
affordable housing is not confined to
low-income geographies under the
interim final rule. As discussed
elsewhere, the interim final rule
presumed that QGTs, es well as
communities served by Tribal
governments, were disproportionately
impacted for administrative
convenience, but recipients may
identify other populations, households,
or geographic areas with disparate
impacts of COVID-19 and provide
affordable housing services to them. For
exempla, undo themfinal rule, a
city could determine that its law -
income residents faced disproportionate
impacts of GOVID-19 and develop
affordable housing tageted to these
households. Such a scenario could
include, for example, affordable projects
in higher -income neighborhoods that
would allow residents to live closer to
jobs and well-resourced schrmla.
Additionally, as nosed above.
Treasury is finalizing the rule with some
changes to the treatment of affordable
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 individual. 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 fact. described above, which
demonstrate that lack of supply of
affordable housing units contributed to
the pandemic's impact on housing
insecurity and unsustainable housing
coat burdens and that these impacts
were experienced broadly across the
count
Pubic Comment Eligible Activities:
Many commenters asked far clarity on
what types of activities (e.g., land
acquisition, construction, pre -
construction costs, cpmating costs, etc.)
are eligible uses of SURF, and what
affordability criteria must be applied to
affordable housing de pro
Commenters encouraged Treasury to
allow the full army of affordable
housing activities, including particular
requests for broad 11"ibility for Tribal
communities, and to specify that
"development" should include
construction, preservation,
rehabilitation, and operation. Other
commanders requested.1mifretton
about permissible program
administration approaches for
affordable housing, such as contracting
methods and distribution of funds.
Some commenters asked that
Treasury require SURF funds to be
end
commenter argued that SLFRF funds
should only be used to support
affordable housing for household.
making 50 percent of AMI or less and
that recipients should be 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.
Treasury Response: Eligible Activities:
The final rule clarifies eligibility of
affordable housing development for
recipients; these uses were eligible
under the interim fine] rule, but
Treasury is providing further guidance
to enhance clarity and respond to
recipient and commenter questions.
As with all interventions to address
the negative economic impacts of the
pandemic, affordable housing projects
must be responsive and proportional to
the hero identified. This lest may be
.at by affordable housing development
projects —which may Involve large
expenditures and capital investments —
if the developments increase the supply
of long-term affordable housing for low-
income households. While there may be
less costly (or non -capital) alternatives
to affordable housing development, a
compreLenaive response m the
widespread housing challenges
underscored by the pandemic will
require the production of additional
affordable homes, and targeted
affordable housing development is a
cost-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 Ford
(HTF) or the Home Investment
Pormerships program (HOME) are
eligible uses of SLFRF funds. Note that
these programs use different income
limits then the definition of low- and
moderate -income adopted by Treasury.
Given the severity of the affordable
housing shortage, and the ways in
which the pandemic has exacerbated
the need for affordable, high -quality
dwelling units, Tressury 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 goverment are eligible uses of
SURF 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 -end moderate -
income households as a result of the
negative economic impacts of the
pandemic, is intended to give recipients
comfort and clarity as they design a
Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4367
wide variety of affordable housing
interventions, including production,
habilitation, and preservation of
affordable rental housing end. in soma
cases, affordable homeownership units.
These programs allow the financing of
a wide range 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
al origination or that establish a posl-
closing, mortgage reserve account on
behalf of the borrower that may be
utilised to make a missed or partial
mortgage payment at any point owing
the life of the loan (e.g., if the borrower
faces financial stress). Homeownership
assistance that would be eligible under
the Community Development Block
Grant (at 24 CFR 507.201(n)) is also an
eligible use of SURF funds.
Public Comment: Permanent
Supportive Housing: Treasury has
received comments encouraging the use
of SURF funds far permanent
supportive housing. This is an eligible
use under the interim final rule: Both
the development of.if od.ble housing
or its
as en
that
substance use.
Public Comment: Operating Expenses:
Commenters specifically asked that
Treasury allow the cars of SURF funds
for operating expenses of affordable
housing units, as operating subsidies we
typically required to reach extremely
low-income households, whose
affordable rants may be lower than the
ongoing cost of operating their unit.
Treasury Response: Operating
expme ws for eligible affordable housing
were an eligible use of funds under the
interim final Is and the final Is
maintains this treatment. This may
include capitalised operating reserves.
Rehabilitation and repair of public
housing will also be considered an
eligible use of SURF funds.
Public Comment: Affordable Housing
Icons and Revolving Loan Funds: Some
commenters requested that loans with
tnstlmLes beyond the period of
performance or revolving loan funds
that revolve beyond the period of
performance be eligible uses of SLFRF
funds if used for affordable housing.
Some commenters pointed out that for -
profit developers of low-income housing
through the Low -Income Housing Tax
Credit (LBTfC) may be deterred from
accepting grants to bridge funding gaps
in current LIHTC deals by the treatment
of grants to for -profit entities in the
calculation of eligible basis for the
LIHTC.
TYeosury, Response: The final rule
does nut change the Informed of loans
from the interim final rule. For mare
details see $action Treatment of Loans
in Program Administration Provisions.
Similarly, the final rule does not change
the treatment of grants to support
affordable housing development.
including developments supported by
the LIHTC: such grants are an eligible
can offends.
Additional enumerated eligible uses
for assistance to impacted households.
As noted above, the interim final rule
intend a question on what other types of
services or costs Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVI 19. In response, comments.
more
legal
to country (e.g., access to and
ility of health insurance) to
that are most applicable to the
cued needs of certain
ens or geographic areas of the
hates (e.g., senior ritice rs,
agions), Other communities
guested a high degree of
respond to the particulm
r communities.
lesponss: Given the large
rule aims to clarify additional
enumerated 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
Parana these enumerated eligible uses
under the final role. In the final rule,
Treasury is clarifying several additional
uses, which generally respond to
pandemic impacts experienced broadly
across jurisdictions and populations, are
eligible under the interim final rule as
assistance to households and continua
to be an our the final role, as outlined
Wow,
11. Paid sick, medical, or jamily
leave.
Public Comment: Some commenters
argued that the pandemic increased the
need for paid sick or medical leave, as
slaying home when ill is recommended
by the CDC /o prevent spread of the
virus but lack of eccess to paid sick
leave often prevents workers from
staying home. Other commenters
recommended paid family leave as an
eligible use, arguing that shortages in
access to childcare or home health
assistance, as well as school closures,
may increase the need for family
members to serve as caretakers.
Background: The COVM-19
pandemic highli�hled the imp tance 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 lees
likely to report to work sick, and
therefore less likely to spread illnesses
I. the workplace: One study
demonstrates that the weelgency ck
leave provision of the Families Firssit
Continuations Response Act (FFCRA)
reduced the spread of COVID-19.155
The lack of paid leave exacerbates
financial hardships expmienced as a
experienced financial hardship.tce
Furthermore, because the Pamily end
Medical Leave Act (FMLA) excludes
small employers, part-time workers, and
works. who have been with their
employer for leas than a year, 94 percent
of workers do not have access to even
unpaid 1eave.157 Workers tricolor and
workers with lower incomes are leas
likely to have access to paid leave.158 159
In Staten Peduar. l(tlnerine sea. and Nialac R.
Zlmenn. Wivll)1s tourist., Sock leave on.
nalpad Pleura The olive In The United State:
study oveminm an ino.
of enaaency aid leave
on than,apmd nl MrID-19, ueenh Aaeire so, no,
12 fit.): are-ailn, IrtlpelA Jraufth
oQo05.org/doi/ro lsn/hlth ff2dadmi Fa.
soon amwn at d., employe and war6,ilo
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Resells ham We 2me Sur,,,. Ant Aaeochte (Jul,
20M. heepelMxvi.dol.yovlaieebat roae5/
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4368 Federal Register/Vol. 87, No. 18/Thumday, January 27, 2022/Rules and Regulations
For workers that are also caregivers
for children, unions, or other family
members, them may be a similar ..it
for —and benefits of —paid family leave.
For example, some workers may have
straggled during the pandemic to
balance caring for children, as schools
and dayearce closed, and working. For
new parents, paid parental leave results
in fewer infant hospitalizations,
lowering pommel stress, increasing
parental involvement, and improvin
the overall health of parent and chill'eo
COVID-19 has also increased the levels
of "emegdving dntioni ty" 1-1 and
"caregiving burden" nix far those
providing care to seldors or alder family
member. 1-11 sa When surveyed, mare
than half of carogivere reported that
COVID-19 increased both the amount of
respond to the negative economic
impacts of the pandemic.
12. Health insurance.
Public Comment: Several commenters
recammended that uses of funds to
expand access to health insurance he
enumerated eligible uses; commenters
believed that the heightened flak of
+i+Nmm' Cureglvim, investor to nodded as the
can not ry, ofrem promded by tnformel
undend;- C"ouddg burden" la defined se the
impuis on phpiul end mmam head, mid heated -
mixed 11-19y of fife of ne um ed amenverc
'"Se Colum. 2I Keane d, MM creation. ML
Greenev Ekp1m inp ChenBm In Cvealvm Burden
end C exv1%Intomily due to COVI0.19.
Gmomolcgy eM GednMc Medidne Ilenuery mat).
doitnn.11»12333r21@19992r9.
me 1d.
illness or hospitalimtion due to COVIf-
19 had incrsmod the negative economic
impacts of lacking health insurance.
Rackground: In 2019, prior to the
pandemic, it was estimated that 11
percent of nonelderly adults lacked
health im um armed By mid-2020, job
loss had resulted to an estimated 3.3
million people lasing their employer
sponsored insurance, resulting in an
additional 2 million uninsured
aduha.'ar Participation in Medicaid, the
role
an
of the
September 202016e and 8.3
do enrolled in insumnce
ACA marketplitca n9
the ACA, CHIP, and
ve eiarifcantly reduced the
through the pandemic and the economic
downturn, adequate coverage and
affordability still remains an issue for
many. In 2020, 21 percent ofworking-
age adults were inadequately insured,
meaning even if they had insumnce,
they incurred a agrdfrcant amount of
not pock costs.11 Addtionally, 37
percent of adults ropmted suvggling
with an d cid bills or
medicnl debt end
71 percent of adults who did not
purchase insurance cited affordability as
the main factor.'''
Treasury Response: Treasury agrees
that loss of health insumnce, increased
financial risk from lacking health
inure . or excessive out -of -packet
healthcare costs constitute negative
economic impacts of the pandemic.
Under the final role, programs or
services to expand access to health
insurance coverage are an enumerated
eligible use as assistance to households,
for example, subsidies for health
Insurance presidents or expansion of a
recipient's health insurance plan to
cover additional employees who
currently lack coverage.
13. Services for the unbanked and
umderhanked.
Public Command: One commenter
expressed support for the inclusion of
services to increase banking access as an
allowable expense under SLFRF. The
commenter recommended that states be
encouraged to offer opportm ices for
consumers to open safe and affordable
accounts capable of receiving direct
payments. The commenter emphasized
that allowing unbanked and
underbenked households to receive
funds securely through ne,fes, direct
deposit will help connect in terminated
consumers to the mainstream finencial
system.
Background: Banking inequities can
make it difficult for unbanked or
undmigod ed households to access
housing, jobs, and other important
economic opportunities. Being
unbanked or mulastan o d ®n also
make it challenging for households to
apply for and receive financial
assistance, including services like
pandemic emergency housing
accessible
a critical role in
over 5 mercent of families, or 7
they do oat have a bank acccunV's
Low-income households, man -white
household., and household. with
individuals with disabilities were even
mom likely to be unbanked. In 2019,16
percent of Native American households,
14 percent of Black households, and 12
percent of Hispanic households team
unbanked, compared to 2.5 percent of
white households. Additionally,
to Federal Impose huumn® Crpontive. Mar
National Savoy al Unben ux) and unfermented
Households (2019. haps://wna fdio.gov/homeltold
neyconSIM15mmummm.pdj
"e Federal 0.yoair Ins menu Carymmbq nnv
Audi® Iman. Household (Jen of dead, end
resented Services Ml9 f111C a—,, he,
neenthk gowavelpn/home5WJ survey/
3019mimc,od)
Federal Register/Vol. 87. No. IS/Thursday, January 27, 2022/Rules and Regulations 4369
undlpiand ed households —Dose that
have a bank account but enly on
alternative financial services, such as
money orders, payday loans, and check
cashing services— amount for 16
percent of all household. in the United
States.l'e As a result of the COVIRI9
pandemic, new social distancing
protocols have, in come instances, made
it more 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 beraitioned to cashless
payments systems to promote
commodes payments.+rs As a resell,
imbi nked individuals may face
additional challenges conducting
financial transactions.
Treasury Response: Recognizing these
challenges, Treasury is clarifying that
recipients may use SLFRF funds to
]met
Earned
or
exhaustive list of uses to provide
financial services to unbenked and
undelbanio d households:
a Provide low or no cost financial
services, including in conjunction with
administration of benefits, such as pre.
paid debit cards, e.g., via Economic
Impact Payment or General purpose
Reloadeble pia -paid cards or for the
development of public banking
infrastructure that can sum ent benefit
e Provideflnandel literacy programs
and conduct community outreach and
deploy eolpl emend resources to
increase aworeness about lowcost, on -
overdraft fee accounts, pilot new
strategies and approaches that help
overcome barriers to banking amass and
support the gathering and sharing of
information in ways that improve
equity, such as community meetings:
partnership. wfth community -based
organizations, online surveys, fours
group., human -centered design
—Bo—1 of Ilia Gras aablePadnalles—
Steven. Repot on,he Fivnumic Wall -Habig of uS
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aclivitim and that community
engagement activities.
Assistance to Unemployed and
Underemployed Workers
The interim final rule included
assistance to unemployed workers as an
enumerated eligible use, including
"services like job training to accelerate
rehiring of unemployed workers."
Treasury provided further guidance,
based on recipient questions after the
interlm final rule, that eligible new
under this section also include "other
efforts to accelerate rehiring and thus
reduce unemployment, such as
childcare assistance, a share. with
transportation to and from a Joliette or
interview, and incentives for newly
employed seorlowd.]" as wallas
assistance to unemployed workers
seeking to start small businesses.
Finally, further guidance also provided
that "public jobs programs, subsidized
employment_ combined education and
occupation or level of training" are all
enumerated eligible uses as assistance h
unemployed or underemployed
workers.
The interim final rule defined eligible
hensficiarles of assistance as
"individuals who want and are
available for work, including those who
have looked for work sacred es. 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, as wen as persons
marginally attached to the labor force
and working part-time for economic
reasons.,,. The latter two ctassifrcatomil
are types of labor underotilization, or
"underemployed" workers.rrr Finally,
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 deterioration of their economic
prosppxis doe to thdemic.
Pube pan
fir Comment: Commenters
generally supported the inclusion of this
enumerated eligible use. One
commenter recommended including
assistance for underemployed workers
who look jobs due to the pandemic that
'°avra.n nrtaem slnd.uca. I.A orrone
stelimA 9o:n the corn., PoaWaltan survey:
funwple end Definition, hops:ZZ—blegov's,V
de)inilinnthnn owl vlsited November a. woo,
»rd.
did not fully utilize that, skfllset or did
not provide the hours, wages, or job
quality desired. Treasury has also
received recipient questions on whether
job fairs or giants to businesses to hire
undelserved workers am eligible uses
under this category. Another commenter
recommended flexibility in eligible
workforce 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 final rule and
subsequent g dance. Treasury is also
confirming that fob fairs or grants to
businesses to hire undoeserved workers
we eligible uses under this section.
Treasury is also commanding that job
and workforce training centers am
eligible capital expenditures, so long as
they adhere to the standards and
presumptions detailed in the section
Capital Expenditures in General
Other.
ell. maintains
Bursae of Labor
ions of unemployed
, using a common,
widely known definition that
incorporates a broad group of
individuals both unemployed or whose
skills are otherwise underotilized in the
labor market.
In addition, recognizing that the
Pandemic has generated broad
workforce disruption, in the final role.
Treasury is making clear that recipients
may provide job training or other
mumenrated types of assistance to
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 to, a
recipient may use funds to make
deposits into its account of the
Unemployment Trust Fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104) up to the level
needed to..inre the pre -pandemic
balance of such account as of January
27, 2020 or to pay back advances
received under Title RlI of the Social
Security Act (42 U.S.C. 1321) for the
payment of benefits between January 27,
2020 and May 17, 2021. These Costa
support the solvency of the
unemployment insurance system and,
ultimately, unemployment insurance
benefits provided to unemployed
4370 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations
workers during the pandemic.17e The
Interim final rule also posed the
question of what, if any. conditions
should be considered to ensure that
funds used under this eligible use
category repair emmenic impacts of the
pandemic 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 SLFRF
funds should be able to address. Other
commenters opposed this eligible use
category, arguing that funds used under
this category may not ultimately support
unemployed workers. Some
eommentere noted that unemployment
insurance taxes on businesses
automatically increase when frost fund
balances ere low and suggested that
permitting the deposit of funds into
unemployment insurance trust funds
prevents a tax increase on businesses,
some of which may not have faced
negative economic impacts from the
pandemic, rather than providing
assistance to unemployed workers.
Other comments suggested that deposits
are better thought of as savings far
future needs than assistance to
unemployed workers in the near term.
Responding to the interim final tale's
question, several commenters suggested
that, if Treasury maintains this eligible
use, the final rule should require
detailed reporting on funds used under
this category or place conditions on this
category to increase the likelihood that
funds ultimately support unemployed
workers. For example, some
c. men enlers suggested that recipients
that deposit SLFRF funds into their trust
fund should be barred firm cutting
unemployment insurance benefits for
workers during the period of
performance or from morning new
barriers to accessing benefits (e.g.,
through the application process and
ongoing requirements to receive
benefits). One commenter, noting that
unemployment insurance benefits often
provide low rates of wage replacement
and de not cover some types of
unemployed workers, argued that
recipients should not be permitted to
deposit fonds into the trust fund unless
I -Note that, while flat —nook loan noun,
addu smd—allanbre MemJ, a, 1111, rim cuss
Incuned to sedans the harm omun eflar March 3.
2021 and proodee amWmco to ommuployed
xrorkme, an ell,i W e use of SLFRF funde.
the recipient concurrently expands
benefits. Finally, one commenter
suggested a cap on the amount of funds
that can be used for this purpose.
Treasury Response: Inclusion as on
Eligible Use and Condition.: In the final
rate, Treasury is maintaining the
inclusion of this eligible use category.
Because unemployment insurance treat
funds directly fund benefits 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, an eligible use of SLFRF funds.
Final ly, 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 SUIT 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 as
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
assist unemployed workers. In other
words, SLFRF funds deposited into an
unemployment tnsurnnce trust fund
generally serve as assistance to
unemployed workers, unless recipients
take policy actions that substantially
decrease the extent to which SLFRF
funds would flow to unemployed
workers. As such, through December 31,
2024, recipients that deposit SLFRF
funds into an unemployment insurance
trust fund or use SLFRF funds to repay
principal on Title XII advances, may not
lake 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 (L ., the
maximum benefit entitlement).
Finally, until the final rule become
effective on April 1, 2022, the interim
final rule remato. binding and
effective.' re These requirements were
not in ef%m 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
mdpicani have taken signiflcant steps
—Sm, eg., tl 9, Do,., ... I aithe Ttesunw.
Idme Intommtion on the Condusion ofthe Public
CummeW Period and the lntenm Raul Rule an the
cuoioovu. stets and Loral Fisral Remvery INMs.
hapama.inmury gav/syalem7lm/I J a//rPo
eaolai.m mmpdJ
toward making a trust fund deposit or
repaying principal on Title X0 advances
under the interim final .Is. such as the
legislative appropriation of funds for
this purpose, even if a formal obligation
has not oaurred, Treasury will exercise
enforcement discretion to not pursue
violations of this final role prevision
(i.e., the requirement not to reduce
benefits) for recipients that have
appropriated funds for this purpose
prior to the date of adoption of the final
role consistent with the laws and
procedures in their jurisdiction.
Recipients should refer to Treasury's
Statement Regarding Compliance with
the Commairus State and Local Fiscal
Recovery Funds Interim Final Rule and
Final Rule, which provides additional
detail rut these issues.
Public Comment and Treasury
Response: Technical Corrections and
A eandmce is: Following the interim
final role, 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'.
treatment of the eligibility of interest on
Title XR advances under the
Coronavirus Relief Fund.
Treasury is further clarifying that
recipients may only use SLFRF funds
for contributions to unemployment
insurance trust foods and repayment of
the principal amount due on advances
received under Title XR of the Social
Security Act up to an amount equal to
(i) the difference betwcen the balance in
the re ciplent's unemployment insurance
treat fund as of]anuary 27, 2020 and the
balance of such account as of May 17.
2021. plus (it) the principal amount
outstanding as of May 17. 2021 on any
advances received ender Title XII of the
Social Security Act between January 27,
2020 and May 17, 2022. 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 SLFRF interim final
rule sets a rap on the amount of SLFRF
funds a recipient may use for trust fund
contributions and repayment of
principal on Title XII advances. Further,
a recipient that deposits SLFRF funds
into its unemployment insurance trust
fund to fully mature the pre -pandemic
balance may not draw down that
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4371
balance and deposit more SLFRF funds,
household income of $0,100 (measured
12 schools into the category "assistance
back up to the pre -pandemic balance.
in 2018 dollam).1fle
'Its
to no households," recognizing
EnumeratedEligible
Enumerated Eligible Uses for
En
impact pre-existing inequalities
have an a household or community's
that these pandemic impacts were
widely shared across the country.
ro Imperial
P P Y P
Households
ability to recover is intersectional.
This section discusses enumerated
Research shows that pre-existing racial
eligible ..a to address health
Background
and gender disparities exacerbated the
disparities, to build stronger
disproportionate economic Sort health
communities through investments in
The COVID-19 pandemic has had
dispropordonally 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 COVM-19 pandemic and
experienced disproportionate rates of
negative health oulcames)a- is,
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 disastem.+s%This pattern held
true for the effects of COVID-19 and the
economic dowotum: historically
undeserved groups experienced
amplified negative impacts, further
widening inequality.ras
Many communities facing systemic
barriers had not yet recovered from the
impact of the Greet Recession before
experiencing the impacts of COVID-19
and the economic downturn. For
example, in 2009, at the and of the Greet
Recession, households without a high
school diploma had an average annual
income of $32,300 (measured in 2018
dollars). By 2018, nine years into the
economic recovery, those same
households saw their average income
increase by $600. During that same time
period, households with a bachelor's
degree saw an increase in their average
,cold.
impact GOVRti19 and the economic
downturn had an workers of color. and
specifically, women of colorJas Another
study found that during the f rat six
months of the pandemic counties that
were both high -poverty and majority
non -white experienced COVID-19
infection rates eight times higher than
high -poverty, majority white
counlies.las Many residents in these
communities are still coping with the
negative health and economic impacts.
Summary of the Interim Final Rule and
Final Rule Structure
As described previously, the interim
final rule provided a broader list of
enumerated eligible uses to respond to
the pandemic in disproportionately
impacted communities, in recognition
that preexisting health, economic, and
social disparities contributed to
disproportionate pandemic impacts in
certain communities and that
addressing the root causes of those
disparities constitutes responding to the
public health and negative economic
onpacw of the pandemic The interim
final rule described eligible use. in
across
health outcomes,
communities
in housing sort
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-
-lasso 11-0 a.1vA Kocbbs,'
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neighborhoods, to address educational
disparities, to provide rental assistance
vouchers or assistance relocating to
areas of greater economic opportunity,
and additional eligible ..a to respond
to negative economic impacts in
disproportionately impeded
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 reflect
the intertwined to. of these issues.
As a reminder, recipients can
presume these uses are eligible when
provided in a QCT, to families and
individuals living in QCfs, 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 geograpphic
areas disproportionately impacted by
the pandemic. Recipients may also
identify addition.] disproportionate
impacts of the pandemic and design an
appropriate respome to add... that
harm. For details on eligibility
standards and presumed eligible
populations, see section General
Provisions: Structure and Standards.
Enumerated Eligible Uses for
Disproportionately Impacted
Households
1. Addressing health disparities.
Public Comment: General: In general,
commenter. supported eligible uses to
address health disparities and support
health equity; several commenters
highlighted the disparities faced by
communities of color and law -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; these are discussed further
below in this section.
Treasury Response; In line with
commenters'recommendatimrs, the
final rule meintem. several enumerated
eligible uses to address health
disparities, specificallyy:
a. Communiryheedg work...
Treasury received few comments on
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.tsr Treasury is maintaining this
eligpible use in the final rule.
6. Ramediation offend paint or other
lead hazardaAlie interim final rule
included remediation of lead paint or
other lead hazards as an enumerated
eligible use to address health
dispparities.
Mile 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 actions, 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 substances such as lead. Other
commenters requested that Treasury
allow replacement of lead pipes as an
eligible use of funds.
Treasury Response: Recipients may
make a broad range of water
infrastructure investments under section
602(c)(1)(d) and 603(c)(1)(d), which can
include lead service line replacement
and other activities to identify and
remediate lead in water. These uses are
discussed in greater detail in section
Water and Sewer Infrastructure of this
SupplSuppplemental Information.
emental
has fuller determined that
several of the services identified by
commenters are appropriate responses
to add... health disparities in
disproportionately impacted
households. These services were eligible
under the interim final rule and
continue to be so under the final role.
These services include romedation to
address lead -based public health risk
factors, outside of lead in water,
including evaluation and remediation of
lead paint, dust, or soil harards; testing
for blood lend levels; public outreach
and education; and emergency
protection measures, like bottled water
and water filter, in areas with an action
level excesdance for lead in water in
accordance with the Environmental
Protection Agency's Lead and Capper
Release
Further, Treasury had determined that
certain capital expenditures, including
improvements to existing facilities to
remediate lead contaminants (e.g.,
removal of lead paint), are eligible
responses, although this does not
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include construction of new facilities
for the purpose of lead remediation.
Recipients should make sure that all
capital expenditures adhere to the
standards and prssumpptiona 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 clinical role of
access to high -quality medical care in
reducing health disparities and
addressing the root causes that led to
disproportionate impact COVIR38
bmltb impacts in certain communities,
the final rule recognizes that medical
equipment and facilities designed to
address disparities in public health
outcomes are eligible capital
expenditures. This includes primary
care clinics, hospitals, or integrations of
health services into other settings.
Recipients, should make sure that all
capital expendual adhereto the
standards and pers.7i tti ns detailed in
section Capital Expenditures in General
Provisions: Other.
2. Housing vouches and assistance
mlaeating In addition to other housing
services, the interim final role permitted
assistance to facilitate household moves
to neighborhoods with hixh levels of
economic opportunity ea mobility for
low-income residents. Examples could
include SLFRF-funded analogues to
Section 8 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.189 Treasury
did not receive public comments on
these enumerated eligible uses.
Treasury Response: Treasury
maintains the eligibility of vouchers and
relocation assistance in the final rate,
3. Building strong, healthy
communities through investments in
neighborhoods. While the interim final
rate Included a category of enumerated
eligible uses for "building stranger
communities through investments in
housing and neighborhoods," the
examples of services provided generally
focused on housing uses. In response to
question. following raises. of the
interim final Is, Treasury issued
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further guidance clarifying that
"invedure re in perks, public plaras.
and other public outdoor recreation
spaces may be responsive to the needs
of disproportionately impacted
communities by promoting healthier
living environments."
Public Comment General: A
significant theme across many public
comments was the importance of
neighborhood environment to health
and economic. outcomes and the
potential connections between
residence in an underserved
neighborhood and dispproportionate
impacts from the pandemic. Many
commenters highlighted the connection
between neighborhoods and health
outcomes, including citing public health
research finking neighborhood traits to
health outcomes. Far example, the CDC
abates that "neighborhoods people live
in have a major impact on their health
and well-being."rvo As such, CDC
identifies "neighborhoods and built
environment" as one of five key social
determinants of health tsi and includes
"creat[ing] 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
outcomes.
Public Comment: Commenters esgued
that ueighburhuuda impact phyeical
health outcomes in several ways. First,
same commenters reasoned that the
physical environment and amenities in
a community's' influence a person's
level of physical activity, with features
like parka, 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 are risk factors for more
severe COVID-18 health outcomes.
Second, some commenters also
suggested that access to healthy food in
a neighborhood impacts health
outcomes. These commenters reasoned
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Federal Register/Vol. 87, No, III/Thursday, January 27, 2022/Rules and Regulations 4373
that lacking �its quem access m
affordable, healthy food or living to a
"food desert" may contribute to
disparities in diet that influence health
outcomes, including contributing to pre-
existing conditions that increased risk
far severe GOV10.19 outcomes. Thus.
commenters cited public health research
finding "clear evidence for disparities in
food access in the United States by
income and race."'es
Some commenters also suggested that
neighborhood environment is connectod
to whet public health outcomes, like
mental health and public safety. For
example, aome research suggests that
living in neighborhoods with green
space and tree coven correlates with
improved mental health outemn.s.'s,
Finally, some commenters argued that
activities like installing streetlights,
greening or cleanup of public spaces or
land, end other efforts to revitalize
public spaces would support improved
public aefety.195 iss
These commenters recommended that
Treasury include as an enumerated
eligible use in disproportionately
impacted communities projects to
develop neighborhood features that
promote improved health and safety
outcome., each as parks, grean.pac.,
nature, inclu
connected to
aw Seen e.g.,
bowmen Green
Adulte:A
mortality and illness and increased
well-being.'"' Urban park use during
the COVID-19 pandemic may have
declined among lower -income
individuals.tes Encouraging physical
activity ran also play a role in health
outcomes, as a sedentary lifestyle is a
risk factor for chronic dim... and more
severe COVID-19 outcomes.'"N Parks,
recreation facilities, and sidewalks can
p smote healthier living environments
by allowing for safe and socially
distanced recreation during the COVID-
19 pandemic.
Additionally, food insecurity rates,
which are higher among lower -income
households and households of color,
doubled among all households and
tripled among households with children
during the onset of COVID-d9 from
February 2020 to May 2020.E
Improving 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 outcome8 as discussed
in the research and analysis provided by
commenters, including risk factors that
Rs that increase access disproportionate COVID-19 health
streetlights, impacts in low-mrnme, rommunities.
weep, end other The fmal rule also recognizes that the
s, can work to
safety challenges like miss of violent
and mental health
crime, which are correlated with A
sg people access to
neighborhood's built environment sad
parks, has been
features. A. such, neighborhood features
.md levels of
that promote improved health and
safety outcomes respond to the pre-
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The final role includes enumerated
eligible uses in disproportionately
impacted communities for developing
neighborhood features that promote
improved health and safety outcomes,
such as parks, green spaces, recreational
facilities, sidewalks, pedestrian safety
features like crosswalks.'^' projects that
increase access 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 section Capital Expenditures in
General Provisions: Other, which
desuibea additional eligibility
standards that apply to uses of funds for
capital expenditures.
b. Vacant or abandoned properties.
As discussed above, the Interim final
role included enumerated eligible uses
for building stronger communities
through investments in housing and
neighborhoods in disproportionately
impacted communities. The interim
final role also posed a question of
whether other potential was in this
category, specifically "rehabilitation of
blighted properties or demolition of
abandoned or vacant properties,"
Add.. the ppublic health or economic
imppacts of the pandemic.
Pubfie Comment Several commenters
argued that programs or services to
add.. 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 mental health outcomes, noted that
hazard, or argued that such
present a barrier to moms
These commenters .ugeeatf
vacant or
values.
operstion of land bank. that redevelop
or renew vacant properties and land.
Treasury Response: As noted
throughout the final rulethe pandemic
underscored the importance of safe.
affordable housing and healthy
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4374 Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
neighborhood environments to public
health and acoromic outcomes.
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:
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 use
• Removal and remediation of
environmental contaminants or harards
from vacant or abandoned properties.
when conducted in compliance with
applicable environmental laws or
regulations
Demolition or deconstruction of
vacant or abandoned buildings
(including residential, commercial, or
industrial buildings) paired with
greening or other lot improvement as
part of a strategy for neighborhood
revttallzafion
a Greening or cleanup of vacant lots,
as wall as other efforts to make vacant
loft safer for the surrounding
community
• Conversion of vacant or abandoned
properties to affordable housing
a 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.'°s Such
properties may be in significant
disrepair (e.g., major structural defects:
lack of weather tight 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
modur ecled and weelf), or may be
declared unfit for inhabitants by a
government authority.
As noted above, demolition and
greening (or other structure or lot
remediation) of vacant or abandoned
properties, including residential,
commercial, or industrial buildings, is
an eligible use of funds. T7eoeury
encourages recipients to undertake these
activities as part of a strategy for
neighborhood revitalinalion and to
be used
this eligible 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 maecurityy or lack of affordable
housing are not eli ''his uses of funds.
This risk is generally more acute in
jurisdictions with low or reasonable
vacancy rates and has acute in
jurisdictions with high or hyper-
vacmcy.'°
AmaHmnC -unity Survey fl-ymhvrimmv,
foe mullerg®gaphic arum. or tabWall-aI Wa
Department of Houston and Urban Development
Treasury presumes that demolition of
vacant or abandoned residential
properties that results in a net reduction
in acceptable 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 that convert occupiable
housing units for low- and moderate -
income individuals into housing units
unaffordable to current residents in the
community. Recipients may assess
whether units are "occupiable" and
what the housing need is for a given
market
are occupiable. Recipients should also
take all reasonable steps to minimize 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 U.S.C. 4601. and the
Department of Transportation's
implementing regulations, 49 CFR part
24, that apply to projects funded with
federal financial assistance. such se
SLFRF funds. Recipients should also be
aware of federal, state, and local laws
and regulations, outside of SLFRF
program requirements. that apply to this
activity. Recipients must comply with
the applicable requirements of the
Uniform Guidance regarding
procurement, contracting, and conflicts
of interest and must follow the
applicable laws and regulations in their
jurisdictions. Recipients must also
comply with all federal, state, and local
public health and environmental laws
or regulations that apply to activities
under this eligible use category.2°a for
example, requirements around the
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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4375
handling and disposal of asbestos -
containing materials, lead paint, and
other harmful materials may apply, as
well as environmental standards for any
backfill materials used at demolition
sites. Treasury enmuragea recipients to
consult and apply best practices from
the Environmental Protection Agency as
well.
Recipients must eval note each
subrecipient's risk of noncompliance
with federal statutes, regulations, and
the terms and conditions of the
subaveard related to safely and properly
conducting activities under this eligible
me. This may include checking for any
past violations recorded by state or local
environmental, workplace safety,
licensing, and proem amen) agencies, as
well as regular reviews for suspensions,
debarments, or stop work orders.
Recipients must establish rigorous
oversight and internal controls
processes to monitor compliance with
any appplicahis reeqq ' merits, including
compliance by sabrecipients.
4. Addressing educational disparities.
The interim final role included an
enumerated eligible use for addressing
educational disparities in
disproportionately impacted
communities and outlined some
enumerated eligible services under this
we. These enumerated uses included
early learning services, assistance to
high -poverty school districts m advance
equitable funding across districts and
geographies, and educational and
evidence -based services to address the
academic, social, emotional, and mental
health needs of students. Addressing the
many dimensions of resource equity —
including equitable and adequate school
funding; access to a well-rounded
education; wall -prepared, effective, and
diverse educators and staff; and
integrated support services,en also
begin to mitigate the impact of COVIH-
19 on schools and students and can
close long-standing gaps in educational
opportunity. As discussed above, in the
fired role, early learning services and
addressing the impacts of lost
instructional time for K-12 students are
enumerated eligible uses for impacted
communities, not just
disproportionately imported
communities.
Public Comment: Treasury received
some comments in this category.
Generally, commenters expressed
agreement with the elements of the
interim final rule regarding use dfunds
for addressing educational disparities.
Some commenters had questions about
whether a few specific uses of funds
qualified under this category. For
example, comments. inquired about
whether the funds could be used for
behavioral health in a school setting in
cultural language classes.
Treasury Response: Treasury is
maintaining these enumerated eligible
uses in the final rule, which are now
organized under the Treading of
"services to address educational
disparities." Treasury reiterates that
these uses include addressing
educational disparities exacerbated by
COVI0.19. including but not limited to:
increasing resoureas far high -poverty
school districts, educational services
like tutoring or afterechool programs,
summer education and enrichment
programs, and supports for students'
social, emotional, and mental health
needs. This also includes responses
aimed al addressing the many
dimensions of resource equity —
including equitable and adequate school
funding; access to awell-rounded
education; well -prepared, effective, and
diverse educators end staff; and
integrated support services —in order to
close long-standing gaps in educational
opportunity.
Further, 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
seeking to use funds for capital
expenditures should refer to the section
Capitol Expenditures in Gemara]
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 childcare,
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,
recipients may presume that any K-12
student who lost amass to in -person
incoan.n fora significant period of
time has been impacted by the
pandemic and is thus eligible for
es ,madve services (sea 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
or costs Treasury should consider as
eligible uses to respond to the
disproportionate public health or
negative eronomic impacts of COVI0.
19 on low-income populations and
communities.
In response, commenters proposed a
wide variety f.dditimul
recommended enumerated eligible uses
to assist disproportionately impacted
households, ranging from general
categories of services (e.g., long-term
investments to remediste long-term
disparities) to highly specific examples
of services (e.g.. a specific type of
healthcare equipment). As discussed
above, Treasury is including several
additional categories of enumerated
eligible uses in the final rule in response
to public comments.
Given the large number and diversity
of SURF recipients, Treasury's
approach to assistance to households in
disproportionately impacted
communities in the final role aims to
provide enumerated eligible uses that
respond to disproportionate impacts of
the pandemic experienced widely in
many jurisdictions across the country
d are intended to simplify and clarify
these enumerated eligible uses. Al the
same time, Treasury recognizes that the
impacts of the pandemic vary over time,
by jurisdiction, and by population; as
such. the final rule provides flexibility
for recipients to identify additional
disproportionate impacts to additional
households or classes of households and
pursue pmgreme and services that
respond to those disproportionate
impacts.
In the rival rele, Treasury has not
chosen to include as enumerated uses
all uses proposed by commentemo given
the significant range, and in some cases
highly specific nature, of the proposed
uses Treasury was not able to assess that
the proposed uses would respond to
disproportionate impacts experienced in
many jurisdictions across the country.
.up ant ng an enumerated eligible use
available to ell recipients
presumptively. However, the final rule
continues to provide a framework to
allow recipients to identify and respond
to additional dispropmilonato impacts
(for details, see eaction General
Provisions: Structure and Standards).
Some types of proposed additional
enumerated eligible uses fa assistance
to households in disproportionately
impacted communities were
recmnmended by several commenters:
• Capital expendimes. Many
commenters recommended that capital
expenditures on many different types of
public and private facilities be
enumerated eligible uses. For clarity,
Treasury hes edd...d 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
.action (a.. section Capital
employment'°^ The negative outlook
the pandemic ere rooted in systemic
Expenditures in General Provisions:
for small businesses has continued: As
issues present even before the
Other).
of November 2021, approximately 66
pandemic. For example, before the
a Equity funds. Several commenters
percent of small businesses reported
economic deve t en, only 12 percent of
recommended that Treasury permit
that the pandemic has had a moderate
Blackown al businesses and 19 percent
SLFRF funds to be deposited into an
or large negative effect on their
of Hispanic -owned businesses had
equity fund to support long-term racial
business, and over a third expect that it
annual earnings of over Sl million
and economic eqquity investment^. The
will take over 6 months for their
compared to3l percent of white -owned
eligibility of s nel"i a would depend on
business to return to their normal level
businesses."° Minority -owned
the specific structure and uses of funds.
of opperations.'°°
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 costs incurred until
result of many small businesses having
downturn (e.g., services, transportation
December 31, 2024; see section
faced periods of closure and having seen
and warehousing, healthcare end 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, end
Further, recipients may calculate the
can face greater hurdles in accessing
accommodation and food servicesy217
.at incurred with respect to
credit,21+ 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 nonminorityowned
Administration Provisions. Projects
significant challenges during the
businesses.219
funded by a revolving loan fiend using
pandemic, minority -owned and vary
Although disparities in annual
SLFRF funds would also need to be
small businesses have faced additional
revenue are not a direct indication of a
eligible uses of SLFRF funds.
obstacles. Between February and April
business's ability to weather an
e Environmental quality and climate
2020, the number electively 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.213 During that
challenging for these businesses to
environmental quality, remedial¢
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, m fnereaae energy
Farman, respectively, compared to a 17
larger challenges in raising capital,
efficiency or electrical grid resilience.
percent decrease in white business
including securing business loans.2'^
Whether these projects respond to the
oweers.211 Female business owners also
saw significant impacts, with bustneseea
Summary of the Interim Final Rule and
disproportionate impacts ofthe
pandemic on certain communities
owned by woman falling by 25
Final Rule Structure
or ld depend on the specific issue they
ParcenL 215
Many of the disparities in how
Summary oJlnterim Final flu/e: As
discussed above, small businesses faced
address and its nexus to the public
health and economic impacts of the
minority beat.. owners experienced
significant challenges in covering
pandemic.
payroll, mortgages or rent, and other
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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 concern or other organization
that:
(1) Has no more than 669 employees
m, if applicable, the size standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates; and
l2) Is a small business concern es
defined fn section 3 of the Small
Business Act (15 U.S.C. 632).
Specifically, the interim final rule
provided that recipients may provide
assistance to ...It businesses to adopt
safer operating procedures, weather
periods of closure, or mitigate financial
hardship resulting om the CAVID-19
public healih emergency, including:
a Loans or grentsto mitigate financial
hardship such as declines in revenues
or impacts of periods of business
closure;
a Loans, grants, or in -kind assistance
to implement COVI0.19 prevention as
mitigation tactics: end
• Technical assistance, counseling, or
other services to insist with business
planning needs.
The interim final rule further
provided that recipients may consider
additional criteria to target assistance to
busineewa 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 Paegam), or aim economic
harm due to the pandemic, as well as
businesses with less capacity to weather
financial hardship, such as the scralleal
businesses, those with less access to
credit, or those serving underserved
communities. The interim final rule she
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 COV10.19 on low-income
populations and communities.
Final Rulc Stricture: Consistent with
the interim final ode approach, the final
rule provides a non-whauethm list of
enumerated eligible uses for 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
experienced by email businesses and
design and implement a response to that
negative economic impart, beyond the
uses specifically enumerated in the final
rule. according to the standard
described in the section Standards:
Identifying a Negative Economic Impact.
A recipient may also identify small
businesses that have been
disproportionately impacted by the
public health emergency and design and
implement a program that responds to
the source of that disproportionate
impact.
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, as described in the section
Standards for Identifying Other Eligible
Populations. For example, to identify
impacted smell businesses, a recipient
may consider whether the small
businesses faced challenges in covering
payroll, mortgage or rent, or other
operating costs as a result of the public
health emergency and measures taken to
contain the spread of the vims. In order
to ease administrative burden, the final
rule presumes that small businesses
operating in QCTs, small businesses
operated by Tribe] governments or on
Tribal Leads, and small businesses
operating in the U.S. territories were
disproportionately impacted by the
pandemic.
Reurganizotkaw and Cruse -
References: As detailed above, Trot"
has re -categorized some uses of funds in
the final rule to provide greater clarity.
For discussion of assistance to small
businesses and impacted industries to
implement COVID-19 mitigation and
prevention strategies, we 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 SLF'RF
funds to provide assistance to small
businesses. Some commantere suggested
that SL1W funds should be available to
seals] all erns]] businesses, rather then
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 assistance to
households or building public sector
capacity.
Treasury also received comments
aralwating'clarification of the types of
small businesses eligible for assistance.
For example, some commenters
requested clarification about whether
microbtagrosses were included in the
definition of small business. Comments
also suggested that self-employed
individuals and Tribal enterprises be
classified as small businesses,
mspeclively. Grammarians argued that
these types of small businesses are more
common among low-income and
minority businessoveners and serve as
important institutions in underearved
communities.
Finally, wine commenters suggested
that Treasury permit broader
enumerated eligible uses to assist small
businesses in disproportionately
impacted communities and generally
strengthen economic growth in these
communities. These commenters
recommended that Treasury presume
small businesses operating in QCCs are
disproportionately impacted and
eliggible for broader enumerated was.
Trw.my Response: As discussed in
the section Designating a Negative
Economic Impact, in the final rule,
recipients must identify an economic
harm used or exacerbated by the
pandemic on a small business or class
f small businesses to provide services
that respond.
As discussed above, programs or
services in this category most respond
to a here experienced by a smell
business or else. of smell businesses as
a result of the public health emergency.
To identify impacted small businesses
and necessary rasp....ai aces,
recipients may consider impacts such as
,.at avenue or increased coats,
challenges covering paymll, rant or
mortgage, or other operating costs, the
capacity of a small business to weather
financial hardships, and general
financial insecurity resoling from the
public health emergency.
Recognizing the difficulties faced by
small businesses in certain
communities, the final rule presumes
that small businesses operating in QCps,
small businesses operated by Tribal
governments or on Tribal lands, and
small businesses operating in the U.S.
territories were disproportionately
impacted by the pandemic. This
Presumption parallels the final 'tile's
rapproach to azsislance to household.,
reflecting the are severe pandemic
impacts in undorsorved communities
and creating a parallel structure across
different categories of eligible uses to
make the structure simpler for
recipients to understand and navigate.
Treasury notes that recipients may
also designate a class of small
businesses that experienced a negative
economic impact or disproportionate
negative ammonite impact (a.g.,
microbusiwases, small businesses in
certain economic aacloa), design an
intervention to fit the impact, and
4378 Federal Register/Vol. 87, No. I8/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 rule definition of"small
business," which used the Small
Business Admint.natton's (SBA)
definition of fewer than 500 employees,
or per the standard for that industry, as
defined by SBA. This definition
includes businesses with very few
employees, self-emplayed individuals,
and Tribally owned busimeses?se
Finally, Treasury at. that recipients
may award SLFRF funds to many
different types of organizations,
including small businesses, to function
as a subrecipient in carrying out eligible
uses of fund. on behalf. of a recipient
government be this case, a smell
business need not have experienced a
negative economic impact in order to
serve as a subrecipfent. See section
Distinguishing Subrecipients versus
Beneficiaries for more detailed
discussion of interactions with
subreciphrus, in contrast to
beneficiaries of assistance.
Enumerated Eligible Uses for Assistance
to Small Businesses
Public Comment: Treasury received
comments requesting clarification of the
types of assistance available to small
buaf resem. Far example, one
commenter suggested that outdoor
dining be an eligible use for SLFRF
funds as assistance to small businesses.
Other commenters asked for
clarification about how SURF funds
could be used to support new
businesses end star aps.
Several commenters requested
clarification of whether and how
recipients may provide services to
business districts or downtown areas,
particularly those that exist in whole or
in part within a QLT, and requested
reduced documentation of the specific
negative economic impact for the
businesses operating within those areas.
Those commenters argued in favor of
allowing redevelopment or other
support, including capital investments,
in business districts at ware
nuln coped m —,I.,se, buemm.
caned ma controlled bye Trlbelgnvmnmem w
np conaldmed alfllieree of is.T@el government
and ue nn.9dorM a fltbtr a of.1b., huainmaes
wmd by the Tribal gwemment brume nl th..ir
mahip by abe Tribal p ve—lm
Iver".. mmreaeruenl, ea aasufli i in m mu
rM.100fb119. Teri e,muron ir mniw,ni with We
Smell Businau Adminimmm (SBA) Hlm v—
delbatiou ore "emu0 bminma mnmen" mhnng to
Tribal pveenmevLa ee we9 ea hnw Tibal
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Gteaa cl).
negatively impacted by COVID-19.
Several commenters al. .,send that
funds should be available to support
and grow microbusinesses, or
businesses with rive or fewer
employes e, which are more likely to be
owned by women and ppeople of color.
Treasury Response: In the final rule,
Treasury is maintaining and clarifying
the enumerated eligible uses of funds
far assistance to small businesses that
are impacted or disproportionately
ice actedby the panaemic.
Pmpactrd smart businesses.
Specifically, Treasury is maintaining
enumerated eligible uses from the
interim final role for assistance to
impacted small businesses. These
include but are not limited to:
• Loans or grants to mitigate financial
hardship such as declines in revenues
or impacts of part ads of business
closure, far example by supporting
payroll and benefits casts, costs to retain
employee., mortgage, rent, or utilities
mats, and other operating costs;
a Loam, grants, or inkindassistance
to implement COVID-19 prevention or
mitigation tactics (see section Public
Health for details on these eligible uses);
end
• Technical assistance, counseling, or
other aervicee to mafst with business
planning needs.
Treasury acknowledges a range of
potential circumstances in which
assisting small businesses could be
responsive to the negative economic
impacts of COVID-19, including for
small businesses startups and
microbusinesses and individuals
seeking to start small or
microbusinesses. For example:
• As noted above, a recipient could
assist small business startups or
microbusinesses with additional costs
associated with COVID-19 mitigation
tactics; sea section Public Health for
details on these eligible uses.
• A recipient could identify and
respond to a negative economic impact
of COVID-19 on new small business
startups or microbusinesses; for
example, if small business startups or
microbusinesses in a locality faced
greater difficulty accessing credit then
prior to the pandemic or faced Increased
costs to starling the business due to the
pandemic or if particular small
busi... sea or microbusinesses had lost
expected startup capital due to the
pandemic.
a The interim final rule also
discessed, and the final rule maintains,
eh'gthis case that provide support for
individuals who have experienced a
negative economic icepact from the
COVID-19 public health emergency,
including uses that provide job training
for unemployed individuals. These
initiatives also may support smell
business start-ups, microbusinesses, and
individuals seeking to start small or
enicrubmimeaee.
Disproportionately impacted small
businesses. Additionally, Treasury
agrees with commenters that
disproportionately impacted small
businesses may bent from additional
assistance to address the sources of that
disparate imppact.
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 SURF
funds to assist these businesses with
certain capital investments, such as
rehabilitation of commercial properties,
storefront improvements, and f ewde
improvements. Recipients may also
provide disproportionately Impacted
microbusinesses additional support to
operate the business, including
financial, childcare, and transportation
suppports.
Rsep rate could also provide
technical assistance, business
incubators, and grants for start-ups or
expansion costs for disproportionately
impacted small businesses. Note that
some of these types of assistance an
similar to those eligible to respond to
small businesses dial experienced a
negative economic impact ("impacted"
small businesses). However, because the
final rule presumes that some small
businesses were disproportionately
impacted, these enumerated eligible
uses can be provided to thane
businesses without any specific
asseesment 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 (i.e.,
expenditures on property, facilities, or
equipment) should also review the
section Capital Expenditures in General
Provisions: Other, which describes
eligibility standards that apply to capital
expenditures. Recipients should ala.
note that services to address vacant or
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 Regfsler/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4379
requirements and applicable dates for
SLFRF Ponds would apply to third party
organizations (like economic
development organizations) who receive
SLFRF funds in order to establish a loan
fund. In additfou, commenters
requested clarification on what
requirements apply to loan programs
with available funds remaining after
December 31, 2024.
Treasury Response: SLFRF funds may
be used to make loans, including to
small businesses, provided that the loan
is an eligible use, and the cast of the
loan is tracked and reported in
accordance with Treasury's Gain lience
and Reporting Guidance. Funds that am
unobligated after December 31, 2024
most be returned to Treasury. See
section Treatment of Loan. for more
information about using SLFRF finds
for loan programs.
c. Assistance to Nonprofits
Background: Nonprofits have faced
significant challenges because of the
pandemic, including increased demand
for services and changing operational
needs.221 Prior to the pandemic, the
median U.S. nonprofit reported that it
had Stx months of cash on band.--- This
varied by sector, however, with some
sec eve like disaster relief organizations
reporting a median of 17 months cash
on hand, and ethers, like mental health
and crisis intervention organizations
reporting only three months.223
Evidence suggests that the pandemic
has damaged the financial health of
nonprofits, with small nonprofits,
which lend to rely more heavily on
donations than large nonprofits,
reporting relatively larger declines ot
donations — 42 percent versus 29
percent, respeodially.zsa Among
nonprofits that collect fees for services,
the median revenue amouot collected
from such fees fall by 30 percent from
2019 to 2020, with ads organization
experiencing a 50 percent decline.'''
Nonprofits also experienced significant
jab losses. While employment fn the
nonprofit sector has recovered from its
low point in 2020, as of November 2021.
u, Sea e.g. faded Rmmve seek or ban
t4misca. Impacts ofCOVID-19 on Nanpro6te in
the wenem United states (Mry 2020). blip,//
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•_• Philanthropy and COV10.19: Measuring one
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the sector remained 485,000 jobs below
its pre -pandemic level.220 In addition,
some nonprofits may have experienced
declines in volunteer staffing during the
pandemic.227
At the same time, nonprofits provide
a hoar of services for their communities,
including helping Americans weather
the multitude of challenges presented
by the pandemic. The ARPA and the
interim final Is recagniand this
dichotomy —nonprofits as entities that
have themselves been negatively
impacted by the pandemic and as
entities that provide services that
respond to the public health and
negative economic impacts of the
Banderole 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
.. nonprofits." The interim Feral rule
defined registence to nonprofits to
include "loads, grants, inkind
assistance, technical assistance in other
services, that responds to the negative
economic impacts of the COVID-19
public health emergency;' and
"nonprofit" to mean a tax-exempt
organization under Section 501(c)(3) of
the U.S. Internal Revenue Code.'""
Second, as dburessed above, ARPA
and the interim final rule provided that
nonprofit organizations may also receive
funds as Subscriptions of a recipient
government (i.e., a government that
received SLFRF funds); suhrecipients
terry out en as
use of SLFRF funds
an behalf of a recipient government
(e.g., a recipient government that would
like to provide food assistance to
impacted 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 for -profit organizations, as
suhecipients to carry out eligible uses
of funds on their behalf. For further
infatuation, on distinguishing between
beneficiaries and suhrecipients, as well
as the impacts of the distinction on
capering and other requirements, see
section Transient of Funds and section
Distinguishing Subscriptions versus
Beneficiaries under the Public Health
e•oC.ltelsea NewMuro, COVN-m and UPDATE,
NOVEMBER 2021: N®pmfin add jest rnm join in
November. Gover for av115ocWy SNdles at IoMt
Napkins Univeredy Caeembw 10, 2021). hap I/
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ear anagoth T Burin v 9. super not, 229 at P.
a.
=•agasalwnm,ne.
and Negative Economic Impacts eligible
usecategory.aa
Reorganization and Coms-References:
Under the interim fuel rule, assistance
to disproportionately impacted
communities was o separate, stand-
alone category. The final rule
reorganizes the disproporRodate impact
analysis within the sections Assistance
to Households, Assistance to Smell
Business, 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 units of
funds, Treasury has re -categorized some
uses of funds in the final rate to provide
greater clarity. For discussion of
assistance to nonprofits to implement
COVID-19 mitigation and prevention
strategies, see section COVID-19
Mitigation and Prevention in Public
Health.
Recipient. providing assistance via
nonprofits involving capital
expenditures (i.e., expenditures on
properly, facilities, or equipment)
should ale. review the section Capital
Expenditures in General Provisions:
Other, which dandifies eligibility
standards for these expenditures.
Recipients providing assistarim in the
form of loans should review the Section
Treatment of Loans,
Public Comment: Eligible Assistance
to Impacted unit Disproportionately
Impacted Nonprofits: A few
commenters asked Treasury to be more
explicit in 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 S1.FRF funds may be ..ad to
mver.2sn Commenters requested that
Treasury note that the pandemic is
coneARPA 9. autee omdmr' arffe,
Authority' the a goopfcat my tre,ukriundato
e private mempmm mganieanom tech v Ome.
theme in peregreph (17) of nction 401 of the
Muttony state nomelme Auinanm not (42
US e 113MI17). Ste 602 ® 603(c)(3) of social
Sawnty An. Seeaexion Transfers of Funds for
ad mutual information an abler types ofe xaee,
moment, mho forma of mon image, that may
musom venues
as Mile not rived ymGfirally in the mind.
final mlo, the nepaamont dose oat.quire or have
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ampoule thatnander funds m tuhretlplwe (ng.
advma paymm,b, reimmoseven, been, era:).
Ulnmvoly. rctlpamt, roue, wmPly vnth it.
eligible use tequiremenn and any other applicable
lean or re,dremeMs and .,a —,.this to, the
ameba of their eubeeelpi ebb or boundaries.
4380 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
leading to a changing financial
operating in Q(Ta, operated by Tribal
benefci+riea, the organization ban....
landscape for nonprofits.
governments or on Tribal Lange, or
a subrecipient. In this case, a nonpmfit
Treasury Response: Eligible
operating in the U.S. territories ware
need not have experienced a negative
Assistance to Impacted and
disproportionately impacted by the
economic impact in order to serve as a
Disproportionately impacted
pavdemic.
subrocipinnt.
Nonprofits: The interim final Is
To summarize, a recipient may
In the context of SLFRF, nonprofits of
provided for, and the final rate
determine that certain nonprofits were
all types may be subrecipients. Treasury
maintains, the ability for recipients to
impacted by the pandemic or wine
is not restricting the types of nonprofits
provide direct assistance to nonprofits
disproportionately impacted by the
that can operate as subrecipimmi, rather
that experienced public health or
pandemic and provide responsive
allowing recipients to decide what form
negative eommmlc impacts of the
services.
best meets the needs of their
pandemic. Specifically, recipients may
Public Comment: Beneficiaries and
community. Therefore, a "nonprofit"
provide direct assistance to nonprofits if
Subrocipients: As noted elsewhere to
that is acting as sulsomiplent could
the nonprofit has experienced a public
this final role, Treasury received
include, but is not limited to, a
health or negative economic impact as
multiple comments expressing
nonprofit as that term fa defined to
a result of the pandemic. For example,
uncertainty on how to categorize a
paragraph U71 of section 401 of the
if nonprofit organization experienced
particular activity in the eligible use
McKinney-Vento Homeless
impacts like decreased revenues or
categories. For instance, some
Ami:time..1- See section
increased coats (e.g., through reduced
commenters requested that recipients be
Distinguishing Subrocipients versus
contributions or uncompensated
able to use SLFRF funds far certain
Beneficiaries for further information.
increases in service need), and a
expenses inured by nonprofits (e.g.,
Additional guidance on determining
recipient provides funds to address that
unemployment charges) as a response to
subreciptent status may be found in the
impact, then it is providing direct
a public health or negative economic
Uniform Guldance.2n
assistance to the nonprofit as a
impact to that nonprofit: others asked if
Recipients may transfer funds to
beneficiary under Subsection (c)(1) of
nonprofits providing certain services
subrecipients in several ways, including
Sections 602 and 603. Direct assistance
(e.g., social services) made them eligible
advance payments and on a
may take the form of loans, grents, in-
for direct assistance. Commenters also
reimbursement basis. Ultimately,
kind assistance, technical assistance. or
requested that Treasury acknowledge
recipients most comply with the eligible
other services that respond to the
that engagement directly with nonprofit
use requirements and any other
negative economic impacts of the
organizations in low-income
applicable laws or uirements end ere
OOVID-19 public health emergency.
communities and communities admirer
responsible for theactions of their
A recipient may identify a negative
may allow the recipient to better stages
sularriplenis or beneficiaries.
economic impact experienced by a
nonprofit, or class of nonprofits, and
economic harms in these areas.
Treome, Response: Beneficiaries and
As part of accepting the Award Terms
design and implement a response to that
Subrocipients: Treasury recognizes that
and Conditions for SLFRF, each
recipient agreed to maintain a confiiet-
negative economic Impart, age section
Standards: Designating a Negative
many nonprofits play important rules in
their communities, and same may have
of -interest policy consistent with 2 CFR
Economic Impact. The final rule
experienced public health or negative
2M.3fa(c) that is applicable to all
activities funded with the SLFRF award.
provides a non -exhaustive list of
enumerated eligible uses for assistance
economic imparts during the pandemic.
As such, under the interim final rule
pursuant to this requirement. decisions
to nonprofits that are impacted or
and the final rule. nonprofits may be
coviceming SLFRF funds must be fee of
undisclosed personal or must
organizational
disproportionately impacted by the
pandemic.
impacted by the pandering, and receive
assistance m a beneficiary, as described
conflicts of interest, bath in feel and in
A recipient may also identify a class
above, and/or be a subracipient
appearance. Recipients may avoid
conflicts of interest in providing
of nonprofits that have been
disproportionately impacted by the
providing services an behalf of a
reciplenLrm
assistance tP nonprofits or making
public health emergency and design and
Specifically, the interim final rule
ind recipient awards by, inter Its,
implement a program that responds to
the seers of that disproportionate
also allowed for, aad the final rule
maintains, the ability for the recipient to
making aid available to nonprofits on
generally applicable terns or utilizing a
impact. For example, a recippient may
transfer, e.g., via grant or contract, funds
competitive grant process, respectively.
A recipient may not use control over
determine that nonprofits oOering after-
school programs with!. its jurisdiction
to nonprofit entities to carry out an
eligible use on behalf of the recipient.
SLFRF funds for their own private gain.
were disproportionately impacted by
Treasury notes that recipients may
Furthermore, no employee, officer, or
agent may in the selection,
the pandemic due to the previous In-
award SLFRF funds to many di8erent
participate
person, indoors nature of the work end
types of organizations to carry out
award, or administration of a contract
supported by a federal award if he or
the nonprofits' reliance on fees received
far services (e.g., attendance fees). The
eligible uses of funds and serve
beneficiaries on behalf of a recipient
she has a real or apparent conflict of
recipient might than design an
intervention to assist those nonprofits in
government (e.g., assisting in a
vaccination campaign, operating a job
interest.
Public Comment Definition of
adapting their programming (e.g., to
training program, developing affordable
Nonprofit: Treasury also received
outdoor or online venues), their revenue
housing). When a recipient provides
several requests to expand the definition
structure (e.g., adapting the fee for
service structure or developing expertise
funds to an organization to cony out
eligible uses of funds and serve
of nonprofits so that other tax-exempt
entities (e.g., 501(c)(7)s, 501(c)(9):,
in digital donation campaigns), or both.
561(c)(19)s, nonprofits with "historical
Additional information about this
=•• Rote, this response is insane d..ay use
framework is included in Gemmel
dia+mna tat— no"pmfid+e b+mffd+nm and
`•` Sea eMi-. a021d(3) set Ma(.Xa) of W+
Provisions: Structure and Standards. In
andSt ndard.
^Onpmfil. e..nbe«ipisnn.0 ie nor meem m emu
lberypw of rul.fiomhipethma•«Ipl+m may sate.
social Sorme, Art. S. oho Smmn 4.1 untie
MCKinreyvemo xomelew Ankes—M 142
Provisons:¢aucturet the
final rule presumes that nonprofits
into with. nouproNse permined under the
omrmm Gmdea«.
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m Peac...g.mmnam"
Federal Register/Vol. 87, No. 18l Thursday, January 27, 2022/Rules and Regulations 4381
significance") could be eligible for
direct assistance as beneficiaries.
Treasury Response: Definition of
Nonprofit: The final ode expands the
definition of nonprofits to mean
501(c)(3) organizations and 501(c)(19)
orga iizetions.xss The 591(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 and 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
provide recipients more Flexibility and
in alignment with the definition of
nonprofit adopted by the CARES Ad,
wherein 501(c)(3)s and 501(c)(19)s were
eligible for owi dence.ass
Public Comment: Reporting
Requirements: One commenter asked
Treasury to clarify if nonprofits that
receive direct assistance as 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
SURF reporting requirements.
However, the recipient must comply
with SURF reporting requirements,
which would require reporting
obligations and expenditures for
assistance to nonprofits. The recipient
may also choose to establish other forms
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
sebrecipient. Per the Uniform Guidance,
subrecipients must adhere to the same
requirements as recipients. Therefore, a
nonprofit t ubrecipienl may only receive
funds ta may out an eligible use of
SLFRF funds and most comply with any
reporting and compliance requirements.
Note that recipients are ultimately
responsible far reporting information to
Treasury and must collect any necessary
us§ 35.3 Qe6nitions.
235rosue ,v ovshleed exp ndbg doe dN1nitlou
af..np3om m lodud. swing.) mPenioauom, ea
Cunlovs ].no did in da. Caosiddi dae.p000 and
Consolidated Apprvprutions Ad of 2031, bw
ultinutely Ltdal m main no, oAgInal CARES Ad
definition. To the wnmt impacted by the pendnmiq
s.1(009 mgennminna may be.1 able m sordo.
rondo to support eligible noun that ali®, with 11.,,
.o 11 impio e.�o ; �.immdi ptamooim, I..ld of
information from their subrecipients to
complete required reporting.
d. Aid to Impacted Industries
The interim final rule allowed for
"aid to tourism, travel, and hospitality,
and other impacted industries" that
responds to the negative economic
impacts of the COVID-19 public health
emergency. In designating other
impeded industries, Treasury specified
that recipients should consider the
"extent of the economic impact as
compound to tourism, travel, and
hospitality" and "whether impacts were
due to the COV10.19 pandemic, as
apposed to longer -term economic or
industrial trends unrelated to the
pandemic."am Treasury identified
declines m employment and revenue as
possible marries to compare the
economic impart on a particular
industry relative to the tourism, travel,
and hospitality industries.
Treasury further provided that out
should be limited to businesses,
attradirms, 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 safe reopening
of businesses in these industries, as well
as aid for a planned expansion or
upgrade of murism, travel, and
hospitality facilities delayed due to the
pandemic. The interim final role and
Treasurys subsequent Compliance and
Reporting Guidance also required
governments to publicly report
assistance provided to private -sector
businesses under this eligible use and
maintain records of their assessments to
facilitate tradepamncy and
accountability.
Reorganization end Cross -References:
As detailed above, Treasury has car
categorized some uses of funds in the
foal rele to provide greater clarity. In
the interim final rule, aid to impacted
Industries to implement COVID-19
mitigation and prevention strategies was
categorized under Aid to Impacted
Industries; the final role addresses these
items under the section COVI0.19
Mitigation and Prevention in Public
Health. Recipients should also is aware
of the diFleunnce between beneficiaries
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SURPFAQ.pdf
of assistance and subrecipients when
working with impacted industries; for
further information, see section
Distinguishing Subrcipienls versus
Beneficiaries.
Designating an Impacted Industry
Public Comment: Many commenters
requested greater clarity on how, to
designate "other impacted industries"
within their jurisdiction. Commenters
requested greater specificity as to the
metrics used to memo. impact, with
some suggesting metrics such as the
change in the size of an industryes
workforce due to the pandemic., as well
as consideration of whether and by
employees are choosing to return to
work at slower rotes in certain
industries. One commenter asked if this
meant nearly every industry was
"disproportionately impeded." Some
commenters encouraged Treasury to
focus on industries most 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 or profit growth. Other
commenters asked for flexibility for
recipients to determine impacted
industries based on their looel
knowledge of the economic landscape.
Treasury Response: The final rule
maintains the interim final rim's
approach of allowing recipients to
designate impacted industries outside
the travel, tourism, and hospitality
industries, and, in response to
comments, provides greater clarity as to
how recipients may designate such
impeded industries.
Sections 602(c)(1)(A) and 603(c)(1)(A)
recognize that the tourism, travel, and
hospitality industries sun severely
negatively impeded try h. pandemic.
Under the final rule, recipients may
provide eligible aid (described in further
detail herein) to the tourism, navel, and
hospitality industries. Treasury
considers Tribal development districts,
which are commercial centers for Tribal
hospitality, gaming, tourism, and
entertainment and can include Tribal
enterprises, as part of the tourism,
travel, and hospitality industries that
have been severely hit by the pandemic.
Tiodefoun, Treasury reaffirms that Tribal
impacted industries and recipients may
provide eligible aid to them.
To identify other industries
comparably 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 rule providdes
recipients the Flexibility to define its
substantive or geographic scope.ase
Recipients may identify a broad sector
that encompasses a number of sub-
industries, or they may identify a
.Pacific mb-industry to be assessed. Far
example, is recipient may identify
"personal one services" as an industry,
or they may identify a mom 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 am not required to
follow, but may consider following,
industry classifications under the North
American Industry Classification
System (NAILS). Treasury notes that the
larger and more diverse the sector, the
more difficult it may be to demonstrate
that the larger and less specific sector is
negatively impacted in the same way
given the scale and diversity of
businesses within it.
Stele m territory recipients may also
define. came industry with
greater geographic precision than state
or territory -wide. For example, a state
may identify a particular industry in e
certain region of the state that was
negatively impacted by the pandemic,
even if the some
industry in the at of
the... did not a" a meaningful
negative economic impact from the
pandemic. Stale recipients oversee large
.ad 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 stole
averages do act 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
obsmved on the tiniest, tourism, and
hospitality industries.
1. Simplified test. An industry is
presumed to be impacted if the industry
experienced employment lass of at least
8 percent.
Specifically, a recipient should
compare the percent change in the
'°Onw an Industry is deelgmied as impacted,
aid should be generally brwdly available to
buviti"', in the hndugry the, gnelity. Rrcipwro.
shunld document haw they darned the seat, of
their Unwary and how they determined that the
ivdwtry ws impachad. For... a ad Imrneriee.
thla inClndw daanmenthlg theirlasifflu ion for
eannmg a mtmnwent inaunrywith Seater
germ' a precision emn state or tertirory-wide.
number of employees of the recipient's
identified industry and the national
Leisure & Hospitality sector in the three
months before the pandemic's meet
severe impacts began (a straight three
month average of seasonally -adjusted
employment data from December 2019,
January 2020, and February 2020) with
the latest data a. of the final rule release
(a straight three-month average of
seasonally -adjusted employment data
from September 2021, October 2021.
and November 2021).as0 The r ationel
Leisure & Hospitality sector largely
represents the national travel, tourism,
and hospitality industries enumerated
in the statute. According to the Bureau
of Labor Statistics, ereployment has
fallen by approximately 8 percent for
the national leisure & Hospitality sector
when comparing the most recent three-
month period available as of the date of
adoption of the final role to the Dead -
month period immediately before the
public health emergency. Therefore, if
the identified industry has suffered an
employment loss of at least a percent,
the final rule presumes the industry to
be an "impacted industry."
For panty and simplicity, smaller
recipients without employment data
that measure industries in their specific
Jurisdiction may use data available for a
broader unit of government for this
calculation (e.g., a county may use data
from the state in which it is located; a
city may use data for the county, if
available, or state in which it is located)
solely for purposive of determining
whether a particular industry I. an
impacted industry.
2. If simplified test is not met. If an
frohni y, does not satisfy the test above
or date are unavailable, the recipient
may still designate the industry as
impacted by demonstrating the
following:
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 the publication
of the final rule, and that the impacts
were generally due to the COVID-19
public health emergency. Example
economic indicators include gross
output, GDP, net profits, employment
levels, and projected time to restore
employment back to pre -pandemic
levels. Recipients may rely on available
economic date, government research
t"Notional Lo4un aHospi nifty suparsedor
employment data can he found on the U.S. shown
of Labor Salads websilo'. U.S. Suisse of Labor
Swim n, L.1sure and Hospitality. bef s:/r
www-0la.ghvlinghpli.,oterat flan visited
Oesembsr7.2021).
publications, research from academic
sources, and other quantitative sources
for this determination.
. Ifqurimitativa date is unavailable, the
recipient can rely on qualitative data to
show that the industry is experiencing
comparable or worse economic impacts
as the national tourism, travel, and
hospitality industries, and the impacts
were generally due to the C0VI0.19
public health emergency. Recipients
may rely on sources 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 rationality proportional to the
negative economic impact that is
experienced, as detailed further below
and in .action General Provisions:
Structure and Standards. Recipients
may add to their list of impacted
industries by showing that the negative
economic impacts to the industry at the
ifine of the designation are comparable
to the negative economic impacts to the
notional tourism, travel, and hospitality
sectors as of the data of the final rule
adopt!.., as detailed here!..
Eligible Aid
Public Comment: Commenters asked
for further clarification 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 COVID-19
mitigation costs and planned
renovations or improvements to
tourism, travel, and hospitality
facilities, im well as marketing and m-
kind incentives to attract visitors.
Commenters also asked about the
eligibility of aid to broadly cover lasses
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 commenters asked for
clarification about eligible aid to
impacted industries owned end
operated by Tribal governments,
including for 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/Vol.
87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4383
Treasury Responsean response to
conflicts of intereat.rav Treasury Loans in Program Administration
commenters' requests for clarification
encourages recipients to design aid Provisions.
on eligible aid, the final rule requires
programs such that funds are first used
that aid to impacted industries,
for operational expenses that era
including to Tribal development
generally recognised as ordinary and
districts, be designed to address the
ec awry fro the recipient's operation,
harm experienced by the impacted
such es payroll, before being used on
industry.
other type. of costs. As noted in the
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 harm
experienced; uses that bear no relation
or are grossly disproportionate to the
type or extent of berm experienced
would not best ible
eeligible uses. Recipients
should consider the further discussion
of this standard provided in the sections
Standards: Designating a Public Health
Impact 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 great program).
Examples of eligible responses include:
Aid to mitigate financial hardship
due to declines in revenue or profits by
supporting payroll costs and
compensation of returning employees
for lost pay and benefits during the
COVID-19 pandemic, on well as support
of operations and maintenance of
existing equipment and facilities, such
a. at, leases, and utilities;
• Aid for technical assistance,
counseling, and other services to assist
with business planning needs; and
• Aid to implement GDV10.19
mitigation and infection prevention
measures, such as vaccination or testing
programs, is broadly eligible for many
typw of entities, including travel,
twrism, hospitality, and other impacted
industries. Recipient. providing old to
impacted indeslrlea for COVID-19
public health measures should review
the section Assistance to Businesses to
IM formal COVID-19 Strategies in
Public Health, which describes types of
eligible uses of funds in this category.
To address the identified harms,
responses (e.g., aid through a grant
program) should be generally broadly
available to all businesses within the
impelled industry to avoid the risk of
self -dealing, preferential treatment, and
section General Standards: Structure
and Standards, new of funds that do not
respond to the negative economic
impacts of the pandemic, each as
excessive compensation to employees,
is ineligible.
The final role maintains the interim
final rule's requirement that aid may
only be considered responsive to the
negative economic impacts of the
pandemic if it supports businesses,
attractions, end Tribal development
districts operating prior to the pandemic
and affected by required closures and
other efforts to contain the pandemle.
Further, to facilitate transparency and
mci untability, the Mal .Is maintains
the interim final rule's requirement that
recipients publicly report assistance
provided to private -sector businesses
under this eligible use, including
tourism, travel, hospitality, and other
impacted industries, and its connection
to negative economic impacts of the
public health emergency. Recipients
also should maintain records to support
their maessment of how businesses
receiving assistance were affected by the
These impacts.
g aid to impacted
for capital
governments providing aid to Tribal
development districts, should also
review the auction Capital Expenditures
in General Provision: Other, which
describes eligibility standards that are
applicable to these expenditures,
depending on the type of aid. Red bad.
providing assistance in the form of loans
should review, the section Treatment of
eunraro.
4. General Provisions: Other
As noted above, the final mle
consolidates into a General Provisions
section several types of was of funds; in
the interim final rule, the eligibility of
these uses of funds was discussed
within specific categories of eligible
was for public health and negative
economic impacts. Treasury anticipates
that this re -organization will enhance
recipient clarity in assessing eligible
uses of fund.. These General Provisions
apply across all uses of funds under
public health and negative economic
r S
7scle.
pacifically, this section considers
eligible uses for:
• Public Sector Capacity and
Workforce, which includes several
separate and non -mutually exclusive
categories articulated in the interim
final mle: public health and safety staff;
rehiring stale, local, and Tribal
government staff; expenses for
administering COVID-19 response
programs; expenses to improve the
efficacy of public health or economic
relief programs; and administrative
expenses caused or stormbound by the
pandemic. Treasury recognizes that
these are closely related and frequenfly
overlapping categories. The final role
treats them as a single purpose,
supporting public sector capacity, and
provides coordinated guidance on the
standards and presumption that apply
to them.
• Capital Eximinfi ices, which was
addressed only under Public Health in
the interim final role. The final role
moves this expense to General
Provisions sod provides more clarity on
the eligibility of capital expenditures
across all expects of the public health
and negative economic impacts eligible
use category.
• Distinguishing Subreei ' is versus
Benefiefoloc., which describe. the
differences between these two
categories. Recipient governments
responding to the public health and
negative economic impacts of the
could
on the
addresses
interim final ml.. Thee uses of fund.
remain ineligible under the final role,
but Treasury has re -categorized where
they am addressed, as described below.
4384 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
This section also addresses enumerated
eligible uses proposed by commenters
had Treasury has not incorporated into
the final rule.
Recipients should also note that the
Office of Management and Budget's
(OMB) Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal Awards
(commonly called the "Uniform
Guidance') generally applies to SLFRF.
a. Public Sector Capacity and Workforoe
Public Safety, Public Health, and
Human Services Staff
Summaryoflnterlm Final Rule:
Under the interim final chip, funds may
be used for aavroll and covered
the
covered benefits eligible to be covered,
if the employee, or his or her operating
unit or division, is "primarily
dedicated" to responding to COVID-19,
meaning that more than half of the
employee, unit. or division's time is
dedicated to responding to COVID-19.
Recipients may consider other
presumptions for assessing the extent to
which an employee, division, or
operating unit is responding to COVID-
19. Recipients ..at periodically
reemees. their determination and
maintain records to support their
assessment, such as payroll records,
attestations from s 1pervieor d or staff, or
regular work product or
ubfa empmen: wines, and advice
f SI.PRF made,—ipievu mar
final rele a bali d pd or
at descred iblea. feud
awevx, when less due
correspondence; recipients need not
track staff hours. The interim final rule
also paced a question on haw long
recipients should be able to use funds
for staff responding to COVID-19 and
what other...aures or presumptions
might Treasury consider to assess the
extent to which public sector staff are
engaged in COVIII-19 response in an
easily administrable manner.
Treasury also provided lumber
guidance on the types of employees
covered by this category of eligible use.
state
officers, and those who directly support
such employees such as dispatchers and
supervisory personnel. Public health
employeesrse would include employees
involved in providing medical and other
health services to patients and
supervisory personnel, including
medical meff.,eigned to schools,
prisons, and other such institutions, and
other support services essential for
patient care (e.g.. laboratory technicians,
medical examiner, or morgue staff) as
well as employees of public health
departments directly engaged in matters
related to public health and related
supervisory personnel. Human services
staff include employees providing or
administering social services; public
benefit.; child welfare services; end
child, alder, of family are, as well as
others."
Public Comment: Measuring Time
Spent on COVID-19 Response: Treasury
received public comments on several
components of this eligible use category.
Many commenters argued that it poses
an administrative burden to identify the
extent to which staff am responding to
COVID-19 and to maintain records to
support that assessment. Largely citing
admirdstrative burden in..sewing
eligibility, several commenters
recommended revision. to the
administrative convenience that the bill
payroll and covered benefits for public
health and safety staff "primarily
dedicated" to responding to COVID-19
may be paid with SLERF funds. Some
commenters recommended presuming
that all public health and safety staff are
primarily dedicated to COVID-19
response, while others proposed that
public health and safely workers who
primarily serve QCrs or low- and
moderate income areas be presumed to
be primarily indicated to COVID-19
211 Note that this category me®ep caw both
public health and health care employers; bah zee
treated as public hatmnployeae for no p,,7.' a
of di"allole use cidn".
response, given the disproportionate
impacts of the pandemic in those
communities. Similarly, Tribal
communities recommended that their
public health staff be presumed eligible
due to the disproportionate impact of
the pandemic on their communities.
Some commenters proposed that they be
able to use the administrative
convenience for staff outside of public
health and safety that are responding to
COVID> 19 (i.e., to be able to pay the full
payroll and covered benefits for any
staff "primarily dedicated" to COVID-
19 rasp....).
Treasury Response: In the final rule,
Treasury is maintaining the approach in
the interim final rule, including
elaborations issued in further guidance,
but providing additional clarification on
its application, including methods to
apply the approach to minimize
administrative burden. Treasury notes
that recipients may assess the extent to
which staff are dedicated to responding
to COVID-19 through a variety of
means, including establishing
prmsumpliona or assessing public health
and safety staff at the division or
operating unit level. For example, a
recipient could consider the amount of
time spent by employees in its public
health department's epidemiology
division in responding to COVH0.19
and, if a majority of its employees are
dedicated to responding to OOVB�19,
determine that a entire division is
primarily dedicated to responding to
GOVID-19. Treasury also clarifies that
recipients may use reasonable estimates
to establish adminfatrable
presumptions; for example, a recipient
could estimate based on discussions
with staff, the general sham of time that
employees in a specific role or type of
position spend on COVID-19 related
tasks and apply that share of time to all
employees in that position.
Recipient. am generally required to be
his to support uses of SLERF funds as
eligible, including, in this instance,
staff are primarily dedicated to
responding to COVID-19. Aa noted
above, recipients may use reasonable
estimates to implement this provision.
Recipients should maintain records on
how they developed these estimates and
need not track staff boom. Treasury
notes that records retained can include
payroll record. (fig., the number and
type of staff in various positions),
attestations from supervisors or staff
(e.g., self -attestation of where of time
spent an COVI0.19), or regular work
product or correspondence (e.g.,
calendars, email coresspoudence,
documents, and that electronic
Federal Register/Vol. 87, No. 18/Thursday, January 27. 2022/Rules and Regulations 4385
records). Treasury anticipates that these example, responding to COVID-19 for a administrative convenience that SURF
types of records are generally retained public safety worker may entail working funds may be used for the full payroll
in many government settings; recipients in an emergency operations center to and revered benefits ofpublic health
should also consult the Award Terms coordinate pandemic -related supply and safety staffpchearily dedicated to
and Conditions for SURF funds for distribution, responding to an increased COVID-19 response. Several
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 COVRI-19 and
simply retain those employces'
electronic records as a record to support
their assessment.
Public Carrousel. Public Health and
Safety Staff Primarily fha llen ed to
COVID-19 Response: Some commentere
recommended expanding the
administrative convenience for public
health and safety staff primarily
dedicated to COVID-19 response to
tudher types of staff, to all public health
and safety staff, or to public health and
safely staff serving underaerved cress.
Treasury Response: The interim final
rule recognized that COVIO-19 response
continues to require substantial staff
resources and provides an
administrative convenience to make it
relatively simpjar to identify the
eliggibility of the types of workers —
public health and safety workere—
generally ..at involved In COVID-19
response. At the same time, many
perform miss maelawd to COVID-19;
coverage of all roles would be overbroad
compared to the workers responding to
COVID-19 in actuality. For this reason,
the final rule maintains the interim final
mis's approach to permitting SLFRF
funds to be used for public health end
responding to COVID-19. Finally, to the
lent that a greater proportion of public
health and safely staff time is needed to
respond to COVID-19 in
disproportionately impacted
communities, the "primarily dedicated"
approach recognizes this increased
need.
Public Comment: Eligible Types of
COVID-19 Response: Some public
commentere also sought further
clarification on how to identify eligible
types of "COVID-19 response." For
response from general public health
or
For
volume of 911 calls, or imp lamenting
COVIO-19 prevention and mitigation
protocols in a commal setting.
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
.it R ble uses of funds under SI.PRF.
Treasgllesponse:Treasury
provided further guidance on eligible
types of employees following the
interim final role, which receressly
included social services and morgue
Treasury
services as
provision only addresa- employees of
the recipient government responding to
COVI0.19. For discussion of eligible
as on oenai
see section
a Program
management, and financial management
personnel to support public health and
safety staff responding to COVH0.19 are
not permissible under this provision,
given the relatively greater challenge of
differentiating the marginal increase in
staRtime and workload due to
pandemic response for indirect versus
direct costs.
Public Comment: Time Period:
Finally, some commenters made
recommendations on the time period
during which this eligible use should be
available. Same commenters
recommended efistil ility begin before
to incur costs using
iacusaion of this
As noted
a question in
far how
Funds was tied
has an active
slat. a1 emergency.
Treasury Aesponse: In the final rule,
Treasury is clarifying that recipients
will be permitted to fund the full
Payroll and covered benefits of public
dedicated to W VR1-19 response
throughout the period of performance
for the SLFRF 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 state, local, and Tribal
government staff in order to bolster the
government's ability to effectively
administer services. Specifically,
recipients may pay far payroll, env ... d
benefits, and other costs associated with
the recipient increasing the number of
its employees up to the pre -pandemic
baseline, or the number of employees
that the recipient government employed
on January 27, 2020.
Public Comment: Many commenters
requested greater flexibility and
additional clarification on the
prevision's requirements, including the
pre -pandemic baseline and re -hiring
process. Some commenters requested
that the final rule allow for hiring above
the pre -pandemic baseline given
historic underinvestment 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 him bad 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. 18/Thursday, January 27, 2022/Rules and Regulations
COVIO-19 response be exempted from
the calculation of number of employees.
Many commenters also requested an
expanded set of eligible uses beyond
maturing their workforce up to the pm -
Fordable baseline. Commenters
requested that funding be able to be
used to avoid layoffs, provide back pay,
retain employees through pay !...a
and other retention programs, or
reimburse salaries and benefits already
paid. Some commenters also mquesled
clarification as to
whether recipients
can fund re -hired positions through the
period of performance end on tiro
definition of payroll and benefl..Othin
commenters requested preferential
hiring for workers laid off, a strong
commitment to equity, and a
requirement that funds would not be
used to pay for convect or temporary
replacement workers during a labor
dispute.
Treasury Response: The fuel Is
at Iowa for an expended set of eligible
uses to restore and support public sector
employment. Eligible uses include
hiring up to a pre -pandemic baseline
that is adjusted for historic
umbrinwstment 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.
bettering pre -pandemic employment.
In response to comments and
recognizing underinv sstment he public
aecmI employment, the final role
expands the ability to use SLFRF funds
to restore pre -pandemic employment.
Treasury is elan clarifying how, and the
extent to which, recipients may use
SLFRF funds to rehire public
employers.
The final rule provides two options to
restore priv pandemic employment,
depending on recipient's needs. Under
the first and simpler option, recipients
may use SLFRF funds to rehire staff for
pro-pe demicpwi[ions that were
unfilled or were eliminated due the
pandemic without undergoing further
analysis. Under the eoption, the
final rule provides recipients option
to him shove the pre -pandemic be baseline,
by -paadjusting the prendemicbasaseliline
for historical growth e, ass well sector
employment over time, as wallas
flexibility on roles for him. Recipients
may otiose between these options but
cannot use haft.
To pursue the that option, recipients
may use SLFRF funds to hire employees
far dre same positions that existed on
ll
January at d 9. but that were unfilled
oreliminated
undergoing
Marcher analysis.
2021,
without undergoing further analysis. For
December 31, ZOM and
December 31, 2026. car.
Uniform Guidance's Co
This
for
would not like to hire above the pra-
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
covered benefits associated with the
recipient increasing its number of
budgeted full-time equivalent
employees (M.) up W 7.5 percent
above its pre -pandemic employment
baseline, which adjusts for the
continued underinvestment in state and
local governments since the Great
Recession. State and local government
employment as a share of population in
2019 remained considerably below its
.here prior to the Great Recession in
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 stale 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
desoribed below. Recipients may choose
whether to conduct this analysis on a
government -wide basis or for an
individual department, agency, or
authority.
• Step One: Identify the recipient's
budgeted FTE level on January 27, 2020.
This includes all budgeted positions,
filled and unfilled. This is ®]led he
pre -pandemic baseline.
• Step Two: Multiply the lab,
pandemic baseline by 1,075 (that is,1
♦ adjustment factor). This is celled the
on
Recipients may, but are not required to,
exclude, Fi dedicated to responding
to the COV70.19 public health
emergenry.2" This is called the actual
numberefFM
—Ridpla ss may die—ba, thus portion den
.vx a uma is damcitad to a spoodue to the
COVm-19 public hwlth m ar,sony. Further, for
admieideadso oosi—o ,me, the..Puna may
• Step Four. Subtract the actual
number of FM from the adjusted pm -
pandemic baseline to calculate the
number of FTEa that can be hired and
covered by SLFRF tondo.
Recipients may use SLFRF funds to
cover payroll and covered benefit costs
obligateby December 31, 2024, and
expended by December 31, 2026, up to
the number of FTEs calculated in Step
Four, consistent with the Uniform
Guidance's Coal principles at 2 CFR part
200 Subpart E. Reci Tents may only use
SLFRF funds for additional FTEs hired
over the March 3, 2021 level of
budgeted FTEs (i.e., the actual number
oFTEs); f note again that rec. tables may
choose whether W conduct the analysis
of FM that can be covered by SLFRF
funds on a government -wide basis or for
an individual department, agency, or
authority.
These FM must have begun their
employment on or after March 3, 2021,
which is the beginning aides 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
end fiscal pressures on state local
budgets. Recipients do not need to him
far the same roles that existed pre -
with 1,000
]i Now, assume that
21. the racioient had 800
50 Me primarily dedicated to
coding to the COVID-19 public
It emergency. The recipient would
the option of using either 800 FTEa
0 FTEs ee its actual number of
able to tend up to 325 Fitts undo b12H
funds fiber is, 1,075-750 = 325 FTEs).
Federal Register/Vol. 87, No. IS/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 FTRs that
begin (hair employment on or after
Month 3, 2021, for costs obligated by
December 31, 2024, and expended by
December 31, 2026, consistent with the
Uniform Guidance's Cost Principles, as
long as SLFRF funds are used for
additional FTFz hired over the
recipient's 750 FTE level (which is its
March 3, 2021 budgeted FIE level.
In hiring new employees, the final
into encourages recipients to ensure a
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.245
Total compensation for a hired
employee that is substantially in ..as
of typical compensation for employees
of their experience and tenure within
the recipient's government, without a
corresponding business rase, may
indicate a potential conflict -of -interest
in fact or appearance.
Providing addlf. mil funding for
employees who experienced payouts
and furloughs. In recognidton of the
economic hardship caused by pay cuts
and furloughs, additional funds may be
provided to employees who experienced
pay cuts or were furloughed since the
anent of the pandemic on January 27,
2020. Recipients must be able to
substantiate that the pay cut m furlough
moos substantially due to the public
health emergency or its negative
economic impacts (a fiscal fiscal pressures
on state and local budgets) and should
document their assessment As a
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 lastng Into amount
unemploymen( insurance (UI) benefits
that a furloughed employee may have
received during the furloughed period.
Treasury presumes that additional funds
beyond the difference to pay had the
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 section Premium Pay.
Avoiding layoffs. Funds may be used
to maintain rimmed 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 absence 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 "a ... meet.
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 must
be able to substantiate that the
employees were likely to leave
employment in the absence of the
retention incentive and should
document that, 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 entrance incentives must
be narrowly tailored to mind and should
not exceed in a 1' t d'ti 11
cn vas rat one y
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 with the employer, they must
be 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 son lass
than 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 r quincomits are met.
Ancillaryodiumistmtive costs. Funds
may be used to pay for ancillary
administrative rusts associated with
administering SLFRF-funded hiring and
retention programs dmet above,
including costs to publish job postings,
review applications, and onboard and
train new likes. For additional
information on administrative expenses,
see section Administrative Expenses in
Program Administration Provisions.
Effective Service Delivery:
Adeninialrati ve Expenses
The interim final role provided that
funds mould be used for: Experrees to
improve efficacy of public health or
economic relief programs:
Administrative costs associated with the
recipient's tDV10.19 public health
emergency assistance programs,
including services msponding to the
COVID-19 public health emergency car
its negative monomic impacts, that are
not federally funded." In the final rule,
Treasury is clarifying that there are
several categories ofeligible
administrative expenses.
First, recipients may use funds for
administrative costs to improve the
afficecy of public health or economic
relief programs through tools like
program evaluation, data analysis, and
targeted consumer outreach (see section
Effeed ve Service Delivery: Program
Evaluation, Data, and Outreach).
Second, recipients may use funds for
administrative coats associated with
programs to respond to the public
health emergency and ie negative
economic Impacts, including programs
that are not funded by SURF or not
federally funded. In other words,
Treasury Motif Ines that responding to
the public health and economic impacts
of the pandemic requires many
programs and aetivities, some of which
she not funded by SLFRF. Fxamrnng
these pmgrams effectively is a
component of responding to the public
health and negative economic imparts
of the pandemic.
Finally, recipients may use funds for
detect and mefirect administrative coats
for administering the SLFRF program
and projects funded by the SLFRF
program. See auction 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
slate. local and Tribal governments may
use SLFRF funds to improve the design
and execution of programs responding
to the COVID-19 pandemic and to
improve the efficacy of programs
addressing negative economic impact..
The interim heal rule included htgh-
level guidance about how SLFRF funds
could be used in 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/Vol. 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 In invest in data and
technology upgrades with SURF funds.
For example, one commenter noted that
investing in technology for better
connectivity, coupled with software and
hardware upgrades, will allow the
workforce to he more productive.
Treasury also received comments
seeking clarification on using funds for
investments in data and technology,
including whether upgrading
government wabsites 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 end
its economic imp.m.s4e Treasury
recognizes that collecting high -quality
data and developing community -driven,
evidence -based programs requires
resources to hire and build the capacity
of staff, adopt new processes and
systems, and use new technology and
cools in order to effectively develop,
execute, and evaluate programs. As
such, Treasury is clarifying that
recipients may use SURF funds toward
the following non -exhaustive flat of ucea
to address the data, evidence, and
program administration needs of
recipients. Additional information may
be provided in the Compliance suit
Reporting Guidance.
. Progam evaluation and evidence
resources to support building and using
evidence to improve outcomes,
including development of Learning
Agendas 247 to support strategic
evidence building, selection of
evidence -based interventions, and
program evaluations including impact
evaluations (randomized central trials
and quasi -experimental designs) as well
as repidcycle ova lualions, process or
implementation evaluations, outcome
evaluations, and cost-bonefit analyses.
Recipients are encouraged to undertake
Learning Agendas and
value do.. to ensure that
uances aze accurately and
ly addressed,
its ere also moo mead to use
among other acumen, to assess the level
of evidence for their interventions and
identify evidence -based models that
could be applied in their jurisdiction
(meaning models with strong or
moderate evidence; see Compliance and
Reporting Guidance for details on these
terms).
a Data analysis resources to gather,
assess. and use data for effective policy -
making and real-time (racking of
program performance to support
effective implementation ofSLFRF-
funded programs and programs that
:.pond to the public health emergency
and its negative economic impacts, or
which households, smell businesses, or
impacted industries are accessing
during the pandemic that are funded by
other sources. These resources include
but are not limited to data gathering,
data cleaning, data analysis, data
infrastructure, data management, data
sharing, data transparency, performance
management, outenow.based
budgeting, outcomes -based
procurement, and other data needs.
Treasury encourages the disaggrega/ion
of data to identify disparate program
impacts and the ua. of cross -
jurisdictional data sharing to better
measure and implement government
programs,
asu;
ere duals —of
amaa. neiaamy
. Technology infrastructure resources
to improve access to and the user -
experience of government information
technology systems, including upgrades
to hardware ..it software as wall as
improvements In public -facing wabsites
or to data management systems, to
increase public access and improve
public delivery of government programs
and services (including in the judicial,
legislative, or executive branches).
. Communilyoutreach 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 accessing
during the pandemic that are funded by
other sources. These methods include
but are not limited to community
meetings, ordine surveys, focus groups,
human -centered design activities,
behavioral science techniques, and
public sector
a expertise
of SLFRF-funded
ograms that respond to
a emergency and its
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
used to address administrative needs of
recipient governments that were caused
or exacerbated by the pandemic.
Guidance following the interim final
role included several examples of this,
for example, was of funds to address
backlogs resulting from pundemic-
related shutdowns (e.g., backlogs in
court systems).249 This also includes
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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/11ules 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.,
creased use of parks resulting in
damage or increased need for
maintenance). Some commenters
expressed support for the ability to use
funds for these purposes. Treasury is
maintaining these enumerated eligible
uses in the final rule and clarifying that
capital expenditures such as technology
infrastructure to adapt government
operations to the pandemic (a.g., video-
conferencingsoftwem, improvements to
case management systems or data
sharing resources), reduce government
becklogs, or ..at increased
maintenance needs are eligible.
b. Capital Expenditures
The interim final role expressly
permitted use of funds for a limited
umber of capital expenditures that
mostly pertained to COVI0.19
prevention and mitigation. These
clinics; adaptations to public
rgs to implement COVID-19
ion tactics; ventilation
ements tu congregate servings,
can witivgs, or other key
ns; assistance to smell businesses
nprofits and aid to impacted
ies to implement COVID-19
tion or mitigation tactics, such as
rl plant changes to enable social
fog. For disormsetionateli,
permitted development of affordable
housing to increase the supply of
affordable and high -quality living units.
Public Comment: Many commenter;
supported the interim final ride's
allowance of capital expenditures in
facilities to meet pandemic operational
needs but requested that the final rule
explicitly allow for a broader range of
capital expenditures. Commenters
expressed an intereat in investing in
benefits beyond the SURF period of
performance. Some commenters state
that the approach in the interim final
rule limited the vest majority of capit
expenditures to governments that
experienced revenue loss under
Sections 602(e)(1)(C) and 603(e)(1)(C)
and that this approach may prevent
some governments from fully mecum
the needs of their residents. A few
—I.e.. arW uden eapwee ro evpadito cam
menlutlan ve angiWe ram"
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 [o dvect
CAV10.t9 public health-aponse be
included as enumerated eligible uses.
The requested types of expenditures
include improvements and construction
of hospitals and health cloure
(including behavioral health clinical, m
wall as other health -related
infrastructure improvements, such as
improvements to medical equipment or
public health information technology.
These commenters stated 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 OovlD
19 on some communities. Further, some
commenter: requested that construction
or improvements ofemergency
management and public safety facilities
be deemed eligible, citing that some of
these sites serve as remote vaccination
sites 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), childcare facilities, and
community centers; some suggested that
all types of projects permissible under
the Community Development Block
Grant Program should be eligible both
for policy and administrability, reasons.
Further, some commenters also asked
for clarification as to whether parks and
recreational facilities am eligible if built
in certain disproportionately impacted
areas, m well as public transportation
infrastructure.
Finally, some commenters also
requested use of funds far capital
expenditures in government
administration buildings, such as public
courthouses, ee well as technology
infrastructure that would allow for
remote delivery of public benefits.
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, can be
appropriate responses to the public
health and economic impacts of the
pandemic, in addition to programs and
services. Like other eligible uses of
SURF 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
am enumerated earlier in sections
Public Health, Negative Economic
impacts, and General Provisions: Other
under the Public Health and Negative
Economic Imoect elfi ible use cateeory
Treasury. In addition to
vo-part framework in
griming a Public Health
etards: Designating a
identifying and designing a response to
a pandemic harm, Treasury will require
Projects with total expected capital
expenditure costs 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
size, as well . projects that are not
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, u such projects will be
presumed to be reasonably proportional,
provided that they are responding to a
harm caused or exacerbeted by the
public health emergency. These
standards and documentation
requirements are designed to minimize
administrative burden while also
ensuring that projects are reasonably
proportional end 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. IS/Thursday, January 27, 2022/Rulas and Regulations
Overview of General Standards
In considering whether a capital
expenditure would be eligible under the
public health and negative economic
impacts eligible near category, recipients
must satisfy the requirements for all
uses under the public health and
negative economic 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
proportional to the extent
impact or harm. Recipien
consult further details on
Designating a Public Health Impact and
Standards: Designating a Negative
Economic Impact under Gained
Provisions: Structure and Standards.
In addition to the framework
described above, far pro)ecte with total
expected capital expenditures of $1
million or greater, recipients must
complete and meet the substantive
requiramenis of a Written Justification
for their capital expenditure, except for
Tribal governments as discussed below.
This Written JustfOcation helps clarify
the application of this interpretive
framework to capital expenditures,
while mcognfzing 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 pandemic -related
needs relative to other type. of
responses. In addition, as discussed in
section Timeline for Use of SLFRF
Funds of this Supplemental
Information, SLFRF funds must be
obligated by December 31, 2024 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 large
projects may be less likely to be
reasonably proportional to the harm
identified. For example, construction of
a new, larger public facility for the
purpose of increasing the ability to
socially distance generally would not be
considered a reasonably proportional
response compared to other less limo-
and res ntrca-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 coat 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 mto, Finally,
the Written Justification also reflects the
fact that infou"n ctum projects are
generally not within snipe of this
eligible use category. See an" ian 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
greater. Tribal governments generally
have limited administrative capacity
due to their small sin and
corresponding limited ability to
supplement staffing for short-term
programs. In addition,'1'ribal
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 ggeenerally aye subject to a
jurisdictionalfy complex sets of rules
and regulations in the case of
improvements to land for which the title
is held I. trust by the United States for
a Tribe (Tribal Trust I snds).2sa This
includes the requirement to certain
circumstance. 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
Leads.
As a result of their limited
administrative capacity and unique and
complex rules and regulations
applicable to Tribal governments
operating on Tribal Trust Lands, Tribal
governments would experience
e'gn ficaut and redundant
administrative burden by also being
required to complete a Written
Justification for applicable capital
expenditures. While Tribal governments
are not required to earn hou the Written
justfficiince for
applicable capital
expenditures, the associated sub. eartfve
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 must be related and
reasonably proportional to the extent
and type of impact or form. Note that,
as a general matter, Treasury may also
rwseszsus.asme.
request further information on SLFRF
expenditures and projects, including
capital expenditures, as part of the
regular SLFRF reporting and
compliance process, including to ass.:
their.] igrbilly 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 need; and f3) compare the
proposed capital expenditure against
alternative capital expenditures that
could be made. The information
required for the Written Justification
reflects the framework applicable to al
uses under the public health and
negative ecanorme impacts eligible us
category, providing justification for tiv
reasonable design, relatedness, end
expenditure in response to the harm or
impact identified.
L Description of harm or need to be
addressed: Recipients should provide a
description of the specific harm or need
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 as the number of
individuals or entities iff est d.
2. Explanation of why a capital
expenditure is appropriate: 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
ham or need and why policy changes
or additional funding to pertinent
programs or services would be
insufficient without the corresponding
capital expenditures. Recipients are not
required to demonstrate that the hum 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 ham without additional
capital expenditure.
3. Comparison of the proposed capital
expenditure against alternative capital
expenditures: Recipients should provide
an objective comparison of the proposed
capital expenditure against at least two
alternative capital expenditures and
demonstrate why their proposed capital
expenditure is superior to alternative
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, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4391
feasible. Where relevant, recipients
should compare the proposal against the
alternative of improving existing capital
assets already owned or leasing other
capital assets. Recipients should use
quantitative data when available,
although they are encouraged to
supplement with qualitative
information and narrative description.
Recipients that complete analyses with
minimal or no quantitative data should
provide an exploration for doing so.
In determining whether their
pro asscapital expenditure is superior
to eltemetive capita] expenditures,
recipients should consider the fallowing
factors against each selected alternative.
a. A comparison of the effectiveness of
the capita/ expenditures in addressing
the harm identified. Recippients should
generally consider the effectiveness of
the capital expenditures in addressing
the harm over the useful life of the
capital asset and may consider metrics
such as the number of impacted or
disproportionately impacted individuals
or entities served, when such
individuals or entities ere estimated to
be served, the relative time horizons of
the project, and consideration of any
uncertainties tor risks involved with the
Ttal expenditure.
A comparison of the expected mind
Pita] assets
: health or
of the oubl
operational
mention is not
Further,
reduces the effectiveness of the capital
investment in addressing the harm
identified.
As an example, a recipient
considering building a new diagnostic
testing laboratory to enhance COVI0.19
testing capacity may consider whether
existing laboratories sufficiently meet
demand for OOVM-19 testing.
considering the demand for test results
(along with their turnaround time) as
well as the impact of current testing
availability on the spread of COVI0.19.
Recipients may also consider other
public health impacts of the level of
diagnostic testing capacity, for example
if insufficient capacity has decreased
testing for other health conditions. The
recipient may consider alternatives such
as expanding existing laboratories or
building a laboratory of a different size.
In comparing the effectiveness of the
capital expenditures, examples of
factors that the recipient may consider
include when the facilities will become
operational and for how long; the daily
throughput of COW0.19 tests; and the
affect on minimizing delays in test
results on the populations that such
tests will serve. In comparing costa, the
recipient may compare the total
expected cost of the new laboratory
(including costs of acquisition of real
property. construction of the laboratory,
and purchase of any necaseary,
eqquipment needed to operalionalize the
fah), against the expected mats of
expending existing laboratories
(whether by replacing torrent
equipment with higher throughout
devices or physically expanding space
to accommodate additional capacity) or
building a new laboratory of a different
size, including by leasing property. As
a reminder, recipients should only
consider alternatives that are potentially
effective and reasomably feasible.
Because, in all rases, uses of SLFRF
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
new correctional facility would
generally not be a proportional response
to an increase in We rate of certain
crimes or overall crime as most
correctional facilities have historically
accommodated fluctuations in
occuls ncy.rs1 In addition, construction
of new congregate facilities, which
would generally be expected to involve
expenditures greater than $l million,
would generally not be a proportional
response to mitigate or prevent COVI0.
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 amortising spread of
the disease."' These alternatives
include personal protective equipment,
ventilation improvements, utilizing
excess capacity in other facilities or
wings, or temporary facility capacity
expansions.
Large capital expenditures intended
for general economic development or to
aid the travel, tourism, and hospitality
industries —such es ccinvendon renters
and stadiums —are, 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
remedying pandemic harms may be very
limited compared to its cost.s+s
Presumptions on Capital Expenditures
For administrative convenience, the
final role provides presumptions on
whether a Written Justification is
required —end required to be submitted
to Treasury through reporting —based on
the type and size 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
most be memorably designed to benefit
the individual or class that experienced
the identified Impact or harm and must
be related and reasonably proportional
to the extent and type of impact or
harm.
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43. ,zsAwn. u I as.
4392 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
If a project Ins tonal expeced cap-
and the use is eramerged by Treasury as eligible,
ital expendttum of
Menu^
Le%then $1 even. ........................
No Written JualiPcation required ......_......................
Greater than ar equal to $1 million,
Written Justification marked but recipients are rat
but lass than $10 million.
required to submit as pad of regular reporting to
Treasury.
$10 mlllim or rtare
Written Justification required and recipients mug
submit as part of regular depending 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. Far
example, Treasury selected $1 million
as a threshold for whether a recipient
needs to complete a Written
head fication as well as a threshold
under which capital expenditures
would he presumed reaeonably
proportional. Treasury estimate. that $1
million would me.psulale the coats of
a significant portion of equipment or
small renovations. These types of
s alles projects are often a necessary
and reasonably proportional part of a
response to the public health
emergency; therefore, the $1 million
threshold provide. a simplified pathway
to complete smaller projects more likely
to meet the eligibility standard. At the
same time, Treasury selected $10
million es the threshold for smash
intensive reporting requirements,
estimating that projects larger then $10
m0lion 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
aria the use Is boypa Muse enumerated by Them -
my as eligibta, Man me
No Written Jushfcation mounted.
Written Justification required and recipients most
suburb as pan of regular repoMng to Treasury.
projects may be less likely to be
reasonably proportional responses. The
$10 million thrershold 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 part of the scope
of one project. These expenditures can
include capital expenditures, as well ea
expenditures on related programs,
services, or other interventions. A
project includes expenditures that are
interdependent (e.g., acquisition of land,
construction of the school on the land,
and purchase of school equipment), or
ere of the same or similar type and
would be utilized for a common
purpose (e.g., acquisition ofa fleet of
emhulances that would be used for
COVIU-19 emergency resporae).
Recipients must not segment a larger
project into smeller projects in order to
evade review. A recipient undertaking a
set of identical or sfmilm 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 as Eligible by
Treasury
Under the public health and negative
economic impacts eligible use category,
the final rule 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 Ural these enumerated
projects are related to the public health
emergency and its negative economic
impacts; however, recipients (other than
Tribal governments) undertaking these
projects with total expected capital
expenditures of $1 million or ggrreeeter
must still complete and mcet the
substantive requirements of a Written
Justification as pert of their
demonstration that the project is a
related and reasonably proportional
response to the harm identified.
a Projects with total expected capital
expenditures of under $1 million:
Treasury provides a safe harbor for
projects with total expected capital
expenditures of less then $1 million end
will not require recipients to complete,
submit, or meet the substantive
requirements ofa Written Justification
for the capital expenditure. In essence,
recipients may pursue an enumerated
project with total expected capital
expenditures of under $1 million
without having to undergo additional
assessments to meet SLFRF
requirements.
• Projects with total expected capital
expenditures 0iot lcnst $1 million but
under $10 mil ion: Recipients should
complete a Written justification for the
capital expenditure and make an
independent assessment of whether
their proposed capital expenditure
meets the substantive requirements of
the Written juatifrcation. Recipients will
not be required to submit the Written
Justification as part of regular reporting
meets the substantive requirements of
the Written Justification. Factors,
recipients will be asked to submit the
Written justification as part of regular
reporting to Treasury. Similar to other
parts of the SLFRF program, such as on
reporting an labor practices, Treasury
recognizes that projects with expected
total capital expenditures of at least $10
million ma➢ be less likely to meal
eligibility requirements and therefore
requires recipients to provide an
..barred 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 as 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/VoI. 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 nay also be asked to
complete a Written justification,
Recipients father than Tribal
governments) are subject to the
following presumptions for the Written
Justification of the capital expenditure,
based on the total expected capital
expenditures of the project:
• Projects with focal expected capital
expenditures of under $1 million:
Treasury provides a safe harbor for
unenumerated projects with total
expected capital expenditures of under
$1 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.
Projects with total expected capitol
expenditures of $1 million or over:
Recipients should complete a Written
justification of the capital expenditure
and make an independent assessment
that their proposed capital expenditure
meets the substantive requirements of
the Written Justification. Further,
recipients will be asked to submit the
Written Justification as part of regular
reporting to Treasury.
Treasury employe a risk -based
approach to overall program
management and monitoring, which
may result in heightened scrutiny on
larger projects. Accordingly, recipients
pursuing Include
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 tabor Standards in Construction
Treasury encourages reciprenls to
carry out projetta in ways that produce
high -quality work, avert disruptive and
costly delays, and promote efficiency.
Treasury encourages recipients to use
strong labor standards, including project
labor agreements (PLAa) and
community benefits agreements that
offer wages at or above the prevailing
rate and include local hire provisions.
Treasury also recommends that
recipients prmilize in their
procurement decisions employers who
can demonstrate that their workforce
...is high safely and training standards
(e.g., professional certification,
hem sure, and/or robust in-house
training), that hire local workers and/or
workers from historically undatserved
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 scrounges
recipients to prioritize emPloysm
(irmluding contracors and
subcontractors) without recent
A.1w a ve effectual and state labor and
employment laws.
easury 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
dismptions, such ro those a.ocialad
with labor disputes or workplace .
injuries. That will, in turn, promote on -
lime and on -budget delivery.
Furthermore, aroong other
requirements contained in 2 CFR 200.
Appendix R, all contracts made by a
recipient or subrecipient in excess of
$100,000 with respect to a capital
expenditure that involve employment of
mechanics or labor.. ..at include a
provision for compliance with certain
provisions of the Contract Work Hours
and Safety Standards Act, 40 U.S.C.
3702 end 37M as supplemented by
Department of Labor regulations f29
CFR part 5).
Treasury will seek information from
recipients an thew workforce plans and
practices related to capital expenditures
undertaken under the public health and
negative economic impacts eligible use
category with SURF 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 SURF funds, all
Frejects most comply with applicable
fderal, state, and local law. In the case
of capital expenditures in particular,
this includes environmental and
Foundling laws and regulations.
Likewise, as with all capital expenditure
projects using the SURF funds, projects
must be completed in a manner that is
technically sound, meaning that it mbar
meet design and construction methods
and use materials that are approved,
codified, recognized, fall under standard
or acceptable levels of practice, or
otherwise sure determined to be
generally umptable by the design and
construction inducthy
Further, as with ell other urea of
funds under the SURF program, the
Uniform Guidance at 2 CFR part 200
applies to capital expenditures unless
stated otherwise. Importantly, this
includes 2 CFR part 200 Subpart D on
post -federal award requirements,
including properly standards pertaining
to insurance coverage, reel properly,
and equipment; procurement standards;
sub -recipient monitoring and
management; and record retention and
access.
Definitions
Treasury adopts several definitions
from the Uniform Guidance at 2 CFR
200.1 under this section, including for
capital expenditures, capital assets,
equipment, and supplies.
Per the Uniform Guidance, the term
"Capital expenditures" means
"expenditures to acquire capits[ assets
or expeadiNres to make additions,
improvements, modifications,
replacements, rearrangement.,
reinstallation, renovations. or
alterations to capital assets that
materially increase their value or useful
life." The term "capital assets" means
"tangible or intangible assets need in
operations having a useful life of more
then one year which are capitalized to
accordance with [Generally Accepted
Accounting Principles[."
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 par -unit
acquisition cost which equals or
exceeds the lasean of the capitalization
level established by the non -Federal
entity far financial statement purposes,
or $5,000. " Supplies, which means all
tangible personal property other than
those included as "equipment," are not
Recipients may also use SLFRF funds
for pre -project development cords that
are tied to or reasonably expected to
lead to an eligible capital expenditure.
For example, pre -project costs
engineering for an eligible project are
considered an eligible use of funds.
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. 18lThursday, January 27, 2022l 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 rule slated
that. "dal transferee receiving a transfer
from a recipient under sections 602(c)(3)
and 603(c)(3) will be a aubrecipianl.
Subeecipients 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 foods transferred to a
subrecipient, the interim final rule
noted that "Irlecipients continue to be
responsible for monitoring and
aversecing the subrecipienfs use of
SLFRP funds and other activities related
to the award to ensure that the
subrecipient complies with the statutory
and regulatory requirements and the
terms and conditi..a of the award.
Recipients also remain responsible for
,sparing to Treasury on their
sod recip ants' use of payments from the
SLFRF funds for the duration of the
award."
Public Comment: Treasury received
many comments requesting clarification
about which entities quality as
subrecipient, and are, in turn, subject to
subrecipient monitoring and reporting
requirements. For example, commenters
sought claHficetion about whether a
nonprofit that received a grant to
provide services under a program to
carry out an enumerated eligible use
would qualify as a subrecipient and be
subject to subrecipient monitoring and
reporting requirements. Similarly,
commenters also wondered if.
economic impact of the public health
emergency would also be a .ubreclph nt
and subject to subrecipient reporting
requirements.
Treasury Rasponse:Traesury is
clarifying the distinction between a
subrecipient and beneficiary in the final
rule. The Uniform Guidance definitions
for subaward and subrecipient inform
Treasury's distinction between
subrecipients and beneficiaries.
First, per 2 CPR 200.1 of Uniform
Guidance "I.lubaward moans an award
provided by a pass -through entity ass to
a subrecipient for the subrecipient to
carry out part of, Federal award
received by the pass -through entity. It
does not include payments to a
contractor or ppayments to an individual
that is a here ficiary of a Federal
Program. A subaward may be provided
through any form of legal agreement,
•"9e'I'a wm..' a'—daough entity means e
ntlplmt of siF I=&.
including an agreement that the pass -
through entityy considers a contract."
Furtheq 2 C8R 200.1 allies Uniform
Guidance defines a subrecipicn4 in that
"Islubrecipient mcsins an entity, usually
but not limited to non -Federal entities,
that receives a subaward from a pess-
through entity to carry out part of a
Federal award; but does not include an
individual that is a beneficiary of such
award. A subrecipient may also be a
recipient of other Federal awards
directly from a Federal awarding
agency." Treasury is aligning the
definition of subrecipient in the final
rule with the definition of subrecipient
in the Uniform Guidance.
Treasury is maintaining the
monitoring and subrecipient reporting
requirements outlined in the final role.
Per 2 CFR 200d01 (b)(2) of the Uniform
Guidance, the terms and conditions of
federal awards Bow down to subawards
to subrocipients. Therefore, non-federal
entities, as defined in the Uniform
Guide.., must comply with the
applicable requirements in the Uniform
Guidance regardless of whether the non-
federal entity is a recipient or
subrecipient of a federal award. This
includes requirements such as the
treatment of eligible uses of funds.
procurement, and reporting
rete.
ThMUniform Guidance definitions for
both subaward and subrecipient specify
that payments to individuals or entities
that are direct benefiriaries of a federal
award am not considered subrocipients.
The final role adopts this definition of
a beneficiary and outlines that
households, communities. small
businesses, nonprofits, and impacted
industries are all potential beneficiaries
of projects carried out with SLFRF
funds. Beneficiaries are not subject to
the requirements placed on
subrocipients in the Uniform Guidance,
including audit pursuant to the Single
Audit Act and 2 CFR pert 20p, subpart
F or subrecipient reporting
requirements.
The distinction between a
subrecipient and a beneficiary,
therefore, is contingent upon the
rationale for why a recipient is
providing funds to the individual or
entity. If the recipient is providing
fund. to the individual or entity for the
purpose of carrying out a SLFRF
program or project an 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 1s providing funds to the
individual or entity for the purpose of
directly benefiting the 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 rate, 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 re -categorized 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 interest or principal
on outstanding debt instruments; fees or
issuance costs associated with the
issuance of new debt; and satisfaction of
any obligation arising under or pursuant
to a settlement agreement, judgment,
cement decree, or Judicially confirmed
debt restructuring plan in a judicial,
administrative, or regulatory
proceeding, except to the extent the
judgment or settlement requires the
provision of services that would
respond to the COVID-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.bove, the interim fluid one
also posed several questions on what
mine 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 lords in this
eligible use category.
General Eligible Uses
Public Comment: Commenters
proposed a wide variety of additional
recommended enumerated eligible uses
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4393
In all .actions of the public health and
negative economic impacts eligible use
category, including in impacted and
disproportionately impacted
communities. The proposed additional
uses included general rategones of
services (e.g., legal and social services,
long-term investments to mmediate
long-term disparities, response to
natural disasters). Other suggested uses
of funds respond to needs widely
experienced across the country (e.g.,
access to and affordability of health
insarancef Finally, other suggested uses
f funds were highly specific (e.g.,
healthcare equipment for a specific
health condition, fire hydrants, weather
alert systems) or most applicable to the
particularised needs to certain
populations or geographic areas of the
United States (e.g., senior minces,
Immigrants, Formed y incarcerated
Individuals, responding to
environmental issues in certain
guographic regions). Other commenters
generally requested a high degree of
Flexibility to respond to the particular
needs of their communities.
Treasury Response: Given the large
recipients, Treasur
include as enumen
programs, services,
expenditures that
health end naeatiw
uses
under the final rule, This provides
enumerated eligible uses that many
recipients may want to pursue, while
including uses that are responsive to the
pandemic's impacts across the diverse
range of SLFRF recipients. In the final
.Is, Treasury has clarified several
additional uses that generally respond
to pandemic impacts experienced
broadly across jurisdictions and
poppulation.
1}many bee not chosen to include as
enumerated now all uses proposed by
commenters; given the significant range,
and to same case. highly specific
nature, of the proposed uses Trewury
was am able to as.... that the proposed
uses would respond to negative
economic impacts experienced
recipients to identify other public health
or negative economic impacts to
additional households, small
businesses, or nonprofits, including
classes of these entities, and pursue
programs and services that respond to
these impacts. Treasury also notes that
some populations am presumed to be
impacted or disproportionately
impacted by the pandemic, end thus
eligible for onvices respsive services; these
presumed eligible populations may
encompass many individuals in the
specific populations for whom
commenters recommended services. For
details on these issues, see section
General Provisions: Structure and
Standards.
Infrastructure, Community
Development, and General Economic
Development
Some potential additions la
enumerated eligible uses were also
recommended by several commenters
each but are not included as enumerated
eligible uses in the final rule.
Public Comment: Infrastructure: In
the interim final rule, Treasury noted
that a "general infrastructure pro]ect, for
example, typically would not be
included [in this eligible use category]
unless the project responded to a
specific pandemic public health need."
Numerous commenters requested that
Treasury permit investments in
infrastructure as a response to the
public health and negative economic
impacts of the pandemic. While these
comments most commonly
recommended that contracting and
maintaining roads and surface
transportation infrastructure be eligible,
the proposed uses for infrastructure
ranged widely end included parking
lots, bridges, traffic management
Infrastructure, solid waste disposal
I
acilities, end utility infrastructure
(outside water, seweq and
broadband).
Many commenters argued that
maintenance
development and
maintenance is a pressing need in (heir
communities and that their
communities had less need for water,
sewer, and broadband infrastructure or
other eligible uses to respond to the
public health and negative economic
impacts the pandemic. Other
commenters argued that these uses
would stimulate the economy, attract
businesses, or allow for tourist
movementht; erase commenters argued
than by generally supporting a stronger
economy or facilitating conditions that
are mare conducive to respon activity
and tourism, these imps respond to the
negative economic impacts of the
pandemic.
Treasury Response: In the final rule.
Treasury Ice maintaining the approach
under the interim final rule that general
Infrastructure projects, including roads,
streets, and surface iransp.imum,
infrastructure, would generally not be
eligible, unless the project responded to
a specific pandemic public health need
or a specific negative economic impact.
The ARPA expressly includes
Infrastructure if it is "necessary" and in
water, sewer, or broadband, suggggeesting
that the statute contemplates oNy those
types of infmsiruclure. Further,
responding to the public health and
negative economic impacts of the
pandemic requires identifying whether,
and the extent to which, there has bean
a he. that resuited from the COVID-
19 public health emergency and
whether, and the extent to which, the
use would respond or address this
harm. Uses of funds intended to
Tnerally grow the economy and
erefore enhance opportunities for
workers and businesses 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
benefidanes. Such an activity would be
attenuated from and thus not reasonably
designed to benefit the households that
experienced the negative economic
ll myact.
Nola, however, that Treasury has
clarified that capital expenditures that
are related and reasonably proportional
misspending to the public health and
economic impacts of the pandemic are
eligible uses of funds, in addition to
programs and services; for details on
eligibility criteria for capital
expenditures, see section Capitol
Expenditures in General Provisions:
Other,
Public Comment: Community
Development Block Grant: Several
commenters recommended that
Treasury enumerate w eligible uses
those eligible under the Department of
Housing and Urban Development's
Community Development Block Grant
(CDBG) or the Housing and Community
Development Act of 1974, which
established the CDBG program.
Commenters requested that these uses
be eligible either to respond to the
negative economic impacts of the
pandemic, or in the alternate the
disproportionate negative economic
impacts of the pandemic in certain
communities. Under the CUING program,
recipient governments may undertake a
wide range of community and economic
439E 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 noes may help recipients easily
understand and pursue eligible projects.
programs
.:In the final rule,
iding all categories
I. under MBG as
uses to respond to
f negative econmmic
households, communities, small
businesses, general economic
development activities, and capital
expenditures. Treasury determined drat
it was more appropriate to ..a.. the
underlying types of projects eligible
within (9BG and whether each type of
whether various types of community
and economic development projects
respond to the impacts of the pander
in different communities and
circumstances. In the final rule,
Treasury addresses the eligibility of
these various tyypes of projects in see
relevant eligible use category within
impacted small businesses, and capital
expenditures.
Public Comment. General Economic
Development Treasury provided
guidance following the interim final
rule that general economic development
or workforce development would
generally not be eligible as it does not
sp not a negative economic impact
of the COVID-19 public health
emergency.
Some commenters recommended that
Treasury expand enumerated eligible
uses to include general economic
development activities, beyond those
that respond to ingenue economic
imparts of the panderic, 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 inexamei es
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 creole mare job
opportunities for workers or expend the
jurisdiction's tax base and produce
funds to support government services.
In contrast, other commenters argued
that academic research consistently
finds that economic development
subsidies have a nagli bla, even
negative, economic a ruor even
citing
research findings to this effect.rs'
Treasury Response: In the final rule,
Treasury maintains the interim final
rate'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 juriedictiori 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,
e recipient must identify a beneficiary
or class of beneficiaries that experienced
a harm or impact due to the pandemic,
and eligible uses of funds must be
"Inidierfor'cro-{ ncchh—aadiene-and-nei
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reaeonably designed to respond to the
harm, benefit the beneficiaries that
experienced it, and be related and
reasonably proportional to that harm or
lact.
s 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 reaistance is not
reasonably designed to impact
individuals or close" that have been
identified as having experienced a
negative economic impact. In other
ver de, there I. not a reasonable
connection between the assistance
provided and an impact on the
beneficiaries. Such an activity would be
attenuated from and thus mat reasonably
designed to benefit the households that
experienced the negative economic
impact. Research cited by some
commenters finding that business
subsidies have limited or negative
economic impact also suggests that such
a response may not be reasonably
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 eas onds to negative
economic irepacm of the pandemic.
However, Treasury notes that the final
rule includes as euumerated 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 602(cf(1)(B) and 603(e)(3)(B)
of the Social Security Act, as added by
the ARPA, provide that SLFRF 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. IS/Thursday, January 27, 2022/Rules and Regulations 4397
that have eligible workers who perform
essential work."
Premium pay is designed to
compensate workers that, by virtue of
their employment, were forced to take
on additional burdens end make ggreat
on persal samifrces as a result o(ihe
COVID-10 pandemic. Premium pay can
be thought of as hazard pay by another
name.2se
During the public health emergency,
employers' policies on COVID-19-
related premium pay or hazard pay have
varied widely, with many essential
workers not yet compensated for the
heightened risks they have faced and
continue to face.259 Many of these
workers earn lower wages on average
and live in socioeconomically
andemerved communities as compared
to the general population.2e9 A recent
study found that 25 percent of essenlia]
workers were estimated to have low
household income, with 13 percent in
high -risk househalds.�sl The low pay of
many essential workers makes them less
able to cope with the financial
consequences of the pandemic or their
work -related health risks. As Americans
return to work and governments relax
certain Pales, essential workers will
continue to bear the brunt of the risk of
maintaining the ongoing operation of
vital facilities end services. The added
health risk to essential workers is one
prominent way in which the pandemic
has amplified pre-existing
socioeconomic inequities. Premium pay
designed to address the disparity
between the critical services provided
by and the risks taken by essential
workers end the relatively low
compensation they tend to receive.
The interim final rule established a
three-part framework for recipients
seeking to use SURE funds for
premium pay. First, to receive premium
work,
health
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questions regarding premium pay
program structuring, This section
responds to the comments by addressing
the three requirements in turn, then the
overall definition of premium pay and,
finally, program structure.
Eligible Workers
The ARPA defines "eligible workers"
as "those workers needed to maintain
continuity of operations of essential
critical Infrastructure sectors and
additional sectors as each.. .
[government) may designate as critical
to protect the health and wellbeing of
fits] residents." The interim final .]a
supplemented this definition by
identifying a list of "essential critical
infrastructure sectors" whose workers
are eligible works., based on the list of
.attars in the HEROES Act, a bill
introduced in the House of
Representatives in 2020 that would have
provided premium pay to essential
worksm.262 In addition to the critical
infmstructure sectors defined in the
interim Beal rule, the chief executive (or
equivalent) of a recipient government
easy designate additional non-public 263
sectors as critical so long as doing so is
necessary to protecting the health and
wellbeing ofthe residents clench
jarisdiction.
Public Comment: Treasury received
multiple comments on the definition of
"eligible worker" included in the
interim final rule. Many commissions
agreed with the definition of eligihis
worker adapted by Treasury. Other
commenters sought clarification about
or changes to the definition of eligible
worker, includingg the definition of
eligible sectors, We inab skm of
government workers in the definition of
eligible workers, and the process for
designating additional non-public
sectors as eligible.
Some commenters asked Treasury to
change haw it identifies eligible sectors,
Including suggestions to add to or
subtract from the list of eligible sectors.
For example, same commenters asked
Treasury to consider using Bureau of
Labor Statistic. (BLS) -Standard
Occupational Classifications to identify
specific sectors or occupations, in
contrast to the approach taken in the
interim final role, which included a
mixture of aconomic 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
,n$a H.R. 6900, 110th Con, (2020).
'^ Note that the eadom defined In the Interim
final mle already include ail aide, Laced, and TdMI
gavem,nwn employees.
these commenters represented public
employees, e.g., employees of facilities
and public works; public utilities;
courthouse employees; police, fire, and
emergency medical services; and waste
and wastewater services. Others were a
mixture of public and private sector
employees, e.g., coroners and medical
examiners; tomepmtation infrastructure
electrir utilitiss, natural gas, and steam
supply: and grocery employees. Other
workers
ad corrections
premium pay for
(Ammentem also asked Treasury to
clarify which government workers are
included in the definition of eligible
workers. ]be interim final rule included
as an essential critical Infrastructure
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 are already included in the
interim feral rule definition of "eligible
worker." Commenters asked whether
this includes governments that did not
receive SLFRF funds (i.e., "non
recipient governments"). 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
are
the
Commenters asked that Treasury adopt
a requirement that Treasury must
approve or deny any additional son -
public sector identified by the chief
executive of a recipient government
prior to implementation of the
recipient's program.
Some commenters asked Treasury to
clarify whether their chief executive (or
equivalent) could designate particular,
and in some cases all, employees ofthe
recipient government m eligible for
premium payy.
Trcusary Response: In the final rule,
Treasury will preserve the definition of
"eligible worker" as it was defined in
the interim final rule with minor
modifications to clarify that all public
4398 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
employees of recipient governments are
already included in the interim final
role definition of "eligible worker." A
more specific eligibility system (eg.,
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 programs to meet
(heir needs while ensuring that
programs focus on sectors where
workers were forced to shoulder
substantial risk as a result of the
COVID-19 pandemic. Furthermore, the
critical infrastructure sectors defined in
the interim Intel 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, or Tribal government."
Treasury has clarified in the final rule
that the chief executive's discretion to
designate additional sectors as an that
inlet.. only to "non-public" sectors,
since all public employees of recipient
governments era already included in the
definition of"eligible worker." While
all such public employees am "eligible
workers" and the chief executive (or
equivalent) of a recipient government
may designate additional non-public
sectors as nciticah in order to receive
premium pay, these workers most still
meet the other premium pay
requirements (e.g., performing essential
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 ere not required to do
so.2w Furthermore, a recipient
government does not need to submit to
Treasury for approval its designation of
a sector as essential criti®I
infrastructure; rather,'1'reasury 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.:wr®e such m evrcnu dR uvr
SMieim, occupational amlmk Handbook,
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"aftnom, ce occupat ces ue Iyucally
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final I U1 ,2as 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 die health and wellbeing of
residents. Treasury has, where possible,
clmified the definition f"essential
critical infrastructure aenore." For
instance, Treasury has clarified in the
final rule that work performed by an
employee of a Tribal government
includes an employee of a Tribal
enterprise and discussed in this
Supplementary Information how a
recipient may qualify other non-public
sedum as essential critical
infrastructure.
Essential Work
The interim final role defined
"essential work" m work that (1) is at
pedoaned while teleworking from a
residence end (2) involves either (f
regular, in -person interactions with
patients, the public, or coworkers of the
individual that is performing the work
or (it) regular physical handling of items
that were handled by, or are to be
handled by, patients, the public, as
coworkers of the individual that is
performing the work. Treasury adopted
this definition of essential work to
envure that premium pay is targeted to
worker's that £aced or fain heightened
disks 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
"semotal 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 it 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
empioyes, veterinarians, election
administrators, detention staffand
sherif a deputies, and employees of
utilities, each as electric power, natural
gas, steam supply, water supply, and
sewage removal.
Several commenters requested that
Treasury not distinguish between
remote and in -person work or amend
the standard so that employees
Viding essential services would still
ligible even if they worked
remotely. Finally, a few commenters
requested clarification as to the
—Public manr esrken ue ^Melbl. wurkeri'
under the lnleum final ruleend final rule.
definition of 'regular"
musections and wheth
functions merit
more
work" in the final rule without
modification. The lest adopted in the
interim final role was designed to
compensate workers facing
disproportionate risk due to the
pandemic. COVID-19 is transmitted
through person-ta-person interactions,
and therefore, workers with regular in -
person interactions ere 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 into
maintains the interim final rule'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 as 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, Times 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
cimumstances. Generally speaking,
however. recipients are encouraged to
consider an eligible worker's risk of
exposure in designing premium pay
programs.
Respond To
As required by the ARPA, the interim
final role required that premium pay
programs "respond lo" 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- end modersle-income
persons, given the significent share of
essential workers that are law- 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 $25,090
in aggregate —in the ARPA supports this
mason nR.
Accordingly, the interim fuel rule
required written justification 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
for Business) uses SURF 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 stela or county's average
annual wage for all occupations, as
defined by the HIS Occupational
Employment and Wage Statistics,
whichever is higher, on an annual basis,
than the recipient must provide,
whether for themselves or an behalf of
a grantee, written justification to
Treasury detailing haw the award
respond. 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 premium
pay to lower-inceme, eligible workers.
Same commenters even asked Treasury
to make the wage threshold a firm
restriction, above which an eligible
worker could not receive premium pay.
Others agreed with the threshold but
also requested Flexibility to use existing
worker classifications 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 "responds to" eligible
workers performing essential work
when it is provided to employees who
are not exempt from the Fair Labor
Standards Act (FLSA) uvxrdine
provisions --a lest that employers are
routinely required to apply.n..
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
(e.g., public safety, waste collection) and
that it did not sufficiently account for
the variance in economic need across
different geographic uses and family
structures. Some smeller communities
argued that the threshold was difficult
to calculate and apply.
Other commentem proposed revisions
for how the threshold Fs 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
co Smyenmo11y29 U.S.C. 2071q: U.S.
VapMmma of labor, overame Pay aeqummrents of
the FLSR (Peer Sheet No. 23y MIpsJ1s we.do10 1
eym,ces/wnd//rt.hwftoa3rya-mvmme-pny. yavround.
thresholds for permitting or reporting on
premium pay.
Finally, there was also some
uncertainty as to the threshold and the
requirement for written justification.
Some commenters interpreted the
threshold as a hard cap an who was
eligible for premium pay, which is not
the case. Relatedly, some commenters
also requested further guidance an 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
performing essential work during the
public health emergency. tinder 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 mitten 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 performing essential work and
adds an additional means of
that
pay is not
to receive premium pay see 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
ml Department or rather. 0emume r.y, hapsl/
uxw.ddgw/ogenuee/w4dloveNme; sae also 2e
.S.c. 2m.
final rule For recipients because
Treasury understands that most
employee:, p blic and private, are
femilier with and are routinely required
to apply the FLSA.
With this addition, the final role
provides that premium pay is
responsive to eligible workers
performing essential work during the
public health emergency if each eligible
worker who receives premium pay laps
into one of three categories: (I) The
worker's pay is below the wage
threshold, (2) the worker is not exempt
from the FLSA overtime provisions, or
(3) the recipient has submitted a mitten
justification to Treasury.
The final rule 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 are net exempt from the
FLSA overtime provisions. The written
justification 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 role also
clarifies that a worker's pay exceeds the
threshold if either the premium pay
increases the worker's total pay above
the wage threshold or the workm's total
pay was already above the threshold,
before receiving premiwn pay.
Treasury hoe also updated the final
rule to clarify that written justification
means a brief, mitten narrative
justification officer the premium pay or
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-10. and why the
recipient determined that the premium
pay was responsive despite the workers'
hiter Inc....
cipients should refer to SLFRF
program reporting guidance, user
guides, and other documentation for
further guidance on the form and
content of the mitten justification.
Treasury anticipates that recipients will
easily be able to satisfy the justification
requirement for front-line workers, like
nureas and hospital staff.
Definition of Premium Pay
The statute defines promium pay as
"on amount of up to$13 per hour... ,
in addition to wages or remuneration
the eligible worker otherwise receives,
for all work performed by the eligible
werkm during the COVID-10 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. IB/Thursday, January 27, 2022/Rules and Regulations
final rule incorporated this definition
types of employees and permissible
C.Revenue Loss
and emphasized that premium pay
structures for awarding premium pay. A
Background
should be in addition to compensation
few commenters asked if premium pay
Sections
typically received.
could be awarded to volunteers or those
602(c)(1)(C)aad 603(c)(1)(C)
Public Comment: Several submitted
in irregular and non -hourly or salaried
of the Social Security Act provide that
comments related to the definition of
employment positions. Similarly,
SLFRF funds may be used "for the
"promium pay." Several commenters
various commenters asked if part-time
provision of government services to the
asked Treasury to clarify certain aspects
workers were eligible for premium pay.
extent of the reduction in revenue of
of the interim final rule and statutory
Some commenters asked Treasury to
such ... government due to the
definition of premium pay. For instance,
provide more detail an when premium
COVILY19 public health emergency
a few commenters asked whether the
pay may be paid retroactively or if a
relative to revenues collected to the
$25,OOO limit applies to the annual
could retmburx its general
most recent full fiscal year of the. .
amount of premium pay received or the
land
ff nd for hazard pay already paid before
government prim to the emergency."
aggregate amount of premium pay
the start of the period of Performance.
This provision allows recipients
received over the period of performance.
TreasuryResponse: TT.....y has also
experiencing budge shortfalls to use
A few commenters requested flexibility
made clear in the final rule that a
payments from the SLFRF funds to
as to how premium pay may be
recipient may award premture pay to
avoid ruts to government Services and,
awarded, including flexibility to make
non -hourly or salaried workers es well
thus, enables stale, local, and Tribal
monthly or quarterly payments or lump
as part-time workers. Premium pay may
governments to continue to provide
sum payments. Finally, cummenlers
not. however, be ..tried to volunteers.
valuable services and ensures that fiscal
requested additional clarification as to
If a recipient is interested in
austerity measures do not hamper the
have premimn pay should be calculated.
For instance, a commenter asked how W
compensating volunteers with SLFRF
funds, than it must do se consistent
broader economic recovery.
State and local government budgets
calculate the amount of and account for
with the requirements set forth in other
eligible use categories; for example, we
experienced stress in fiscal year 2020 as
delayed tax filings and paMemic-
overtime pay and other incentive
Pay zoo
section Public Sector Capacity end
related business closures caused
Treasury Response: Treasury has
Workforce to Public Health end
revenues to decline sharply.271 Twenty -
clarified some of these issues in the
Negative
Owhat
Ecommic Impacts.
the final role, recipients may
two state governments took actions to
close budget gaps in fiscal year 2020 272
final rule. For example, Treasury, has
clarified in the final cute that the
award premium pay reUoxlivelyy
and nearly 80 percent of cities reported
$25,000 per employee limit Is for the
however. SLFRF funds may not be used
to reimburse a recipient or eligible
being less able to ment the fiscal needs
of their communities relative to fiscal
entire period of performance, not an
annual cap. Further, recipients have
employer grantee for premium pay or
year 2019,273 Surveys of Tribal
discretion with respect to the way in
hazard pay already received by the
employee. To make interactive premium
governments and Tribal enterprises
conducted in 2020 found majorities of
which premium pay is awarded to
eligible workers (e.g., monthly,
payments funded with SLFRF funds, a
respondents reporting suhstanUal cost
quarterly, lump sum), provided that the
remptent or eligible employer granten
must make a new cash outlay for the
increases and revenue decreases, with
Tribal governments reporting reductions
total premium pay awarded to any
eligible worker does not exceed $13 per
miumn le
and the ages
must
, social services,
conomth ic
hour or $25,000 over the period of
be addition to any wnts
or
remuneration the eligible worker
and ein
development activities as
a result of reduced coname ea.r7s
performance. Finally, a recipient may
award premium pay to far eligible
already received, subject to the other
The economic recovery, aided by the
worker in addition to the overtime pay
requirements and limitations set forth in
the ARPA and this final rule.
brand distribution of COVIO-Q9
vaccines and the deployment of federal
already earned by the eligible worker
but in no instance may the portion of
Finally, as part of accepting the
Award Terms and Conditions for
stimulus, has led to a strong rebound in
total State and local government revenue
the compensation funded with SLFRF
SLFRF, each recipient agreed to
and is contributing to a brighter fiscal
funds exceed $13 per hour, even if strict
maintain a conflict -of -interest policy
time -and -.-half calculation requires
consistent with 2 GFR 200.318(c) that is
1" to the second gwnm of 2020, emrtwty vice
more.z7o To the extent that an employer
applicable to all..vibes funded with
snd lord axmonew as reported by ten U.S.
is required under the FLSA to make
the SLFRF award. This award term
Camera.. su to p—w wapwed to the
Barw..
manta to an eligible worker in excess
PRY g
$13 hour or $25.000 in the
re quires recipients and suhrecipients to
rmM gm�wutzers: us. retire
Quarterly Summand Sim and Loin I -
of per
report to Treasury or the pass -through
Revenue. hio Jl—census aomlp7.gwms
aggregate over the period of
agency, as appropriate. Say potential
s urw:yel such mf.
performance, the employer mast use a
conflict of Interest related to the award
—eim -al Aemammn of Sass ends. 0fu®re,
source of fundingother than the SLFRF
funds per 2 CFR 200.112. Pursuant to
vial Serwy m the Scene (Fall 2020). amlmWo of
nnpr:/lblghedogcaowWmd.ssnm.mnuwx�
funds to satisfy those obligations.
this policy. decisions concerning SLFRF
NAS➢OIOZdrdbla949 eJio-msoo( reademel
Program Structure
funds must be free ofundtscl..ed
Uylwded/m.ges/Ffeml%NlSurvey/NASBOJ+oII_
20w_Pk-lsnrvey_of seniors
Public Cammenh Several commeniem
personal or organizational conflicts of
both in fact and in appearance.
pdf
removal term of Guee, rey Fly.[
conditom 12nml. seclabte.t nime://w.vw.nlr
also requested elaboration on eligible
Consistent with this policy, elected
evW
wprmwnUuplmds/m2o/oe/tiryplscvL
rswzs0s.c.zethe^IABamovim loam..
officialsareprohibited kom using their
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Country
eraommpmentameeedanl Roemmer
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ale Allredpimtaen,ye. ondbcomyverpsb
policy also prohibits, among other
ponemot
202a.CIi-toenoe Heemw S.Iuepmq Tnbd
and
ommwiso—voll l'he
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--to 0.2ema,lishave r
Fee Late,mywre
v.le
hour mgnlmmenLa In Fee Ilbm Slenderda Act
oonmmmt mf lemr,wegeemdtm
funds to projects in which the have a
financial interest or using funds to 9
PY
R. .R—kis
ames.
fiances Pedmd anemve rune of ntneimwpolu:
1Wov.m.20xa1. naps:IMww.m(..oncameedt.
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A
R'.—v.Swnd..denm. ercps:l/www.ew.sovl
oso.rres/wha/pro.
themselves premium pay. .
viand/2o2Um4heuj,es-re-..os-r.saime.o:
w.daaamrcesano�pnmow.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4401
outlook for most Jurisdictions as
earn ared to the earlier months of the
public health emergency. For the fiscal
year coding June 30, 2021. total ants
and local government tax revenues
increased 21 percent relative to the
same period in 2020, re0ecdng the
combined impact of the modified tax
filing deadline in 2020 and an
improving economy.s's However,
despite a stable budget situation overall,
many governments face uncertainty as
the C'OVID-19 pandemic continues to
impact commuting patterns, hospitality
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 2020,2" and over half of
surveyed Tribal governments and Tribal
enterprises reported losing at least 40
Percent of then revenue since the start
of the pl ndemic.2" Budget challenges
persist as governments work to mitigate
and contain COVID-19 and help
citizens weather the economic
dowatum.
State, local, and Tribal government
budgets affect the broader economic
recovery. During the period following
the 2007-2009 recession, state and local
government budget pressures led to
fiscal austerity that was a significant
drag on the overall economic
MCOVdy.s+s Inflation -adjusted state and
local government revenue did net return
to the previous peak until 2013 279
while employment in the sector
returned to the previous peak in August
2019, nearly A decade late -e- just
months after recouping losses from the
previous downturn, the CMD-19
pandemic caused state and local
government employment to contract
again, but this time more sharply: By
Mey 2020, state and local government
payyrroolls fell y9 pereent compered to
Peboney 2020. Despite improvement,
non-federal public sector job growth
continues to lag behind the rest of the
U.S. labor market red very.sm
Summary of Interim Final Rule
A. stated above, the Social Security
Ad 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 Been] year of the . .
government prior to the emergency."
The interim final rate provided a
formula for calculating revenue loss
through a fourelepp process:
• Step 1: IdenOfy revenues collected
III the most recent full fiscal year prior
to the public health emergency (i.e., last
full fiscal year before January 27, 2620),
railed the base year revenue.
Is Step 2: Estimate counferfactual
raven as. which is the amount of
revenue the recipient would have
expected in the absence of the downturn
caused by the pandemic The
counterfactual revenue is equal to base
year (avenue' 10 +growth adjustment)
A (n/12)I, where 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 Sources" in the
most recent 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.282 This approach to the
growth rate provides recipients with the
option to use a standardized growth
adjustment when calculating the
counterfactual revenue trend end thus
minimizes administrative burden, while
not disadvantaging recipients with
revenue growth that exceeded the
national average prior to the COVID-19
public health emergency by permitting
these recipients to use their own
revenue growth rate over the preceding
three yeare.
e Step 3: Identify actual revenue,zxa
which equals revenues collected over
the twelve months immediately
preceding the calculation date.
a 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 revemen is
set to zero for that calculation date.
For Illustration, consider a
hypothetical recipient with base year
revenue equal to IM (Step 1) that ends
on June 30. 2010. ]n Step 2, the
hypothetical recipient funds that the
average annual growth across all state
and local government "General Revenue
from Own Sam.." in the most ..at
three years of available data, 5.2
percent, is greater than the recipient's
average annual revenue growth in the
three full fiscal years prior to the public
health emergency. In this illustration, n
(months elapsed) and counterfactual
revenue would be equal to:
As of.
12/3//2020
12/31/2021
12I31Y2022
imlam
a (monNa depend) ............................... _................... ......................................
COurRfedacluel raw.nue:..................................................................................
1R
10].8
30
1135
42
118.4
50
125.R
'Aealyaia o'c earerly summery, or strn and
Lanl Tu Rwenee, U.S. Cresm Rumsµ supra note
271.
'^Nalwa d league of all,,. City Fibeal
Cause...(m21),nwilabbax?war1Awwnk.w e
wp nvolo Uupbold"2Ut0/402v-City-Faye.
Condl(ron.eeport-202r.pdy
"'Cmbr for Indian Country readepment and
Fedml Reawve lank of Minneapolis, One Yew
Imo COVIU-m. Pandemic's Negative sheds Persist
in Indian Country (May 2021). owilable at https✓l
Ink,covid fern evo� ru,sh%2r/oneeares
pan ago lima-Ponle(
jr.
insean pray.
era Souse.g.. Nanorapotrid?. fl rtysDeaow
Der
Grimareow State and Lwe1 SequreHan aStreet
lmnoMn Rlce. PNetel Reserve Hank of Now Ynh
a, Pew Bemired. stab and meal Governmeen
lab Growth Lego ae &enemy R.— (Sepbmban
rOzfl. wallama m hrcps/M Mrsemoso teal
react lands2wiYa dN idwl202llO9n4/araa-
.nd how, aveammwyo6 gmMf-logsaserormmy-
^• At are erne the Interim final rule was
published, the sewage annual gran h serves all
.late and keel govammanl "Crewel Ravens fan
Oew5amae:'intb rnswoeen nes.,areof
vaikhle due (x015-xolel wan e.1%, which was
presented as one apdm for the gmMh adjuatmant.
Since the interim find rule was published. 2019
does her bean waste eewris e, which itmroaxa are
me to x. %.'Fie hard .1..,do. the pvwMs,
m ss%, as aboard In a" n.
s^.. As explained below, I. the feel role.
ncipn t adjust setanl rave... anumna
base.. owed. has pdicy changes.
4402 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
The figure below illustrates the hypothetical recipient calculated in
reduction in revenue for the accordance with the methodology.
W
=Actual Revenue
130
120
110
100
90
80
Jun49
wExtent of reduction in revenue
.Rasa war rowmux
Finally, as explained in greater detail
below, the clear meaning of the
statutory phrase "due to the COV10.19
public health emergency" is that it is
referring to revenue reductions caused
by the public health emergency. As
each, it does not include avenue
reduced for reasons other then 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
final rule implicitly assumed that
recipients did at suffer a lass in
revenue due to the public health
emergency if they did not extensors, 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
acmunt other factors, including actions
taken by the recipient as well as the
expiation of the COVIQI9 public
health emergency, to determining
whether to presume that revenue losses
Dec-20 Dec-21
are'due to' the COVIO-19 public health
emergency."
Treasury received a substantial
number of comments on the revenue
loss provisions set forth in the interim
final rule. Thine comments largely
revenue
should be
-or
that ell
Overall Methodology for Calculating
Revenue fries
As noted above, the interim final rule
provided a formula for recipients to
calculate revenue loss by comparing
actual revenues received during a given
time -period with a counterfactual
amouvt of revenue based on revenues in
the base year and an adjustment for
expelled growth in revenue each year.
Public Comment Treasury iecmved
many public comments on the overall
methodology for calculating revenue
loss. Some recipients, including smaller
governments, have expressed =core
regarding the burden associated with
Deas22 Dec-27
the calculation of revenue loss,
par0cularly the burden Involved in
calculating the amount of general
revenue, given that the definition of
general revenue in the interim final rate
does not always align with the
definition of revenue already calculated
by recipients for other purposes, end
requested clarifications regarding a
number of components, including the
definition of revenue. Commenters also
asked for clarification on the
relationship between revenue lose
calculations... different calculation
dates. Other commenters argued that the
revenue loss 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 really be made up for with
other revenue sources.
Treasury Response: In the final rule,
Treasury is largely maintaining the
revenue lose formula as set forth in the
interim final rate. To address comment.
that the formula for calculating revenue
loss was difficult to apply. Treasury is
including an 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 loss that can then be used to
fund government services. This fixed
Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations 4403
amount. referred to as the "standard
allowance," is set at up to $10 million
total for the entire period of
performance not to exceed the
recipient's SLFRF award amount,
Although Treasury anticipates that this
standard allowance will be most helpful
to smeller local governments and Tribal
governments, any recipient can use this
standard allowance instead of
calculating revenue lass pursuant to the
formula above, so long as recipients
employ a consistent methodology across
the period of performance (La., chores
either the standard allowance or the
regular formula). Treasury intends to
amend its reporting farms to provide a
mechanism for recipients to make a one-
time, irrevocable election to utilize
either the revenue loss formula or the
standard allowance.
The $10 million level is based on
average revenue loss across state and
local governments, taking into
consideration potential variation in
revenue types and losses and continued
uncertainty faced by many recipients
re coding revenue shortfalls. To
calculate this estimate, Treasury applied
a variation of the final ride's revenue
loss calculation on available aggregate
state and local government lax reason.
data as reported by the Census Bureau
for the Beat calculation data of
December 31, 2020, This estimate
accounts for expected variation acmes
recipient experiences and reflects the
fact that the final rule revenue loss
calculation provides recipients several
options for specific aspade (e.g.,
calendar year or fiscal year basis; use of
average state and local revenue growth
rate or specific local rate). Treasury
compared actual calendar year 2U20 tax
revenues, in aggregate for all state and
local ima enwante, to several
counterfactual trends that vary based on
the end date of the fiscal base year?sa
Treasury also assessed counterfactual
trends using different revenue growth
rates (e.g., the three-year average growth
rates of total state and local government
general revenue for both fiscal years
ending in 20152018 and fiscal years
ending in 2017-2019; the three-year
average growth rates of total atem and
local government tax revenues for fiscal
years ending in 2017-2019; and the one-
year growth rate for mist state and local
government tax revenue in the lam fall
fiscal year before the public health
emergency). To account for the fact that
the initial estimate, based oo tax
as Bc e1w Ceneua Bareeua"eta and 1.1
pnornment ma raeonue darn is Waned on a
gnanaar eognonc, need bans ymr and daze. of
M—ha, i... ar. Seln.nrber a., and! nrcemtar a
ware used in this mes.ment.
revenue, only includes a subset of
recipient aggregate general revenue,
Treasury applied a adding factor to
recognize that tax revenues generally
make up just over half of general
revenue collected by state and local
governments (i.e., Treasury scaled up its
estimate based on tax revenue to
produce an estimate for total general
revenue).'"' The resulting calculation
was then extrapolated over the four-year
period of performance and divided by a
population of interest to arrive at an
avmage 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 date. The governments
covered by the Gamma Bureau's survey
do at entbely align with SLFRF
recipients. The Census Bureaus figures
are based on 50 state governments, all
local government property tax collectors
and local government ron-property tax
imposers, representing at a minimum
the more than 38,000 "General Purpose
Governments" defiosd by Gansu..
However, there are only roughly 32'000
recipients of SLFRF funds. Thus,
Treasury considered the difference
between the number and type of entities
fn the Cerise 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 $0 to $11.7
million per recipient over the period of
perfarmanum— Treasury settled on a
point estimate toward the upper end of
the range of potential averages, in part,
to amount for significant variation in
the experiences of recipient
governments: Some recipients likely
experienced losses at the upper end of
this range of potential averages. A point
estimate toward the upper and of the
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 the
"I Annual Survey of Stale and Local Govemment
deans. Isom].
"^This b Ilm range of.v—,on even Tons.,
alenlamd be vrePns dw .for— o onnd
as.mnminre.
regular revenue loss calculation. Thus,
selecting a point estimate toward the
higher ..it of the expected range not
only increases the likelihood that the
standard allowance will railed the
experience of a larger number of SLFRF
recipients but is more responsive to the
comments of thee. with smaller awards.
In addition, using a point estimate
toward the upper and of the range
accounts for the difficulty and
uncertainty in predicting revenue lasses
years into the future, throughout the
period of perfoemance.am
Finally, Treasury selected a single
allowance level, es opposed to varying
levels, to further the goals of simplicity,
flexibility, and administrebility.
Furthermore, data limitations make it
difficult to distinguish between types of
Ireal gowsmncnta.2ee
General Revenue
The interim final role adopted a
definition of "general revenue" based
largely on the components reported
under "General Revenue from Own
Sources" in the Census Bureau's Annual
Survey of State and Local Government
Finances. Under the interim final rule,
general revenue included revenue
collected by a recipient and generated
Cram its underlying econom , end it
would capture a range of different types
of tax revmtuss, as well as other types
of revenue that are available to support
government aarvicesPes Specifically,
revenue under the interim Beef tale
included money that is received from
tax revenue, current charges, and
miscellaneous general revenues and
excluded refunds and other correcting
tmnsectime, proceed. from issuance of
debt or the sale of investments, agency
or private treat transactions, revenue
from utilities. social insurance trust
revenues. and intergovernmental
an, Sne, ea. Gwemmenl Accountability Ofice.
State and lard tuverwneste: FbW Conditions
"none on COW61B PoMemic in S.I.and Steka
up from their loin
4404 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
transfers from the federal government,
including transfers made pursuant to
section 9901 of the ARPA.-n In the case
of Tribal governments. it also included
revenue from Tribal business
enterprises.
Public Comment: Many commenters
asked Treasury to include certain items
in the definition of "goners) .venue."
For instance, several comments. that
operate their own utilities asked that
revenue from utilities be included,
arguing that declines in utility revenue
direct)y affect contributions to their
generel funds. Many of these
commenters noted that moratoriums on
utility shutoffs and a decline in
collections have resulted in significant
budgetary pressures.
Some.mmenters also asked for the
exclusion of certain intergovernmental
transfers in the definition effloresced
revenue, including transfers of shared
revenue from the stater" Other
commenters asked for the inclusion of
certain transfers from the federal
government, including fees paid for
services and grants that are, in effect,
paid for fire provision of services.
Treasury also received multiple
requests to include revenue from Tribal
enterprises in the definition of "general
revenue" and that "Tribal enterprise" be
defined broadly. Others asked for the
ability to choose whether to include
revenue from Tribal enterprises.
Finally, some commenters requested
that the definition of general revenue
exclude certain sources of revenue, such
as revenue sources that do not support
a general fund (i.e., revenue sources that
are restricted to use). Commenters also
asked that general revenue exclude
revenue from special assessments,
settlements that make the recipient
as A. iush..mil rut..cored our" Ma nl
.I--and possesses axcludmi remade and
. as Namemhi,u. Named of
'ezdudleg' m untie end IN, co miler,
corwassions, IN Cason abuse. mefhmddmgy ri ma
ad tub Wuee assiduous sod based provides IN,
,—I revenue and lax —a. -am it. ipad
'net or'mmads and oiler arreuipg Nast Una.
no use of, ascwiug" m the Interim limit care Is
station wit d. acme aa, he Ci n m, Banco,
met enickssy. Itowsvm, as In mpei.tan wild We
sm -loin.,, used by the Cn..a Bureau, de Mal
col. pose "net o¢'sound of'mulndIn,."Curare
charges are deMnd in "charges imposed fro
,ma din, current emvi me or fro Ilm sale of
ecducts in connection with gene eral grense
tivftie :' It outsde, revemma such as public
whole for past expenditures, and one-
time revenues such as revenue from the
sale of property.
Treasury Response: In the foul rule,
Treasury has maintained the definition
of "genera] revenue" from the interim
final rule with two excep(lone.
Treasury has adjusted the definition
to allow recipients that operate utilities
that are part of their own government to
choose whether to include revenue from
these utilities in their revenue loss
calculation. This change responds to
comments from recipients indicating
that revenue from utilities is used to
fund other government services and that
utility revenues have declined on
aggregate,ser This approach n consistent
with other eligible uses, which
recognize decreased ability of many
households to make utility payments;
see section Assistance to Households,
which identifies utility assistance as an
enumerated eligible use of funds,
including through direct or bulk
payments to utilities for consumer
assistance. Furthermore, for utilities or
other entities (e.g., certain $.vice
districts) that are not part of the
recipient government, a transfer from
the utility to the recipient constitutes an
intergovernmental transfer and therefore
is included in the definition of 'general
revenue."aes
Treasury has also added liquor store
revenue to the definition of general
revenue. The Supplemental Information
to the interim final rule staled that the
definition of tax revenue would include
liquor store revenue, but the text of the
role did not include it. Accordingly, in
the final role, Treasury is clarifying that
revenue includes liquor store revenue.
However. Treasury believes revenue
from government -owned liquor stores is
better classified as general revenue than
it is as tax revenue. so the final rule
includes it as pert of general revenue,
In response to requests that the
definition of general revenue exclude
revenue from special assessments,
settlements that make the recipient
whole for past expenditures, and one-
time revenues such as revenue from the
sale of property, Treasury is maintaining
its position In the final rule that such
.venue is included in general revenue.
While such revenues may be lass
predictable than other sources of
revenue (e.g., property taxes), these a.
not uncommon sources of revenue for
recipients, and their inclusion provides
a more ..plate view of the financial
health of a recipient government and is
..)dent with the Comore Bureau
methodology. Treasury is also
maintaining the exclusion of all
payments from the federal government
(including payments for services) from
general revenue in order to avoid
substantial dilution of the definition of
revenue, particularly in light of
extraordinary fiscal support provided
during the pandemic. Treasury is
maintaining the inclusion of
intergovernmental transfers other than
from the federal government for the
mesons provided in the Supplemental
Information to the interim final rule; to
do otherwise would be to significantly
distort the revenue calculations for local
governments that regularly receive
revenue sharing payments, for example,
from their state governments. Treasury
is also maintaining the approach that
"general revenue" includes revenue
from Tribal enterprises. This approach
recognizes that these enterprises often
form the revenue base for Tribal
governments' budgets.
To ease the burden on recipients and
account for anomalmrs variations in
revenue, as mentioned above, Treasury
has incorporated a "standard
allowance" option into the final role. A
recipient may choose to use the
standard allowance, which under the
final rule is set at up to $10 million, not
to exceed the recipient's SLFRF award
amount, as an alternative to calculating
revenue loss according to the formula
described above. This addition will
promote administrative efficiency and
simplify the revenue loss calculation for
the vast majority of recipients. Treasury
intends to amend its reporting farms to
provide a mechanism for recipients to
elect to utilize either the revenue Im.
formula or the standard allowance, in
addition to other changes made as part
of the final rule.
Aggregate Revenue Loss Calculation
Under the interim final rule, revenue
loss was calculated based on aggregate
revenues and therefore loss in one type
of evenue could be offset by gains in
another. The amount of SLFRF funds
education imtimnnn, public hospital, and toll
an U.S. Eni l.Mruatim, Adminmannn,
available to provide government
a. Miardleceongerev
enue venum e reprlew
die. mhorgmnal
AElectricutiuryate al Electric Deacmbw tact),
services was based on overall net
avnnm iff,rommena Gram
understood! hnpi:nimor dn.gov/decMuryhmlaa_
revenu61oa6. In the Supplementary
PP y
dmirosn annrcna r,.a.. ad.r man uuuty and
+na.rence Neat rempled, including ants. cayaltia.
nepnm./.
'°FAQ one provides hmhergabi.... con how
Information to the interim final rule,
low, psuccul, and fin..
in dmarmine what entitle. conatimte. gcannumm
Treasury asked commenters to discuss
.^The mmam final opts..eluded sovanmenml
ter purpome of mlculmiry ramem. lass, sae
the advantages and disadvantages of,
barkr, from the reduced Govan., but it did
Cmonavirus Son and Local Rural Pwnvery)Lode,
with,(
and any potential con.[rla with, this
(soda c
odd euludm fnlmgwwnmenbl members from dish
gwemmentel spin far purpoua oftbe asecam hiss
Freiman, Asked Quati.n. a. d July 19. 3021;
hops://hmnetre.sury8olawmmelds./tau
ncedes is
approach, B
pavumre.
B HPFAQpdy
which it could be necessary or
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4405
appropriate to calculate the reduction in
revenue source.
Pu61ic omment: Treasury received
many comments stating that revenue
Ion should be calculated on a source -
by -source basis. Some commenters
argued that a source -by -source approach
would be administratively simpler.
Other commenters argued that
calculating revenue loss source-by-
.oume would better reffect the impact of
the COVID-19 pandemic on their ability
to fund government services bemuse
revenue gains in one source cannot
always be used to make up for losses in
another. For similar reasons, other
commenter. asked that revenue lass be
calculated on a fund beats.
Treasury Response: Treasury
considered alternative methods (e.g..
source -by -source, fund -by -fund) but
ultimately determined to maintain the
calculation ofrevenue loss in the
aggregate. T'he 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 lose for some
recipients. However, the statute is.
only to "the reduction in revenue of
such State, local government or Tribal
government." 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 lose on an aggregate
basis provides a more accurate
representation of the effect of the
pandemic on overall revenues and the
final health of the recipient. In many
circumstances, recipient governments
have flexibility to use revenues from an
array of sources and offset declines in
some sources wfth gains in others.
V✓hfb, the details and configuration of
this flexibilfty vary widely across
recipient governments, calculating
revenue loss 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 rovenue
loss is to be calculated an an aggregate
basis.
Calculation Dates
Public Comment: Under the interim
final rule, recipients calculate revenue
less as of the end of the calendar year.
Treasury received many comments
requesting that recipients be permitted
to calculate avenue loss as of the and
of their fiscal year. Commenters argued
that doing so would be simpler and less
burdensome oa recipients end that
financial date as of Curd of the fiscal
year is audited and therefore more
reliable. Communion also argued that
recipients' fiscal years are structured
around the timing of major revenue
sources, and that the Census Bureau
uses fiscal years in its Annual Survey.
Treasury also received comments
about the use of multiple calculation
dales. Several Tribal governments stated
that they would not see ongoing revenue
losses due to the COVID-19 public
health emergency suit asked to be able
to determine revenue loss as of the first
mice lation date. Several commenters
asked whether revenue lass is
determined independently for each
year, so that a gain in one year does not
offset a loss in ...then, or whether
revenue loss is cumulative from the
beginning of the pandemic.
Treasury Response; In the final rule,
Treasury has made adjustments to give
recipients more Flexibility with respect
to calculation data$ end to clarify
certain elements. Specifically, the final
rule provides recipients the option to
choose whether to calculate revenue
loss on a fiscal year or calendar year
basis, then It they must choose e
consistentbasis rlo..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 not affect the calculation of
revenue lost in prior or future years.
Presumption That Revenue Loss Is Due
to the Pandemic
As stated above, sections 602(c)(1)(C)
and 993(c)(1)(C) of the Social Security
Act provide that SLFRF funds may be
used "for the provision of government
services to the extent of the reduction in
revenue of each ... 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 fical rule,
although revenue may decline for
reasons unrelated to COVM-19, in order
to minimize the administrative burden
on recipients in calculating revenue loss
..it take into consideration the
devastating effects of the COVID-19
public health emergency, any reduction
in revenue relative to the counterfactual
estimate was presumed in the interim
final rule to be considered revenue lost
duo to the pandemic.
Treasury stated in 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 as the
expiration of the COVED-19 public
health emergency, in determining
whether to presume that revenue losses
am "due to" the CDVW-19 public
health emergency.
Public Comment: Treasury mosived
many comments in support of the
presumption, as well as some opposed.
Some commenters argued that the
presumption eases the administrative
burden on recipients because, without
iir it would be difficult to identify which
losses are 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 comments asking that it
adjust any avenue loss calculation to
account for tax changes enacted by the
recipient. In particular, some
commenters noted that some recipients
had increased taxes in ardor to ..at
additional demands for government
services in to address declines in
revenue due to the pandemic. These tax
increases have in some cases offset some
or all .l the ad..] revenue lams
attributable to the public health
emergency. Because the interim final
cute calculates revenue loss by reference
to actual revenue collected, commenters
argued that the calculation of revenue
loss "due to" 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 carom
adjustments to respond in comments
and to better account for revenue loss
"due to the COVI0.19 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 increases or decreases
adopted after the issuance of the final
rule will not be treated as due to the
public health emergency.
4406 Federal Register/Vol. 87, No. Ig/Thursday, January 27, 2022/Rules and Regulations
Presumption 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 state, local
government, or Tribal government could
use funds to"cover coats ... for the
provision of government services;' but
only "to the extent of the reduction in
revenue ... due to the COVID-19
public health emergency relative to
revenues collected in the ..at recent
full fiscal year... prior to the
emergency." In doing so. Congress
recognized that the pandemic wee
amusing significant disruption to
economic activity and sought to
minimize the impact of associated
levels
revenue on the ability of the
recipient to provide government
services when such services were
needed most.ai, The tam of the statute
itself reinforces this important context:
The law specifically limits funds to
v.r revenue losa.. that both are "due
to the COVID-10 public health
emergency" and could impact "the
provision of government services."
Courts have mainland that the
phrase "due to" can refer to various
arousal mandards.29' Here, in the context
of Congreas'a addressing economic
dismptiona caused by the COVID-19
pandemic that could import both
revenues and government services, the
key consideration I. whether a revenue
lass experienced by the recipient
resulted from the exogenous impacts of
the public health emergency (and were
thus "due to" the pandemic) or instead
from the recipient's awn discretionary
actions (and, in this context, were not
"due to" the pandemic). Reductions in
revenue due to the public health
emergency does not cover revenue
reductions that resulted tram a
recipient's awn discretionaryy actions.
In the interim final rule, Treasury
Included a presumption that all revenue
loss fa due to the pandemic fn or to
minimize the adminisrative burden an
recipients discussed above and take iota
consideration the devastating.Ne�ts of
the COVID-19 public heelI emergency.
Based on comments Treaa at as
ury
that the reasons for the ph aumpdan
continue to be valid and Fran determined
to maintain the presumption in the final
rule with certain modifications. In
rvn ama4o seclione ae2(egtl and eased MIM1a
SadeI Security Aa (appropriating flo had. far,
pryment to raipimna in ender to "mitigate Ile
mod eaacte eremmi,p from the public hiehh
m,ar,xv,").
— U.S. Poatol Survhn v, creel aegeWrory
Consisted
o in,nth F..ad 120 UdC air, an11'. ue.Gmber
v. TmaId Cory., ins F.ed owe, uw both M,..
a.); Adam, v. m,acroc 014l m6 Fad ale..21
(nth Cc amid.
particular, at this paint in the course of
the pandemic, with the fiscal pressure
n state and local governments having
been significantly reduced, it is
appropriate for Treasury to reassess
aspects of this pmsnmptian. As
discussed below, the final rule requires
recipients to exclude the value of tax
Policy changes adopted after January g,
2022.
Recipients of the SURF range from
slates to the smallest local governments.
At the dine that the interim final rule
was adopted, it was important for
recipients to be able to calculate with
ease and certainly 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 rate provided a relatively
simple formula for all recipients to use,
but the exigent need for recipients to
immediately deploy funds for the
provision of government services has
decreased suit the benefit of the
presumption in reducing administrative
burden is Into relevant far those
governments that are not likely to avail
themselves of fire standard allowance
described above.
Consistent with these considerations,
the final .Is requires recipients to
exclude revenue tars due to tax changes
adopted inflationary B, 2022.
Eliminating revenue less due to tax
changes from the presumption is
appropriate given the significance of tax
revenue as a portion of all revenue for
state and local governments, the direct
impart of tax policy decisions on
revenue reflected, end the relative ease
with which recipients can isolate the
estimated affect of a tax change on
revermines Most state budgeting
processes require a "budget aeons."
often developed through a consensus
process with executive and legislative
branch experts,asr and Treasury expects
that larger localities, those most likely to
utilize 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 pprepare estimates of
the impact of lax chen,a. on revenue,
and as discussed below, Treasury will
generally permit recipients to rely on
such estimates in adjusting their
revenue loss 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 in tax changes
given that state and local governments
do not generally prepare estimates of the
revenue effects of other actions. Finally,
as noted above, taxes are the single
baronet source of revenue for state and
local government recipients in the
aggregate.
Roelof... to Presumption To Address
Tax Reductions
For these reasons, Treasury is
providing in the final rule that changes
in general revenue that are reused by
tax cuts adopted lifter the data of
adoption of the final rule IJanuary 6,
2022) will not be treated as due to the
public health emergency, and the
estimated fiscal impel of such tax cuts
must be added to 'rat
of
"actual revenue" for purposes of
calculation dates that occur on or after
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 rate, a raises. a
deduction, a credit, or otherwise) or
delays the imposition of any tax or our
increase and that the recipient assesses
has had the affect of reducing tax
revenue relative to current law. This
Includes the phase -in or taking affect of
any statute in mle if the phecin or
taking effect was not prescribed prior to
the issuance of the final rule.
In assessing whether a tax change has
had the effect of reducing tax revenue,
recipients may either calculate the
gamed effect on revenue or rely on
estimates prepared at the time the tax
change was adopted. More specifically,
recipients may rely on information
typically prepared in the course of
developing the budget (e.g.. expected
revenues) and/or considering tax
changes (e.g., budge scores, revenue
notes) to determine the amount of
revenue that would have been collected
in the absence of the tax cut, as long as
them estimates are based an 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
As is the rase with tax is discussed
adopted between the beginnin of the
counterfactual growth assumptions
above, tax increases that most be
public health emergency and the
Recipients that choose to calculate the
reflected in the calmdation of revenue
adoption of the final rule. Truantry
actual effect of a tax change on revenue
include final legislative or regulatory
intends to reviaa its reporting
must similarly base their calculations on
action or a new or changed
requirements to permit recipients to
reasonable estimates that do not use
administrative interpretation that
amend their previously reported
dynamic methodologies. Recipients
increases any tax and that the recipient
calculation periods to reflect such
should apply this adjustment in
assesses has had the affect of increasing
changes.
determine their actual n total
t 1 ti t 1 I
ng rave ue s as revenue re a ve o currant aw. n
at Step 3 in the revenue loss calculation assessing whether a tax change has had
described above. the effect of increasing tax revenue,
Revisions to Presumption To Address h
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
recognises 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 from
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 find) rule of a counterfactual growth
rate, which effectively permits
recipients to count revenue losses due
to the public health emergency that are
offset by increased tax revenue resulting
form 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 adopted after the data of
adoption of this final rule fanuary 6,
2022) for purposes of calculation dates
that occur on or after April 1, 2022. This
change and the change to the fine] rule
described above treat tax changes in a
consistent manner. In the case of
reduction in revenue resulting from a
lax cut, a recipient must add the amount
of that reduction to its calculation of
actual revenue, and to the case of an
increase in revenue resulting from a tax
increase, a recipient must subtract the
amount of additional revenue collected
as a result of the tax increase from its
calculation of actual revenue.zes
..no final rate des, not person recipients to
renect the effects a orlon, thong. In'altar, sndt
to fees adapted aaer adoption of the
Bnelmiu r, I —an, nrdererande that the mein
bmmfitlenes at such a change would be those
mcipiants War will intent (rem me standard
advances 'needed cos In the Gnat .I. act that for
athm recipients the edmmistrmiee burden-
mrttneme tw.aad to camwate mesa adiestmsnts
remprents may at at calculate the
actual effect on revenue or rely on
estimates prepared at the time the tax
change was adopted. Recipients may
in the course of developing the budget
scores, revenue astral to determine the
amount of revenue that was collected as
a result of the tax increase 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 macroeconomic
growth is accounted for in the
counterfactual growth assumptions.
Recipients that choose to calculate the
actual effect of a tax change on reveuue
must similarly base their calculations on
reasonable estimates that do not use
dynamic methodologies. Recipients
should apply this adjustment in
determining their actual revenue trials
at St 3 in the revenue loss calculation
described above.
Previously Adopted Tax Changes
As discussed shoe, the final .Is will
not require recipients to reflect the
revenue effects of tax increases or
decreases adopted prior 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 dates aft" the effective date
of the final rule. However, the final rule
will permit recipient. 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 rule.zse If a
recipient elects to do so, it must do so
with respect to all of its tax changes
waved outweigh the hanefil of baring. eotnawh.t
6rgm Door of foods evelleble forger foment
—TM 0ul ram abo addressee the prosmrlit,
the] come rttlplenn may bell h11I ymn ending
entries the la_
hetwcen January a, 1or3 and
April r, nt aueh rslinced. e,."a. to tent tax
chances train polar penoda reason also apply in
change during Chia period with nsprct to the
calculation date in this period.
Determination of the Banc Year
Under the ARPA and interim final
rule, 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 most
recent full fiscal year prior to the
COV10.19 public health emergency.
Public Comment Treasury received
multiple comments asking for Flexibility
in determining base year revenues. For
instance, aome commenters asked to use
a different base year then the "most
moral full fiscal year" prior to the
pandemic for calculating revenue loss;
others asked to be able to average prior
years. Commenters stated that, for
various reasons, revenue was artificially
low in the last full fiscal year prior to
the public health emergency, and,
therefore, using revenue in that year as
the base yea did not accurately reflect
expected revenue in a normal year. For
example, several Tribes stated that
unforeseeable weather events resulted
I. forced closure of casinos which, in
turn, artificially deflated revenues in the
base year. Other commenters indicated
that one-time anomalies in the timing of
tax collection in that year artificially
pushed revenue into the following fiscal
year. Similarly, a few commenters noted
that tax changes that look effect in the
middle of the base year may artificially
skew the size of the revenue loss
experienced by the recipient
government.
Treasury Response: Treasury
understands that recipients may have
expn erieced events in the base year that
led to lower or higher revenues than
what they otherwise would have
collected. The ARPA provides that
revenue loss is to be determined with
respect to m some in the most recent
full fiscal year prior to the pandemic,
and therefore the final rule maintains its
incorporation of the statutory definition.
In calculating revenue loss, recipients
may use date 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 in revenue
receipt. Bah the standard allowance
and elements of the formula (e.g.,
4406 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 INFONIMT IN to the
interim final rule provided a non.
exhaustive list of examples of services
that are government services. The
interim final rule also discussed why
motion
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 if.] rule did
not include satisfaction of any
obligation arising under or pursuant to
a settlement agreement, judgment,
consent decree, or judicially confirmed
debt restructuring in a judicial,
administrative, or regulatory
proceeding, unless the judgment or
settlement required the provision of
government services.
Public Comment: Treasury received
several comments requesting further
clarification regarding the scope of
government services, 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
role. For instance, many of the
comments Treasury received suggested
that replenishing reserve funds and at
lest certain types of debt service should
be trusted as providing governmental
services. Some commenters also
suggested that a recipient should be able
to use funds for costs incurred before
Mach 3, 2021. Other commenters asked
Treasury to maintain the prohibition on
using the funds to pay debt service.
Treasury Response: Treasury
continue. to believe that the lists of
activities that either ere or are not
providingg government services are
accurate but is clarifying here that,
generally speaking, services provided by
the recipient governments am
"government services" under the
interim final role and final rule, unless
Treasury has stated otherwise.
Government services include, but ere
not limited to, maintenance or paygo
funded building-0 of infrastructure,
including roads; modernization of
cybersecurily, including hardware,
—F.ygo infr.vu[mm funding rehra e.rho
pnatf a of funding opu.t pmacn with v,A-an
hand iron, ox.. I... now and.1h.
ether wo cash m.m.vea.um..
software, and protection of critical
inf e.truclure; health services;
environmental ma ediation; 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 those articulated in the
section Restrictions on Use. In the final
rule. Treasury is maintaining the
limitations on government services
included in the interim final rule and
has addressed and responded to public
commenters 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' atments to
waist, sewer, end broadband
infrastructure. The interim final rule
provided recipients with the ability to
use funds for a broad 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
meaning of "necessary" investments as
meaning those designed to provide an
adequate minimum level of service and
unlikely to be made using privet.
sources of foods. Second, the interim
final rule encouraged recipients ro 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 end sewer
projects that ware authorized under the
interim final rule by reference to
existing Environmemal Protection
Agency (EPA) programs would in all
cases be necessary investments given
the conditions applicable to such EPA
programs. Similarly, the interim final
mle'e definition of eligible broadband
projects as those designed to provide a
certain standard of service to thus.
households and businesses with limited
existing service was based on the
statutory requirement that investments
in water, sewer, and broadband at be
"necessary.•'
As discussed further below, Treasury
has expanded the scope of what is an
eligible water and sewer infrastructure
project to include additional uses. In
particular, the final rule permits use of
SLFRF funds for certain dam and
reservoir maturation projects and certain
drinking water projects to support
population growth. The nature of these
additional uses is such that additional
factors must be considered in
determining whether one of these
additional uses is a ne®ssary project. In
addition, Treasury recognizes that there
may be a need for improvements to
broadband beyond those households
and businesses with limited existing
service as defined in the interim final
rule. Treasury has replaced this specific
requirement 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.
ar broadband infrastructure project, the
feel rule provides a further elaboration
of Treasury's understanding of the
conditions under which an
Infrastructure project will be considered
to be a necessary investment, Treasury
considers a necessary investment in
infrastructure to be one that is (1)
responsive to an identified need to
achieve or maintain an adequate
mfnimum level of service, which may
include a reasonable projection of
increased need, whethe, due to
population growth or otherwise and (2)
a cost-effective means for meeting that
need, taking into account 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 popWetion growth, the pproject
must bra projected to be sustemalb, a over
its estimated useful life.
Not included in the list of criteria
above is the requirement in the interim
final rule 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 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 Construction
As stated in the Supplementary
Information to the interim final me,
Treasury encourages recipients to carry
out investments in water, sewer. or
broadband infrastructure in ways that
produce high -quality infrastructure,
avert disruptive and costly delays, and
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4409
promote efficiency.'°' Treasury as supplemented by Department of
by the Environmental Protection Agency
mountains recipients to use strong labor Labor regulations (29 CPR pail 5).
(EPA). By referring to these existing
standards, including project labor Treasury will continue to seek
programs, with which many recipients
agreements (PLAs) and community information from recipients on their
are already familiar, Treasury intended
benefits agreements that offer wages at workforce plans and water, sewer, and
to provide flexibility to recipients to
or above the prevailing rate and include broadband projects undertaken with
respond to the needs of their
local hire provisions. Treasury also SURF funds. This reporting will
communities while facilitating
recommends that recipients prioritize in support transparency and competition
recipients' identification of eligible
their procurement decisions employers by enhancing available information on
projects. Furthermore, by aligning
who can demonstrate that their the services being provided. Since
SURF eligible uses with these existing
workforce mats high safety and publiceton of the interim final rule,
programs, Treasury could ensure that
training standards (e.g., professional Treasury has provided recipients with
projects using the SLFRF are limited to
certification, licensers, and/or rebus( in- additional guidance and instructions on
necessary investments."
house training), that hire local workers the reporting requirements.'"'
Public Comment: Treasury received
and/or workers from historically
underserved 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 prioritize
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 -qualify infrastructum
projects and support the economic
recovery through strong employent m
appointee ities for workers. Such
practices will also reduce the likelihood
of potential project challenges If as work
stoppages or safety accidents, while
ensuring a reliable supply f.killed
labor and minimizing disruptions, such
as those associated with labor disputes
or workplace injuries. That will, in tum,
Promote on -lime and on -budget
delivery.
Furthermore, among other
requirements contained in 2 CFR 200,
Appendix 11. m] contracts made by a
recipient or subrecipient in excess of
$100,000 with respect to water, sewer,
or broadband inf restructure project that
involve employment of mechanics or
laborers at include a provision for
compliance with certain provisions of
the Contract Work Horns and Safety
Standards Act, 40 U.S.C. 3702 and 3704,
—° oaaenry mashed eavmd mmmems related to
oumgmno.I of .9. wage sad lame
m.ndads he the Supplamamary randnwtion es the
immes limit refs. Santa cm... allied this
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end refemnm he K.As end pmvailie, siege lawn
wind lead to canludmis or make it mom likely not
re, "ores wane eppg (shin an—aarde m ways tom
out a co of n'doo t and ratio project
rams. C.-scaly, same ismmemms eupptend the
ansimingromet of the me of cousin standards.
Including giving prefsence to employme cut meet
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momme it would.plea me "I of complain,
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r edhio ion an teii'modz
Environmental and Other Generally
Applicable Requirements
Treasury cautions that, as is the own
with all projects engaged in using the
SURF funds, all projects must comply
with applicable federal, 'lets, and local
law. In the case of infrastructure
Projects in particular, this includes
environmental and permitting laws and
regulations. Likewise, as with all capital
expenditure projects using SURF
funds, projects most 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 m acceptable levels of
practice, or othmwise are determined to
be gerelly acceptable by the design
endm
construction industry.
1. Water and Sewer Infrestrumme
Sections 602(c)(1)(D) and Section
603(e)(1)(D) of the Social Security Act
provide the recipients may use the
SURF funds "to As necessary
investments in water land) fresewer. .
fnstructme." The interim final rule
permitted a broad range of necessary
inv mmeents in projects that improve
access to clean drinking water and
fropprove wastewater and stormwater
infrastructure systems. As discussed
below, after review of comments
received on the interim final rule,
Treasury has made changes in the final
role to expand the scope of eligible
water and sewer projects.
Summaryry of Interim Fine] Rule and
Final Rate Structure
Background: In the interim final rule,
Treasury aligned eligible uses of the
SURF 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 State
Revolving Fund (DWSRF) administered
in Sao U.S. nominated d tine Tent
Gamesome and nepmnNg Continue, 21 Uuae 24,
non. httpeJyhomeemme s"We'moillw".i
5/Fn mplimm end-Peyortin -Gaidana.pol.
many comments responding to the
water and sewer infrastructure
provisions of the interim final role from
stale. locel, and Tribal governments,
industry trade associations, public
interest groups, private individuals, and
other interested parties. Commitment
requested that Treasury provide a wider
set of eligible uses for water and sewer
infrastructure beyond those uses
articulated by the DWSRF and CWSRF,
suggesting that Treasury expand the
definition of necessary water and sewer
infrastructure.
Treasury Reaponsean response to
commenters, Treasury is expanding the
eligible use categories for water and
sewer fnfreatmcture. discussed in
Further detail below. Because the
interim final rate 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 rule a
revised standard for determining e
necessary water and sewer
infrastructure investment for eligible
water and sewer uses beyond those was
that us eligible order the DWSRF and
CWSRF.
Interpretation of Necessary Investments
and Water and Sewer Infrastructure
Necessary Investments: As discussed
above, Treasury considers an
investment in infrastmcture to be
necessary if it is (1) responsive to an
identified need to achieve or maintain
an adequate minimum level of service,
which for some eligible project
categories may include a reasonable
projection of increased need, whether
due to population growth in otherwise
and (2) a cost-effective means for
meeting that used, taking into account
available 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/'l'hursday, January 27, 2022/Rules and Regulations
role, 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 role.
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 pmi must
be sized such that it provides an
adequate volume of water to households
and other customers and must meet
applicable standards far drinkil a water
wastewater treatment project should be
designed to manage updated estimated
flow rates and comply with Clean Water
Act requirements. These requirements
criteria of the DWI
is a
the
compared to alternatives, and the
effectiveness of the project in meeting
the identified need. Recipients are not
required to conduct a full cost -benefit
analysis: however, they should consider
and analyze relevant factors. For
example, a recipient may not use funds
to pursue a costly dam rehabilitation to
provide drinking water to a community
if it could provide the same service with
a significantly smaller investment by
drawing water from another available
reservoir, assuming that doing so would
meet the other requirements of the final
mle. As detailed further below,
recipients ere only required to assess
cost-effectiveness of projects for the
creation of now drinking water systems,
dam and reservoir rehabilitation
projects, or projects for the extension of
drinking water service to meet
poppulation growth needs.
Certain DWSRF eligibilities me
already subject to a costeff defiveness
test. Specifically, projects that create
new drinking water systems must be a
cost-effective solution to addressing the
identified problenium The EPA also
mposes a coat-efectveness condition
on dam and reservoir rehabilitation
projects undertaken pursuant to its class
deviation from the DWSRF rule. These
projects are particularly expensive and,
unlike in the case of other types of
eligible projects, there are often
an^SM QM J tares/ b (Mat
available alternatives to conducting
these projects. Projects for the extension
of drinking water service to meet
population growth needs are also often
particularly expensive, and there are
often different ways to meet the needs
of expanding populations. Treasury will
accordingly require that recipients
engage in a costeffactiven apt analysis
when engaging in projects for the
creation of new drinking water systems,
it.. and reservoir rehabilitation
project., or projects for the extension of
drinking water service tome
population growth needs. Other types oI
eligible water m sewer projects will not
be subject to this coat -effectiveness test,
including lead line replacement and
lead remeathdion.'m`
In the case of projects that expand
drinking water service infrastructure to
satisfyy a projected mervi ss in
populatton, the project most 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 source of water. For example, a
reservoir rehabilitation project may not
he pursued if the reservoir will no
longer be able to provide an adequate
source of drinking water before the end
of the estimated useful life of the
Improvements to the reservoir. In trees
currently impeded by drought or where
drought conditions are expected to be
more frequent an mere severe in the
future, sources of drinking water may be
diminished more 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 for other current and expected
uses, including use by fish and other
wildlife.
The final rule applies this
susuddiability condition to projects that
expand drinking water service
infrastructure to satisfy a projected
increase in population but not to other
drinking water projects. When a new
source of water is required to remedy an
existing threat to public health, as in the
team of source projects eligible under the
DWSRF, sustainability should be a
consideration, but in some cases, the
Head to replace a contaminated source
may mean that a leas sustainable choice
was In aucL ream. otbc the projects ere
prod mpave)y owteffoodoe hi, lead prnpte
bald always be wamdaed emoarteclroe®wen the
.ffiImposed by lad sommung)oracat-
retworeastan is ins relawam®ven the lad of
addible alternatives or the mlativoly law art of
not pmose'.
may be made. When faced with such an
issue, such as in the case of a
contaminated well system, a project to
replace the contaminated source can be
said to be "necessary" even if the
replaced source is not sustainable over
the long tern. Expediency may dictate
that a shorter -term solution is pursued
if it is cost-eOective and will prevent
health issues while a longer -term
solution can be found. In count an
expansion to accommodate population
growth cannot be said to be necessary if
it is not sustainable over its estimated
useful his.
Not included in the list of miteris
above is the requirement in the interim
final rule 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 thedreatestpublc benefit.
SWateranaucerinfrosWctum: As
stated above, G roym i provided that
SURF funds are available for
"necessary, water, sewer, and broadband
Infrastructure." Treasury interprets the
reference to water and sewer used
consistent with the inclusion of
broadband uses. Water, sew., 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,
commerce, work, and civic matters and
to receive health cave and sorrel
services.
Water it sewer service. provided
broadly to the public as essential
servic. include lira provision of
drinking water and the remova,
.
management, and treatment of
wastewater and stormwater.-om
Although governments are engaged in
other Infrastructure related to water,
including irrigation projects,
transportation projects, and recreation
projects, such projects go beyond the
scope of what I. provided to all
residents as an essential service.
Provision of drinking water and
moment management, and treatment of
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Federal Register/Vol. By, No. iB/Thursday, January 27, 2022/Rules and Regulations 4411
wastewater end s muresawr 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 goveromenta to
provide such services, including to
address the consequences of deferred
maintenance and additional millinery
needed to adapt to changes to the
Although the meaning of water and
sewer infrastructure for purposes of
sections 602(c)(1)I1)) and 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 projects. Treasury
interprets the word "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.enr As discussed below, this
can include not cyst storm drains and
culverts for the management of
stormwaten for example, but also
bioretention basins and rain barrels
implemented across a watershed,
including an both public and private
property, that together reduce the
amount of runoff that needs to be
managed by traditional infrastructure.
Further, Treasury understands that
investments in infrastructure include
e®In eddits7 eesuryinterpmre the elZi.
uses dSLMF hmda egainat the beck®oundaM.
orrrionn n Rent bLnd Icm]. rur which iM
use rotation.
,m See, As, wrion 502 of the Federal Wtlm
PAlutio s fond Act (33 U.S.0.1362), de6ritg
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or ruler Parrrands utdores or s.twouse,
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educe no— m aav,r ardo— or to earls. wmm-'•
improvements that increase the capacity
of existing infrastructure and extend the
useful life of existing infrastructure.
Accordingly, water and sewer
infrastructure investment projecta
include those that conserve water,
thereby reducing pressure on
infrastructure for the provision of
drinking water, and that recycle
wastewater and intercessions, thereby
reducing pressure on the infrastructure
for treating and managing wastewater
and stormwater.
As with other infrunrncture projects
and capital expenditure projects that are
permitted as responses to the public
health emergency and its negative
economic impacts, costs for planning
and design and associated pre -project
coats are eligible uses of SLFRF funds.
Costs for the acquisition of land are also
eligible, but only if needed for the
purposes of locating eligible project
components. Recipients should ensure
that they have the technical, financial,
and managerial capability to ensure
compliance with the requirements of the
SDWA, or that the assistance will
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 Clean 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 inhaetroch re
category. By providing that projects
eligible under the DWSRF and the
CWSRF are also eligible uses of SLFRF
Ponds, the interim final rule 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 owned treatment
infrastructure, manage and treat
slormwater or subsurface drainage
water, and facilitate water reuse, among
other uses. Consistent with the DWSRF
and the Ciii the interim Tina] rule
provided that SLFRF funds may be used
for eybeconerrily needs to protect water
or sewer info strodure, such as
developing effective eyhemermrity
predicts and measures at drinking
water systems and publicly owned
treatment works.
Use ofDWSRP and CWSRF to Support
Climate Change Adaptations. Many of
the types of projects eligible under
either the DWSRF or CWSRF also
support efforts to address climate
change. For example, by taking steps to
manage potential sources of pollution
and preventing these sources 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 DWSRF and CWSRF
include measures to conserve and reuse
water, fro example through projects to
reuse or recycle wastewater, stormweter,
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, more
frequent and extreme precipitation
events combined with construction and
development Vends have led to
increased instances ofstormwater
runoff, water pollution, and flooding.
Green infrastructure projects that
suppart stormwater system resiliency
could include bioretendon basins that
provide water storage and fultretion
benefits, and green streets, where
vegetation, soil, and engineered systems
are combined to direct and filler
rainwater from impervious surfaces. In
cases of a natural disaster, recipients
may also use SLFRF funds for water
Infrastructure to provide relief, such as
interconnecting water systems or
rehabilitating existing wells during an
extended drought.
Public Comment: Many commenters
expraised support for the interim final
ride's If nment of the use of funds for
water and sewer infrastructure under
the SLFRF with the project categories
provided through the BPA's DWSRF and
CWSRF programs.
Many commenters also provided
recommendations about the specific
types of water infrastructure projects
that should be el'grble c ndar the final
rule. In many of these mass.
mmmenlers recommended that
Treasury include.project types that are
already eligible under the DWSRF and
CWSRF and thus eligible undear the
interim final 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 noupoinl
source pollution management
program inn or (2) constitute reuse of
.. Spnnacely, Nu world lncludn diedurs ion
p.I. thet decessw the boaden As suit can where
then is umd relationship baMeen rioter
witldrewels aM aerweter Intrusion i1 us pmpne
implement a nonpdnt wurrx pollnes
cwmnnm
4412 Federal Register/Vol. 07, No. 18/Thursday, January 27, 2022/Rules and Regulations
wastewater, shermwaten or subsurface improve the quality of drinking women separately below under "Expansion of
drainage water ere in fact eligible uses
comply with primary or secondary
Drinking Water Service." Projects
under the CWSRF. Furthermore, under
standards and point of entry or central
eligible under thin DWSRF ..at be sized
the DWSRF, eligible projects include
treatment under section 1401(4)(E)(i)(111)
only to accommodate a reasonable
certain aquifer storage and recovery
of the SDWA.
amount of population growth expected
systems for water storage.
(it) Transmission and distribution
to occur over the useful life of the
Treasury Response: Eligible projects
projects, including installation or
project'.
articulated in the DWSRF and CWSRF
replacement oftiansmission and
Eligible projects under the CWSRF.
continue to be eligible uses of SLFRF
distribution pipes to improve water
The final rule continues to allow the use
funds under the Fuel rule. Recognizing
pressure to safe levels or to prevent
of SLFRF funds for projects eligible
that recipients have faced challenges
contamination caused by leaks or breaks
under the CWSRF, consistent with the
interpreting eligible use categories
in the pipes.
interim finel role. Under the CWSRF,A
under the interim final rule or moas-
(iii) Source projects, including
project most meet the action. of one of
referencing EPA program materiels to
rehabilitation of wells or development
the following CWSRF eligibilities to be
interpret eligible project types, Treasury
of eligible sources to replace
eligible for assistance. Section 603(c) of
is including in this Supplementary
contaminated sources.
the Clean Water Act(CWA) ll2 provides
Information additional information
on
(iv) Storage projects, including
that the CWSRF can provide assistance:
the types ofprojeats eligible under the
DWSRF and CWSRF.'remsury
installation in upgrade oneligible
storage facilities, including finished
uni.
municipality, iry
emphasized that this further clarification
P
water reservoirs, to prevent
interstatg)toanym
consnicitio n of
publicly owned treatment wane lee defined
Publicly mactsteic agency fwransWaa dappled
does not.
asury change in
microbiological nants m
cwtiono
miemor
Treaent
eligibility. Treasury encourages
public system.
entering a public water system.
the implementation
lip for the implementation of e
recipients toS reference EPA handbooks
Consolidation projects, including
ant pragmm established under
for the DWSRF and CWSRP, which
pbv)rojects
projects needed to consolidate water
ction 3 CWA: eta
.ecnan 3tim
provide further information and detail
supplies where, for example, a supply
(fill for the development and
doe
about the type. of projects eligible
has become contaminated or a system is
implementation of a mnw.rvution and
under those programs and thus under
unable to maintain compliance for
management plan under seniam 320 of the
the final rule.
technical, financial, or managerial
CWA: n+s
(ivl far the constmdion, repair, or
Eligible projects under the DWSRF.
Eli 'bililies under the DWSRF, the
Rr
reasons.
(vi) Creation of new systems,
replacement of d... otedized wew astaer
treatment syslme. that neat municipal
interim final tile, and the final rule
including those that, upon completion,
wastewater or dmmmstic sewage. Eligible
include projects that address present or
will create a community water system to
projects include, but Am not limited to, the
Prevent future violations ofhealth-based
address existing public health problems
eonstruction of new doccurtmlieed systems
drinking water standards. These include
with serious risks caused by unsafe
(e.g., individual onaite systems and cluster
projects needed to maintain compliance
dr'mking water provided by individual
systems), as well as the upgrade, ral or
with existing national primary drinking
wells or surface water sources. Eligible
replacement of existing systems.
water regulations for contaminants with
projects are also those that create a new
(v) for measures to manage, reduce,
acute and chronic health effects.
regional community water system by
treat, or recapture starmwater or
Projects to replace aging mfe"tmolure
consolidating existing systems that have
subsurface drainage wale, Publicly and
are also eligible uses if they are needed
technical, financial, or managerial
privately owned, permitted and
to maintain compliance or further the
difficulties. Projects to address existing
unpennittad projects that manage,
public health protection objectives of
public health problems associated with
reduce treat, or recapture earmwater or
section 1452 of the SDWA.sre Th.
individual wells or surface water
subsurface drainage water are eligible.
fallowing project categories are eligible
sources must be Ijheited in scope to the
For example, pmjacts that are
under the DWSRF, were eligible under
specific geographic area affected by
specifically required by a Municipal
the interim final rule, and continue to
contamination. Projects that create new
Separate Storm Some System (MSc)
be elfg''his under the final rule:
regional community water systems by
be
permit are eligible, regardless of
(i) Treatment projects, Including
consolidating existing systems must
ownership. Projects may include, but
installation or upgrade of facilities to
limited in scope to the service was of
are not limited to green roofs,
the systems being consolidated.
bicamention basins, roadside plantings,
management progress under samian 319 of the
Ineligible projects under the DWSRF.
porous pavement, and rainwater
Clan water As. This mind include impacts in
Federally -owned public water systems
harvesting.
which deashead.awater is inisc+tad ima the
aquiferm mingatem,re ore art wet. Editors.
and for -profit noncommunity water
(all to any municipality,
on well as proleats to which brackuh were,is
mound form an equikr. ea.uated, and counted
systems are not eligible to receive
y 8
DWSRF funds and therefore SLFRF
intermunieipel, interstate, or state
agency for measures to reduce the
tothn agmfw.
funds.''" The acquisition of water
demand for publicly owned treatment
on sea as use. 300H2(a)12)(H)(I ening
rights, laboratory fees for routine
works capacity through water
g.—is) sadsunce used by a public water system
m naturalist —(including expenditures for
compliance monitoring, and o operation
P
con9ervalion. efficienry, m ouse.
planmrv. design. suing. and tee-wned
end maintenance expenses am not cosh
Eligible projects
include, but are not
pre®marm ion activities, m for replacing ce
associated with investments in
limited to, the
installation, replacement,
ambitious, a, nammam. swase, 0,
infrastructure and thus would not be
or upgrade of water motors: plumbing
distribution Gcilities of public water systems. but
nor ineludible sseNtmiug. npeed i.m. and
eligible under the final role. 311 Pro ads
g 1
fixture retrofits or replacement; and gray
monarane-,,hones of. typo or cmgm,
needed primarily to serve future
water recycling. Water audits and water
whir the Administrator of the EPA we
population growth are also ineligible
conservation plans we also eligible.
dimensions, Enough guidance, will fedatd.
under the DWSRF: the treatment of such
compussin with u.timol primary annual, water
Mirlsoma eppli®bra to the sydem under R
Proj
projects under the final cola is discussed
s's 33 US.G t3ealc).
U.S.C. 300g-1 ar otherwise slgnlnantly Labor the
33 US.C. ilea.
hvith production oblectiw allies SWOA): Sno also
— See a0 M 35aaVadllp.
3'+33 US.0 1329.
90 Us n.,ian d
°" See to ot 535daalgejj2}fal.
ml 33 US.C. 1330.
Federal Register/Vol. 87, No. III/Thursday, January 27, 2022/Rules and Regulations 4413
Equipment to muse effluent (e.g., gray
water, condensate, and wastewater
effluent muse systems) is eligible.
(vid for the development and
implementation of watershed projects
meeting the criteria set forth in section
122 of the CWA."° Projects that
develop or implement a watershed pilot
project related to at least one of the six
mesa identified in section 122 of the
CWA are eligible: Watershed
management of wet weather discharges,
stormwater beat management practices,
watershed partnerships, integrated
water resource planning, municipalily-
wide stormwater management planning,
or increased resilience of treatment
works.
Mill to any municipality.
intermunicipal, interstate, or slate
agency for measures to reduce the
energy consumption needs for publicly
owned treatment works. Projects may
include, but we 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 am also
eligible.
(ix) for earaing or recycling
wastewater, stormwater, or subsurface
drainage water. Projects involving the
muse a recycling of wastewater,
.uerenwate, or subsurface drainage
water are eligible. This include., ea part
of a reuse project. the purchase and
lasts llation of treatment equipment
sufficient to meet reuse standards. Other
eligible projects include, but ere not
limited to, distribution systems to
support effluent reuse, including piping
the effluent on the property of a private
consumer, recharge transmission lines,
injection wells, and equipment to muse
effluent (e.g., gray water, condensate,
and wastewater effluent reuse systems).
(a) for measure. to increase the
security of publicly owned treatment
works. Security measures for publicly
owned treatment works might include,
but are not limited to. vulnerability
suit fuel
manholes. The CWSRF cannot fund
operations and maintenance activities.
Therefore, maintaining a human
presence (i.e., security guards) and
monitoring activities are not eligible.
Other Clarifications of DSWRF and
CWSRF Eligible Project Categories
Public Comment Several riu mentwe
requested that Treasury provide
clarification of the requirements
associated with use of SLFRF funds for
necessary investments in water and
sewer infrastructure.
Treasury Response: After release of
the interim final rule, Treasury clarified
in further guidance that, while
recipients must ensure that water and
sewer infrastructure projects pumued
an eligible under the final rule,
recipients ere not required to obtain
project pre appervel from Treasury or
any other federal agency when using
SLFRF funds for necessary water and
sewer infrastructure projects unless
otherwise required by federal law. For
projects that are being pursued under
the eligibility categories provided
through the DW SRF or CWSRF
programs, project eligibilities are based
an federal project categories and
definitions for the programs and not on
each state's eligibility or definitions.
While reference in the final nde to the
lher federal water
to assist recipients
sewer inhastrw
be funded with
not need to app
any federal wet
besides eligible
final rule does
attach to the DWSRF, CWSRF, or other
federal water pmgrams. However, as
noted above, recipients should be aware
of ether federal or slate laws or
regulations that may apply to
construction projects or water and sewer
projects, independent of SLFRF funding
conditions, and that may require pre,
approval from another federal or state
agency.
Expanded Eligible Uses for Water and
Sewerfinfrastructure
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 DWWRF and CWSRF.
These commenters argued that localities
are best situated to identify the higbow-
need water aad sewer projects in their
communities. Several Tribal
government commenters noted that
Tribes have different water and sewer
infrastructure needs than states 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
.ewer infrastructure. For example,
several commenters suggested Treasury
broaden the eligibilitez provided under
the interim final rule to include project
types eligible under other federal water
and sewer programs.
Treasury Response: Treasury agrees
that additional flexibility for use of
SLFRF funds is worm rted and is
providingg expanded eligibilities as
deamibed below, several of which
address specific wow of need outlined
by Tribal and rural communities.
As discussed below, Treasury has
incorporated into the feral rule projects
that am eligible under certain programs
established by the EPA under the Water
Infrastructure Improvements for the
Nation Act (WIIN Act). Other water -
related grant programs cited by
commenters include projects Oral are
otherwise already covered by the final
mle, for example because they are
ineligible under the final Is 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 ing ems, which may
exacerbate current challenges to
understanding eligibility under SLFRF,
Treasury is providing detailed
information related to expanded
eligibilities within the text of Otis
SUPPLEMENTARY 21NRIIA7IO111 for the
feral role.
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
replacement of storm sewers is
necessary to address increased rainfall
brought about by a changing climate.
Other commenters noted that coral
communities that do not manage their
own sewer systems may rely on this
ad range of stormwater
projects, and as such
were eligible under the
ale and continue to he
is gmy infrastructure
as traditional pipe,
aetment systems. Projects
4414 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
that manage, reduce, treat. or recapture
noted that wells maybe contaminated
entities. Given the lifelong impacts of
stonw nater or subsurface drainage water
with dangerous substances, including
lead exposure for children and the
are also eligible, including real-time
arsenic, lead, radon, and PFAS (per- and
widespread prevalence of lead service
control systems for combined sewer
polytuoroalkyl). Commenters also
lines. Treasury encourages recipients to
overflow management, and sediment
suggested that, because rural and
consider projects to replace lead service
control. Culvert infrastructure projects
mderwayed communities are often
lines.
are eligible under the CWSRF ifthey(1)
reliant on these infrastructure types for
In addition, Treasury is providing in
implement a nonpoint source
their drinking water or wastewater
the final rule that for lead service line
management plan, (2) implement
needs, lack of appropriate funding to
replacement projects, recipients must
National Estuary Program
maintain these systems could present
replace the PoII length of the service
Comprehensive Conservation and
health and safely issues that
line, soul not just a partial portion of the
Management Plan, or (3) implement a
disproportionately affect certain
service line. Some water utilities, when
sturmwater management plan with the
communities.
placingg service lines, will only replace
goal of providing a water quality benefit.
Treasury Response: Consistent with
[he "pv6lic portion" of the service 1me
Stmorwater projects under the CWSRF
the CWSRF. the installation, repair, or
and physically slice through the lead
also encompass a number of eligible
'replacement of private septic units
service line at the public/ rivate Itna,
re green infrastructucategories, such ro
continues to be an eligible use of SURF
This action can result in elevated
green roofer green streets, and green
funds under the final rule. For example,
drinking water lead levels for some
walls, minwater harvesting collection,
eligible projects include those that
period of time after replacement,
storage, management, and distribution
add resagroundwatercontamination
suggesting the potential for harm, rather
systems, real -lime control systems for
resulting from faulty septic units and
than benefit during that time period.sto
harvested rainwater, infiltration basins,
those that would connect failing septic
Requiring replacement of the full length
constructed wetlands, including surface
systems to centralized wastewater
of the service line is also consistent with
Raw and subsurface flow (e.g., gravel)
treatment. Consistent with the DWSRF,
the requirements of the EPA's Lead and
wetlands, bioretention/bioswalm (e.g.,
connecting homes served by a private
Copper Rule Revisions for water
biorete mien basins, use boxes),
well to a public water system is an
systems that have an action level
permeable pavement. wetland, riparian,
eligg@le uas of SLFRF funds.
samodence for lead a+a and certain other
or shoreline creation, protection, and
In addition, Treasury has provided to
watersystema.sro
restoration, establishment or maturation
fire final rule that recipients may use
Treasury is expanding eligible uses of
of urban tree canopy, and replacement
SLFRF funds for an expanded set of
SURF funds to include infrastructure
of grey infrastructure with green
infrastructure projects that improve
projects eligible under EPA grant
infreslmclur¢ including purchase end
scree' to end provision of safe drinking
programs authorized by the WIIN
demolition casts.
water far individuals served by
Acts" Eligible projects under these
In addition to the eligible uses under
residential wells. Eligible projects
under
programs include the installation or re -
the CWSRF, Treasury is expanding the
this category include rehabilitation
of
optimization of corrosion control
eligible uses under the final rule to
private wells, testing initiatives to
treatment' replacing lead service lines,
include stormweter system
identify contaminants in wells, and
replacing galvanized pipes downstream
Infrastructure projects regardless of
treatment ectivitiee and monediation
of a Trod service live (other than lead
whether there is an expected water
strategies that address contamination.
pryes within a home as discussed
quality benefit from the projert
Remedie[ing Laid in Water
below), and maintaining an inventory of
Treasury anticipates that this eligible
the drinking water system's service
use will allow recipients to manage
Public Comment: Several commenters
knees. Water quality testing, compliance
increased volume. of summers, ea a
emphasized the need to fully remediate
monitoring, end remediation activities
result of changes to the climate. For
lead contamination, especially in
in schools and other childcare facilities,
example, the final rule now permits the
structures that serve the public in
as well as activities necessary to
use of SLFRF funds for the repair,
populations like children that are
respond to a contaminant, are eligible
repplacemem. or removaln of culvas or
particularly vulnerable to the effects of
uses of SLFRF funds.322 Remediation
otMr mad -stream consent;
lead exposure, such ea schools and
infrastructure to the extent the purpose
daycaces. Many American households
.,.seer can scionce Addwry even, e.aluation
of the project is to manage stormwater,
In addition, Treasuryunderstands that
and on estimated 4100,000 schools and
children, centers current) lack safe
Y
eu. en"cuvenua: of pmiol Imd S—i- a"n
Raeplplacemmds, ISepbrwber 20111, hap,:/1
the repair, roplaement, or removal of
drinking water.'"
pu.goo/mwci owww-ode'w,l-aoom-
—1u.lw,.egeu.mw ,vodl.leco-aeroce.una.
culverts may necessitate the repair or
Tommy Response: The replacement
aylaemants (.dmdng a" onn pool lead centev
upgrade of roads. As noted in guidance
of lead service lines, up to premise
line
issued after the interim final rule,
plumbing, is an eligible use under the
ree Envbvno ed,l Frorocengen on ey, entire mar
recipients may use SLFRF funds for
DWSRF and continues to be an eligible
1> Environwenve Prorecuon Agency, nauond
mad repetrs and upgrades that interact
use of SLFRF funds. Such projects are
Pdwaryndnkingwaer Regnlac... raedand
directly with an eligible stormwmer
eligible regardless of the pipe material
co poi Rue Rwiaion..m eR+rva. +o CPR.I.Aa.
gp
Infrastructure project. All stormwaler
ottere replacement lines and ownership
li �� � ��/ an-eaaoa;.cM1epiu/lad
infrastructure projects undertaken
ofhhe property on which the service
1. bmeffootm December la, 2021,
should incorporate updated design
line is located. Lead service line
Ecricanoodal Frotaemn Agency. es Fxalsas,
features and current beat practices.
replacement projects can serve
dttpsdlu .)Nn gisterso idl2p2l.l26 o.
Pr' few W 11 dS ' S t
households, schools, or any other
n <Imdisefundds include diowo.able
va e son optic Y. ems
Public Comment: Several commenters
°"IDe wNm nouu. updated Fnl sheer:
requested that the scope of eligible
nipanuan lnsenconi live..., and lobo Aa
projects be expended to allow for the
(August 2.20211, knew./Awwo-1 aehowegow
expenditure of SLFRF funds on private
P P
hnepn un,✓ecan„rera-rel—ex/20iiAM1UN
.passe fn,c hwd.b:uwn.i.f .nvanre-
wells or septic systems. Commenters
mvoxme.11ca/wss- n
"'sumreadng and re,nediarion prugrvne would
be a" eligible use cf a FRF foods given that they
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/1bules and Regulations 4415
activities such as replacement of
faucets, internal plumbing, and fixtures
in schools end childcare facilities are
also an eligible use of SLFRF funds.
Consistent with the EPA programs,
.plain. t of land pipes within a
home is not eligible under the final rule
because the vast majority of lead
contamination cases can be solved 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 worms 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 SURF funds under this
eligible use category, as it is not an
investment in infrastructure. However,
bottled water in areas with an action
level exccedanee for land in water may
be an eligible use of SLFRF funds under
a separate eligible use category for
"remedialion of lead paint and other
lead hazards:" see Assistance to
Households in Public Health and
Negative Economic Impacts.
Welar Erltmtion systems are eligible
under the EPA grant programs and the
final role as long as they ere installed as
a permanent part of a facility's system
and not intended for temporary use.
Conducting remedialion, 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
SURF funds or otherwise, are also
eligible projects. Finally, recipients
should note that "remedialion of lead
paint and other lead hazards" is a
separate eligible use
category and a
broader range of programs and services
may ba eligible ,radar that section,
including investments that are not
infrastructure; see the eligible use for
"remedialion of lead paint and other
lead hazards" in section Assistance to
Households in Public. Health end
Negative Economic Impacts.
Dams and Reservoirs
Public Comment: Many commenters
requested that Treasury broaden
aligibilities to include dame and
reservoirs, infrastructure that
commentere noted may in its current
stale be unsafe and could put
surrounding communities at risk. Some
would help arsipient determine whernwan
iahaenacmm project inch n a lead It..
rml.xvmmt b nxueery. In onrum.ea memloned
algae, not ewuofcontinual testing Ibm to penof
ed on, wean, wutawemr faciliaet, npmeoing
toms would not be cwsidemd part olar
infmatmclum Miss.
commenters argued that dams and
reservoirs play an important role in
providing municipal water supply and
water to irrigate farmland, including in
areas impacted by recant droughts.
Other commentere noted that a large
number of dams are currently classified
as high -hazard structures, the failure of
which would have severe. consequences
for public safety and the local
environment. With respect 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 SURF
funds. These commenters noted that
alternate sources of funding exist for
dam and reservoir projects and that
dams and reservoir infrastructure could
result in negative impacts to Tribal
communities and negative
environmental impacts, including harm
to wildlife habitats.
Treasury Response: Treasury
understands that many dams and
reservoirs in aced of rehabilitation are
dams and reaervoirs whose primary
purpose is to provide drinking water. As
diarrested above, SURF funds are
available for pinjects ro[wild 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 reservoir
rehabilitation projects in certain
circumslances.32o fit approving this
class deviation, the EPA recognized that
many dams used for drinking water we
aging and deteriorating and pose a
public health risk to communities; that
current dam conditions do not meet
8
/ale safety standards; and that reservoir
capacity has diminished and requires
dredging to meat drinking water needs
of the existing p r n abon.
1}easury's final mle provides that
funds maybe used for rehabilitation of
dame and reeerv.,. if the primary
purpose of the dam or reservoir fs for
drinking water supply and the
rehabilitation project is necessary for
continued provision of drinking water
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supply. In considering whether a dam or
reservoir project is necessary for the
provision 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 rase be designed to support
no mare then a reasonable lava) 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 costa and benefits of the
project as compared to those
alternatives.
This change to the final rule would
permit a wide variety of projects as+The
limitation in the final role to
rehabilitation of existing dams and
reservoim reflects the scope of the EPA
class deviation referenced above and
Treasury's understanding of the
siggnn'ficant need for investments in
rehahflitation to address deterioration of
it... and the diminished capacity of
reservoir. Further, Treasury expects
that in many cases it would be
considerably mom difficult to
demoostrete that contraction of a new
dam or reservoir would be necessary for
the purpose ofthe provision of drinking
.is, 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 xup. of
the fine[ rule to dam end reservoir
rehabilitation prejects.
As discussed above. Treasury has
determined that ARPA dues not
authorize the use of SURF 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 es eligible uses of SURF
funds unless they meet the conditions
discussed above.
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4416 Federal Register/Vol. 87, No. 18/'Thursday, January 27, 2022/Rules and Regulations
Public Comment: Several commenters available alternatives. For this eligible Sewer Infrastructure" above for more
requested that the removal of dams and use category, expansion of drinking information.
associated habitat restoration should be
eligible uses of SLFRF funds, noting that
in some cases, dam removal will
improve water quality while removing
long-term operational expenses for the
recippient.
7jetsan assonse ciated
smremoval
habitats and associated stream and
habitat on projects am eligible
uses CW CWSRF and continue to e
eligiblleethe
under the nisei rule when the
removal implements althea a o
souplan rce management program plan or
a a
NationCkimprel Estuary Program
Comprehensive Conservation and
Management Plan r when the removal
will provide a water quality benefit.
Habitat restoration projects more
generally may also be eligible under the
CWSRF and the final rule if they
constitute a form of.tonsawater
infrastructure.
Expansion of Drinking Water Service
Infrastructure
Public Comment: Commenters asked
for the ability to use funds for drinking
water projects for the purpose of
meeting needs arising from future
growth, which, given the restrictions
applicable to the ❑WSRF, was not
permitted under the interim final rule.
nmpmmenung me irwbitr program
provides that projects needed primarily
to serve future population growth me
not eligible uses ofthe DW SRF. A
project that is intended primarily to
address public health or regulatory
compliance issues for the existing
service population may be sized for a
"reasonable" amount of population
growth over the useful fife of the
project.."
ARPA dose not include the same
limitation as the SHWA. Accordingly,
the final rule provides that recipients
may use SLFRF funds for projects that
are needed to support increased
population in certain cases. ARPA
limits projects to those investments that
are "necessary. " As discussed above,
Treasury interprets this to mean that the
Investments must he (1) responsive to
an identified and to achieve or
maintain an adequate minimum level of
service, which for some eligible project
categories may include a reasonable
projection of increased need, whether
due to population growth or otherwise
and (2) a cost-effective means for
meeting that need, taking into account
•ssappee CFR 3535r0(u)151.
water service infrastructure, the project
must also be projected to be sustainable
over its estimated useful life.
Investments must be determined to be
necessary when they are initiated.
Accordingly. Treasury is clarifying in
the final role that the used identified for
a water or sewer project may include a
need arising faro reasonable
expectations of future population
growth, provided that it is necessary at
the time the investment is initiated for
the recipient to make the investment to
meet this growth. For example,a
recipient expecting increased
population during the period of
performance may install a drinking
water treatment plant to meet that
growth. In addition, a recipient
expecting increased population growth
outside the period of performance may
install the treatment plant if the
planning and construction timeline for
the project would require work to begin
during the performance period in order
to meet the expected population growth.
A recipient may install transmission
lines as part of the development of new
housing occurring during the period of
performance. In this case, die housing
development must be in progress; a
recipient may not use the SLFRF funds
to install a water main, for example, to
an undeveloped front in the expectation
that in the future diet beet will be
developed with housing, because there
would be no need for that investment to
be made at the time it is initiated.
For the reasons discussed above. if a
project is undertaken to address
expected growth 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 source of
water. In considering how much cis
source of water will be available I. the
Intone for the drinking water project, a
recipient must consider that a source of
water may be drawn upon or otherwise
used for other current and expected
uses, including use by fish and other
wildlife. A drinking water project that is
designed to address a growing
population cannot he considered a
necessary investment if the source of
drinking water will cease to be available
to meet the population's needs before
the end of the estimated useful life of
the project. In such a can, a recipient
should consider alternative sources for
drinking water. See "Interpretation of
Necessary Investments and Water sod
Non -Federal Matching Requirements for
Authorized Bureau of Reclamation
Projects
The Infrastructure Investment and
Jobs Act emends sent inner 602(c) and
603(c) of the Social Security Act to add
an additional eligible use of SLFRF
funds, providing that SLFRF funds
"may he used for purposes of satisfying
any non -Federal matching requirement
required for In authorized Bureau of
Reclamation proj.fl."==
This amendment permits the use of
SLFRF funds to meet non-federal
matching requirements ofany
authorized Bureau of Reclamation
project, regardless of whether Ora
underlying project would be an eligible
use of SLFRF funds under the water and
sewer infrastructure eligible use
category. These amendments are
effective as of March 11, 2021, as if
included in the ARPA at the time of its
enactment.'" Treasury will provide
further guidance to recipients on the
scope of Bureau of Reclamation water
projects and expenses covered by this
provision.
Floodplain Management and Flood
Mitigation Projects
Public Comment: Several commenters
requested that projects to address
floodwater, including noodplain
management and flood mitigation
projects, be included es an eligible use
of SLFRF funds. Within this category of
floodplain management and flood
mitigation infrastructure, several
commenters requested that the
installation of levees, flood walls, sea
walls, elevation projects, dredging, or
nature -based flood mitigation projects
be included as eligible yenjeca
Treasury Response: Treasury notes
that some floodplain management and
flood mitigation infrastructure projects,
including green infrastructure designed
to protect treatment works from flood
waters and flood hoped sae currently
eligible under the CWSRF and therefore
continue to be eligible under the final
.Is.
Treasury hex not included floodplain
management and flood an id all
projects more generally as eligible under
the final ale. Although floodplain
management and flood mitigation are
functions of many state and local
governments, they are not the sort of
generally -provided essential services
included within the meaning of water
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Federal Register/Val. 87, No. 1g/Thursday, January 27, 2022/Rules and Regulations 4417
and sewer projects under the ARPA, as and efficiency related to infrastructure
discussed aboveimprovements, e.g., incentives such as
Irrigation bat11 far
Public Comment: Some commenters
requested that irrigation projects be an
eligible use because they consider such
projects to be critical infrastmcture.
Several commenters aupperled this
request by noting that Irrigation systems
ay be used to replenish aquifers and
recharge wells, in addition to delivering
water for initiation. One commenter also
noted that the national initiation system
is antiquated and in need of repair.
Treasury Response: Some irrigation
project. were eligible under the interim
find 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 implements a
management program established under
section 319 offer CWA and/or a
conservation and management plan
under section 320 of the CWA are
eligible uses under the CWSRF and
therefore continue to be an eligible use
of SLFRF funds undm 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
final into. Unlike projects for the
improvement of irrigation systems
generally, these reclaimed water
projects are related to wastewater
treatment and slurmwater management,
which are within the scope of the
meaning of water and sewer
infrastmcture for ppurposes of ARPA.
Treasury considrad commander
requests for inclusion of additional
irrigation infrastructure and determined
that irrigation projects more generally
are not permitted under the final rule.
Although these types of projects may be
water -related infrastructure, they are not
the sort of generally -provided essential
services included within the meaning of
water and sewer projects under ARPA,
as discussed above.
Consumer Incentive I'mgams
Public Comment: One commenter
requested that consumer incentive
programs in the areas of water use
efficiency. conservation, green
infrastrectme, use, and other
distributed solutions be an allowable
use of SLFRF.
Treasniiyy Response: The DWSRF end
CWSRF eligibilities include the
development and implementation of
incentive and educational programs that
address and promote water
conservation. source water protection,
re as to mate green m structure
such as rain barrels or promote that
water conservation activities. Treasury
clarifies that such project types were
eligible under the interim final rule and
continue to be eligible under the final
rule.
2.13roadband lnfrastruclum
Under the ARPA, recipient
governments may use SLFRF funds to
make "necessary investments in .. .
broadband infrastructure."In the
Supplementary Information to the
interim final rule, Treasury interpreted
necessary investments in infrastructure
as investments "deigned to provide an
adequate minimum level of service and
Ithat) are unlikely to be made using
private sources of funds." Treasury
explained that, with respect to
broadband specifically, such necessary
investments include projects that
'establish I I or improve I I broadband
service to underserved populations to
each an adequate level to permit a
household to work or attend school, and
that are unlikely to be met with private
sources of funds:'
Summary of Interim Final Rule, Public Comments, and Treasury Response
Summary of Imerim Final Rule: In
implementing the ARPA, the interim
final rule provided that eligible
broadband infrastructure investments
are limited to those that are designed to
provide service to unserved or
undemerved households an business...
defined es those that lack access to a
wirel"m connection capable of reliably
delivering at least minimum speeds of
25 Mbps download and 3 Mbps upload.
The interim final role 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 wham
it would not be practicable for a project
to deliver such service speeds because
of the geography, topography, or
excessive costs associated with such e
project, the interim final rule provided
that the project would be required to be
designed to deliver, upon project
completion, service that reliably meets
or exceeds 100 Mbps download speed
and between at least 20 Mbps and too
Mbps upload speeds and be scalable to
a minimum of IN Mbps symmetrical
for download and upload speeds.
In addition, Treasury, in the
Supplememary Information to the
interim final role, encouraged recipients
to pursue a number of other objectives.
First, Treasury encouraged recipients to
prioritize investments in fiber-optic
infrastructure wherever feasible and
focus on projects that deliver a physical
broadband connection by prioritizing
projects that achieve lest -mile
connections. Second, Treasury
encouraged recipients to integrate
affordability options into their program
design. Third, Treasury encouraged
recipients to prioritize support for local
networks awned, operated, or affiliated
with lord governments, nonprofits, and
cooperatives. Fourth, Treasury
encouraged recipients to avoid investing
in locations with existing agreements to
build reliable sureties service with
minimum speeds of IN Mhpa
download and 20 Mbps upload by
December 31, 2024, in order to avoid
duplication of efforts and resource e.
Finally, following release of the interim
final role, Treasury provided fudher
guidance clarifying some aspects of
broadband infrastructure eligibility,
specifically on Flexibility for recipients
to determine eligible areas to be
served.3ss middle -mile pmjects,-s" pre -
project development coats,330
broadband connections to schools or
libraries,ssr and the applicability of the
National Environmental Policy Act
INEPA) and the Devi. -Bacon Art.332
Summary of public Commands:
Treasury received several comments on
the interim final mis's requirements
regarding eligible areas for investment
and build -to speed standards, as well as
Treasurys encouragements in the
Supplementary Information of the
interim final rule. Many commenters
found the interim final ride's
requirement to limit projects m those
designed to provide service to untamed
or undemerved households or
businesses to be appropriately focused
on hard -to -reach areas. In contrast it.,
commenters argued that this
requirement was too restrictive and that
it would limit the ability for some
recipients, particularly local
governments, to invest in broadband
infrastmcture.
Separately, some commenters
supported the interim final mis's
requirement that eligible projects he
built to reliable speeds of IN Mbps
symmetrical, with an exception for areas
where it was impracticable, and
encouragement that projects be built
with fiber-optic infmstmqure, while a
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4418 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
few others argued that the interim final
rate should remain imhnology-nantial
and that lower speed standards would
be more appropriate for today's usage
nceds.
Summary of Treasury Response: In
response to the comments, the final mle
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,
which would include but not be limited
to a lack of broadband ...oleo reliably
delivering certain speeds. In addition, as
discussed further below, the final rule
further supports the expansion of
affordable access to broadband service
for households by requiring that
recipients use a provider that
participates in a qualifying affordability
plan. Treasury encourages recipients to
prioritize projects that are designed to
provide service to locations not
currently served by a wireline
connection that reliably delivers at least
IN Mbps of download speed and 20
Mk s of upload speed.
The final rule maintains the interim
final rules requirement that eligible
projects be designed to, upon
completion, reliably meet or exceed
symmetrical 100 Mbps download and
upload speeds. As was the case under
the interim final rule, in cases where it
is not practicable, because of the
excessive cast of the project or
geography or topography of the area to
be served by the project, eligible
projects may be designed to reliably
meet or exceed 100 Mbps download
speed and between at least 20 Mbps end
100 Mbps upload speed and be scalable
to a minimum of IN Mbps download
speed and IN Mbps upload speed.
Treasury continues to encourage
recipients to prioritize investments in
fiber-optic inhastradure wherever
feasible and to focus on projects that
will achieve last -mile connections,
whether by focusing directly on funding
last -mile ts priesor by ensuring that
funded midd]e-mile projects have
commitments in place to support new
and/or baproved lest -mile service.
The frnel rule requires out bents to
address the affordability nceds of low-
income consumers in accessing
broadband networks funded by SURF,
given that such a project cannot be
considered a necessary investment in
broadband infrastructure if it is at
affordable to the population the project
would serve. Recipients must require
the service provider for a completed
broadband infrastructure investment
project that provides service to
households to either participate in the
Federal Communications Commission's
(FCC) Affordable Connectivity Program
(ACP), or otherwise provide access to a
broad -based affordability program to
low -inmate consumers in the proposed
service men of the broadband
infrastructure that provides benefits to
households commensurate with those
provided under the ACP.
Treasury also recognizes the
importance of affordable broadband
access for all consumers beyond those
that are low-income. As pert 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 service area. Additionally,
recipients are encouraged to require that
services provided by a broadband
infrastructure projmt include at least
One lew-Lost option offered without
data usage caps and at speeds that era
sufficient for a household with multiple
users to simultaneously telework and
engage in remote learning. Recipients
will be required to report speed, pricing,
and any data allowance information as
part of mandatory reporlin to Treasury.
The final rule also clamone that
subsidies to households and
communities impacted by the pandemic
to access the animist, broadband
adoption programs, digital literary
programs, and device programs are
eligible programs to respond to the
public health and negative economic
impacts of the pandemic under sections
602(c)(1)(A) and 603(c)(1)(A). Sae
section Assistance to Households in
Negative Economic Impacts.
T.,my continues to encourage
recipients to prioritize support for
broadband networks owned, operated
by, or affitatad with local governments,
nonprofits, and cooperatives. In
addition, to the extent recipients ere
considering deploying broadband to
locations where there are existing
enforceable federal or stale funding
commitments for reliable service at
spends of et least IN Mbps download
speed and 20 Mbps upload speed,
recipients ..at ensure that SUFF
funds are designed to address an
identified need for additional
broadband investment that is not met by
existing federal or stela funding
commitments. Recipients must also
ensure that SI.FRF 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 of grunt funds to
procure or obtain certain
telecommunications and video
surveillance services or equipment as
outlined in 2 CFR 200.216 and 2 CFR
200.411 and clarifies that modmnfuetion
of cyberwcurity for existing and new
broadband networks are eligible uses of
funds under sections 602(elf 1)(D) and
603(c)(1)(D).
Finally, this Supplementary
Information to the final rule
incorporates and confirms guidance
issued by Treasury following the
interim final rule regarding middle -mile
projeca,"aa pre -project development
coats,334 broadband connections to
schools or libraries,3" and applicability
of the National Environmental Policy
Act (NEPA) and Davis -Bacon AdP'°
The remainder of this section
provides additional details on the final
role. Specifically, these sections
address: (1) Eligible areas fat
investment; (2) build -to speed
standard.;(3) affordability;(4) public
networks; (5) duplication of efforts and
resources;(6) cybersecurity; and(2) use
of funds to meet non-federal match
under the Infrastructure Investment and
jobs Act.
Eligible Areas for Investment
The interim final rate limited eligible
broadband investments to projects
focused on delivering service to
unnerved or uadmserved locations,
defined as households or businesses
that lack access to a wireline connection
capable of reliably delivering at least
minimum spends of 25 Mhps download
and 3 Mbps upload. This targeted
approach was generally consistent with
cartoon speed thresholds used in other
federal progroms to identify eligible
mea5 for federal investment in
broadband infrastructure, such set the
FCC's Renal Digital Opportunity Fund
(ROOF) program and the National
Telecommunication and Information
Administration's (NTIA's) Broadband
Infrastructure Program, and generally
aligns with the FCC's benchmark fat an
"advanced telecommunications
capability" fat wircline, broadband
aervicea.
Public Comment: Many commenters
discussed the disadvantages of such an
approach. Some commenters, including
several local government recipienta,
argued that limiting investments to
locations without access to mliable
wireline 25/3 Mbps 337 was too
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Federal Register/Vol. Sy, No. 16/Thursday, January 27, 2022/Rules and Regulations 4419
mannidtve because some urban
jurisdictions are already mostly or
entirely covered by a network with at
least 2513 Mbps speeds yet lack
widespread broadband adoption for
various reasons. 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 Mbps, such as to
provide affordable broadband access in
low-income areas or to address service
quality and reliability issues. Further,
commenters argued that Treasury'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
state, have already expanded the focus
of the¢ broadband programs beyond
those without reliable access to speeds
of 25/3 Mbps. Commenters argued that
if the limitation to untamed and
underaerved households and businesses
were maintained, the definition of
unserved and under erved households
and businesses should be revised to
include households and businesses
currently aimed by higher standards.
Commenters proposed a number of
alternative cutoff speeds, Including 25/
25 Mbps, 50110 Mbps, and IN Mbps
symmetrical. Others expressed support
far providing flexibility for recipients to
make their own determination on
eligible areas for investment. These
commenters referenced studies
indicating that 25/3 Mbps is inadequate
for mday's modern household or
business needs.
Some commenters advocated for
mourned ..it undereerved areas to be
prioritized while providing flexibility
for recipients to serve areas beyond
those designated as uninvited or
underserved. Reflecting the perceived
restrictiveness ofthe interim final mle
approach, some commenters asked for
assurance that projects conducted under
other categories of SLFRF eligible use.,
specifically to respond to the public
health and negative economic impacts
of the pandemic under sections
602(c)(1)(AHC) and 603(c)(1)(A)-(C),
were not barred by the presence of 25/
3 Mbps serviceincluding "gap
networks," which are networks
designed to offer law -cost or nocced
Internet access for lower -income
Mbps upload epvads."100 Mbps" symmeutrat
rases tpadW to bnd inbstros tuhe that is dexpad
noted,
meal of eared st least m0 Mhpa
download speeds and mo Mape upload speed,
households with low broadband
adoption miss.
Commenters suggested additional
factors to be incorporated 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 barrier for most
Americans who do net have robust
broadband service in their households.
Some advocated that the final rule allow
for investments in areas with existing
reliable wirefine access at or above
25/3 Mbps as long as existing broadband
service has been unaffordable for a
certain segment of the population;
others advocated that Treasury presume
eligibility when investments am made
I. certain areas, such as Qualified
Census Tracts or neighborhoods with
persistent poverty, or are made by Trihal
governments, Separately, some
commenters noted that Treasury should
provide mare clarification on what
constitutes a "reliable]" connection,
including providing details as to
latency, jitter, and other technics[
specifications that would meet that
standard, and what it means for certain
technologies, such as copper and other
outdated technologies, to be deemed
presumptively unreliable.
Other commenters supported the
interim final mis's approach on eligible
areas for investment in suggested
tightening eligibility even further. They
argued that higher speed thresholds
beyond 25/3 Mbps would likely lead to
investments in or building of now
broadband infrastructure I. areas
already served by broadband at speeds
these commentera considered sufficient;
Ih... areas, commenters suggested, are
less in need of federal assistance and
permitting investments hem could
divert funding away from rural areas to
mare densely populated areas.
7}am". I Response: The final rule
expands elgible arena 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.
Red p name have flexibility to identify a
needfor additional broadband
infrastructure investment Examples of
need include lack of access to a
connection that reliably meets or
exceeds symmetrical 100 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 not currentlyy served
by a wireline connection the,
delivers at least too Mbps of download
speed and 20 Mbps of upload spend, as
many commenters indicated that those
without such service constitute hard -to -
reach areas in need of subsidized
broadband deployment.
Households and businesses with an
identified need for additional
broadband infrastructure 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
appmach that provides ..tufts to a
wider area, for example, in order to
make ongoing service of certain
households or businesses within the
service area economical.
Consistent with further guidance
issued by Treasuryce in determining
areas for investment, recipients may
choose to consider any available date,
including but not limited to
documentation of existing broadband
interne[ service performance, federal
and/or state collected broadband data,
user speed test results, interviews with
community members and business
owners, reports from community
organizations, and any other
information they deem relevant.
In evaluating such data, recipients
may take into account a variety of
factors, including whether users
actually receive interest service at or
above the speed thresholds at all boom
of the day, whether factors other than
speed such as latency, jitter, or
deterioration of the existine connections
technology) or early versions of cable
system technology (OOCSIS 2.0 or
wrlier)?ss and other factors related to
4420 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations
the services to be provided by the
project. In addition, recipients may
consider the actual experience of
current 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 rule provided that a
recipient may use funds to make
investments in broadband infrastructure
that is designed to, upon completion,
reliably meet m exceed symmetrical IN
Mbps download and upload speeds. In
cases where it is not practicable,
because of the excessive cost of the
pro7w:t or the geography or topography
of the area to be served by the project,
eligible projects may be designed to
reliably meet or exceed IN Mbps
download speed and hetween at least 20
Mbps and 100 Mbps upload speed, so
long as it is scalable to a minimum of
IN Mbps download speed and fun
Mbps upload speed. Relaledly, Treasury
in the RUPPIEMENrmV INFORMAIgM to
the interim final rule encouraged
recipients to priaritize investments in
fiber-optic infrastructure wherever
feasible and to prioritize projects that
achieve last -mile connections.
Public Comment. Many commented
discussed the advantages of setting
minimum symmehiml download and
upload speeds of reliable too Mbps as
the speed threshold for new projects.
Some commented indicated support for
the interim final role's standard as it
takes into account growing demands on
Internet use resulting from pandemic
broadband usage and suggested that
such a standard will help to ensure that
networks built with SLFRF funds
remain valuable for years to come, even
as demands continue to weelerale,
particularly on upload speeds. Some
also indicated that the interim final rule
standard has the effect of prioritizing
the use of fiber-optic infrastructure to
deliver such speeds, which some noted
W. a "gold standard" future -proof
technology, although some commented
noted that other technologies like fixed
wireless have been he. to deliver
such speeds in certain circumstances.
Other commenters suggested that IN
Mbps symmetrical speeds were
unnecessary given curent broadband
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usage needs and that such high
standards may have the potential to
slow down expansion to um rued or
unit caerved rural areas. Some argued
that setting this symmetrical threshold
may limit the type of technologies that
can be used, thereby decreasing
competition end limiting flexibility to
recipients whose communities might be
better served by technologies such as
wireless aolutions or inexpensive gap
networks. Commenters suggested
alternate minimum speeds, ranging from
25/3 Mbps (which some signed best
balances reaching all communities and
maximizing the impact of federal funds)
to 100/20 Mbps (which some argued
best carves the typfeel broadband usage
patterns of households and businesses,
including new pandemic -driven needs),
A few commenters suggested a higher
inhumane speed. such as gigabit speeds,
advocating that such speeds were
necessary fora network to last at least
a decade.
Many commenters supported the
interim final ride's lower speed
standards for projects whore it is
impracticable to meet minimum reliable
speeds of IN Mbps symmetrical, as it
provides flexibility for recipients to
invest in herd -to -reach areas, such as
those in mountainous regions. A few
commenters indicated that Treasury
should more clearly define the
characteristics of a location eligible for
this exception. Some indicated that the
minimum standard for all new projects
should be 100 Mbps symmerical. In
contrast, others argued that amiability to
too Mbps symmetrical should not be a
requirement to meet today's demands,
particularly in hard -to -reach areas.
Some commenters requested that
Treasury clarify eligibility for middle.
mile pro7act. as these projects
potentially provide connectivity to far-
reaching areas, while other commenters
suggested that last -mile projects
generally require more capital
investment and are therefore mast in
need of government sirppaa.
Treasury Response: The final rule
maintains the interim final rule's
requirement that eligible projects be
designed to, upon completion, reliably
meet or exceed symmetrical IN Mbps
download and upload speeds, with the
interim final rule's exception far
prejects where it is impracticable to
build to such 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 foods to
fund lasting infrastructure that will be
Al. to accommodate increased network
demand ono the network is
campletesa^ while providing Flexibility
for certain locations to meet lower speed
standards where IOU Mbps symmetrical
speeds are impracticable.
To illustrate the accelerating nand 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 aarliac.a '
Jurisdictions are increasingly
responding to the growing demand., of
their communities for high 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 videcconferencing, while
also helping ensure that funding is
respa sambly used to provide a true and
lasting benefit fee years to come,
Treasury continues m encourage
recipients to prioritize Investments in
fiber-optic infrastructure wherever
fen,ible, as such advanced technology
enables the at generation of
"reliable" service at required speeds
and are not required to rely on
providers' advertised speeds in their
assessments.
Consistent with further guidance
issued by Trewurysas while recipients
are permitted to make investments in
"middle -mile" connections that
otherwise satisfy the requirements of tiro
final rule, Treasury continues to
encourage recipients to focus on
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4421
projects that will achieve last -mile Recipients must require providers to Other wmmenters argued against
connactione—whether by focusing
directly of funding last -mile projects or
by amusing that funded middle -mile
projects have commitments in place to
I
support and/or improved lael-mile
service.
Affordability
The interim Final rule encouraged
recipients to consider ways to integrate
affordability options into their program
design but did not require recipients to
take particular actions. The interim final
role also provided that assisting
households with interest access and
digital literacy is an eligible use of
SURF funds under sections
602(c)(1)(A) and 603(c)(1)(A) to respond
to the negative economic impacts of
GOV11Y19.
Public Comment: Many commenters
suggested that Treasury provide
recipients with a broader set of bola to
tackle what the commenters
characterized as an affordability crisis to
the broadband sector. As noted above,
some commenters proposed that
Treasury consider affordability when
determining whether an mes is
unservad or mu erwased by broadband.
Some commenters indicated that the
fined rule should allow far the
construction of broadband networks in
low-income neighborhoods including
low<ost or no -cost gap networks, even
in ores with existing service at the
speeds required under the interim final
rule. Other commenters voiced support
for direct subsidies to low-income
communities to afford broadband
service, which would provide
additional incentives for providers to
serve these communities.
Treasury Responsean response to
many commentms that highlighted the
importance of affordability in providing
meaningful access to necessary
broadband infrastructure, the final rule
provides additional requirements to
address the affordability needs of low-
income consumers in accessing
broadband networks Funded by SURF.
Recipients must require the service
provider for a completed broadband
infrastructure investment project that
provides service to households to:
. Participate in the Federal
Communications Commission's (PCC)
Affordable Connectivity Program (ACP);
or
. Otherwise provide access to a
broad -bled affordability program to
low-income consumers in the proposed
service area of the broadband
infrastructure that provides benefits to
households commam.reis with these
provided under the ACP.
participate in or provide access to these
programs through the life of the ACP.
This requirement will no longer apply
once the SLPRF-funded broadband
infrastructure is n0 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 die
community on the general affordability
needs of the target markets in the
proposed service area. Additionally,
recipients are encouraged to require that
mrvic s provided by a broadband
infrastructure project include at least
one lowest Option Offered without
data usage caps at speeds that are
sufficient for a household with multiple
users to simultaneously lelework and
engage in remote learning. Treasury, will
require recipients to report speed,
pricing, and any data allowance
information as pan of their mandatory
reportingto Treasury.
Further, Treasury is clarifying that, as
a response to the public health and
negative economic impacts of the
Pay
programs, and device programs that
provide discounted or noroost devices
for low-income households to access the
Internet. For further discussion of this
eligible use category, we the section
intereet Assistance in Assistance to
Households in Public Health and
Negative Economic Impacts.
Public Networks
The interim final rule encouraged
recipients to prioritize supper for local
networks owned, operated, re affiliated
with local governments, nonprofits, and
cooperatives.
Public Comment Many commanders
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 left with
unaffordable 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 m private providers, along
with potentially increasing local
competition in a service area,
that private businesses have a
customers. These commenters argued
that commercial providers have greate
technical and operational expertise in
deploying and operating broadband
networks and mev be able to construct
may consmerea an minor competitive
advantage for govemment-or
cammunityowned or operated
networks may hurt consumers over
time.
Treasury Response: The final rule
maintains the interim final mis'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 a commitment to
serve entire communities.-' This
encouragement provides flexibility for
recipients to select providers that best
fit their needs, while noting the critical
role that networks owned, operated, or
affiliated 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 mmme item
raised concerns that Treasurys
encouragement in the interim final rule
that recipients avoid funding projects in
provide service that reliably delivers
100/20 Mbps by December 31, 2024 was
too restrictive. Commenters noted that
grants were designed and awarded
before the oneal of the 00110-19
pandemic and do not meet the critical
broadband needs highlighted by the
pandemic. Other commenters argued
that Treasury's encouragement to avoid
duplicaden of resources should be
strengthened, as investing in areas with
existing agreements would be an
inefficient duplication of efforts.
T sury Response: Given the final
rule's revised requirements on eligible
areas for investment, this
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4422 Federal Register/Vol. 87, No, III/Thursday, January 27, 2022/Rules and Regulations
Supplementary Information to the final
rule also modifies the interim foal
rate's requirements around duplication
of res m.n. Since recipients must
.an. 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
are 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 Was upload speed,
recipients must ensure that SLFRF
funds are designed to address an
identified need for additianal
broadband investment that is not met by
existing federal or slate funding
commitments. Recipients must also
ensure that SLFRF funds will out be
used for costs that will be reimbursed by
the other federal or state funding
streams.
Cybersecurity,
Public Comment: Several commenters
expressed concern about the
cyberiamerity, of new broadband projects
funded with SLFRF funds and urged
Treasury to prohibit recipients from
utilizing SLFRF 6.mds to procure
equipment from cartel. pmvedw. hem
the People's Republic of China that may
pose a national security risk. These
commenters painted out that the 2019
National ➢¢fame Autharf titian Act
(NDAA) and the FCC's Universal
Service Ford have similar prohibitions.
Father, several commenters requested
that Treasury explicitly include
ryberwcurity costa as an eligible use for
broadband infra dructum investment
given the growing threat of cybere0acks
and cyber-intrusions into the nation's
infrastructure.
Trmsuryliesponse: Treasury
highlights that investments in
broadband Infrastructure must be
carried out in ways that comply with
applicable federal laws, including the
2019 N➢AA. Among other requirements
contained in 2 CPR par[ 200, 2 CFR
200.216 implements certain provisions
of the NDAA and contains prohibitions
on the use officiated financial assistance
to procure or obtain certain
telecommunications and video
surveillance services 0r equipment
provided ar produced by designated
entities, including certain entities
owned or controlled by the People's
Republic of China. In addition. 2 CFR
200.471 provides that certain
telecommunications and video
surveillance costs associated with 2 CFR
200.216 are unallowable.
Further, the final rule allows for
ne dernixetion of cyberaecurity for
existing and new broadband
infrastructure as an eligible use under
sections 602(c)(1)(D) and 603(c)(1)(D) as
such investments am necessary for the
reliability and resiliency of broadband
infrastructure'+^ Recipients tray
provide necessary investments in
cybersecurity, including modernization
of bwdware and software, for existing
and new broadband infrastructure
regardless of their speed delivery
standards. The final rule maintains the
interim final rule's provision that allows
for broader modernization of
cyberaecurity, including hardware,
software, and protection ofcritical
infrastructure ea an eligible provision of
government services, to the extent of
immune lose due to the pandemic,
under sections 502(c)(1)(C) and
603(c)(1)(C).
Use of Funds To Meet Non -Federal
Match Under the Infrastructure
Investment and jobs Act
The Infrastructure Investment and
Jobs Act specifies that, except as
otherwise provided, an entity using
funding under section 50102 of the law
for broadband deployment "shall
provide, or require a subgrantee to
provide, a contribution, derived from
non -Federal fiords (or Ponds from a
Federal regional commission or
authority) ... of not less than 25
st
ates
t of prefect costs. contribution
0 Portlier
that the matching
may
i tnclude funds provided to an
eligible entity or nMe under the
American Resume Plan e Plan Act for the
purpose of deployment of broadband
service, which includes program.
funds provided
under the ad the program.
SLFRF
se end the program established
under section 60102 of the
Infrastructure Investment and Jobs Act
are separate femme with separate
requirements. While section 60102
allows states and other eligible entities
to use SLFRF filed. as the souse of
matching funds for broadband
deployment, the requirements of the
SLFRF program still apply. As such,
Portiere is that use SLFRF funds to meet
the section 60102 matching requirement
will continue to be subject to the
requirements of the SLFItir program.
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Public tow 117, 58 (2021),
Ill. Restrictions an Use
While recipients have considerable
flexibility to use funds to address the
diverse needs of their communities,
some restrictions on in of funds apply.
The ARPA includes two statutory
provisions that further define the
boundaries of the statutes eligible uses.
First, section 602(c)(2)(A) of the Social
Security Ail provides that states and
lersfforms may not "use the funds, .
to either directly or indirectly offset a
reduction in ... net tax revenue .. .
resulting from a change in law,
regulation, or administrative
interpretation during the covered period
t hw reduces any tax ... or delays the
imposition of any tax or lax increase."
Second, sections 602(c)(2)(9) and
603(c)(2) prohfbfl 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 againat
the use of funds for purposes outside of
the eligible use c.b imaiss provided for
in 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 loss 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 were
ineligible uses of funds under the
eligible use categories for public health
and negative economic impacts and
revenue loss. These restrimfons apply to
all recipients.
Recipients should ..to that
restrictions on use of funds for debt
service, to replenish financial reserves,
a judicial seldom
to all eligible use
eligible use Paine
..trial.. 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
Pont! iris 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
the soumes of funds that will offset—
fund revenue, such as a change that
environmental and civil rights laws.
i.e., cover the cost of —any reduction in
would marine a tax rate; and
To enhance clarity, this
net tax revenue resulting from such
o Spending cuts in areas not being
SOPPLEMENTARY INFORMATION for the
changes. The interim final role
replaced by SLFRF funds.
final rele consolidates thew restrictions
recognises Wren sources of funds that
The lBclp rentgovemmenlwill
on use i f funds into one section and
may offset a reduction in net tax
calculate the value of revenue reduction
makes clear that they apply to all
revenue other than SLFRF funds:
remaining after applying these sources
eligible use categories and any use of
Organic revenue growth, increases in
of offsetting funding to the total value of
funds under the program by recipients
revenue due to policy changes (e.g., an
revenue reducing changes —that is, how
to whom each specific restriction
increase in a tax rate), and cortain cuts
much of the tax change has not been
applies.
This section discusses the
in spendingp.
Specificelly, interim
paid for. The recipient government will
the final rule
than compare that value to the
aforementioned restrictions, public
establishes a step-by-step process for
difference between the baseline and
comments received, and Treasurys
determining whether, and the extent to
actual tax revenue. A recipient
response to these comments. For clarity,
which, SLFRF funds have been used to
government will not be required to
Treasury has divided the following
offset a reduction in net tax revenue,
repay tu Treasury an amount that is
discussion into (A) smtutory restrictions
based on information reported by the
greater than the recipient government's
under the ARPA, which include (1)
recipmot government
actual tax revenue shortfall relative to
offsetting a reduction in net tax revenue,
•First, each year, each recipient
the baseline (i.e.. fiscal year 2019 tax
and (2) deposits into pension funds, and
government will identify and value the
revenue adjusted for inflation). This
(B) other restrictions on use, which
changes in law, regulation, or
"revenue reduction cap," together with
include (1) debt service and
interpretation that would result in a
Step 3, ensures that recipient
replenishing reserves, (2) settlements
reduction in net tax revenue, as it would
governments can use organic revenue
and judgments, and (3) general
in the ordinary course of its budgeting
growth to offset the cost of revenue
restrictions.
process. The sum of these values in the
reductions.
A. Ineligible Uses of Funds Under the
year for which the government is
"pay
• Finallg if there are any amounts
ARPA Siesta
reporting is the amount it needs to
that could be subject to recoupment,
for" with sources other than SLFRF
Treasury will provide notice to the
1. Offset a Reduction in Nat Tax
Revenue
For slates and territories (recipient
governments 347), auction 002(c)(2)(A)—
the offset prevision —prohibits the use
m SLFRF Ponds to directly or indirectly
offset a reduction in net tax revenue
resulting from a change in law,
regulation, or admimatrative
Interpretation— during the covered
period. If a state or territory uses SLFRF
funds to offset a reduction in red tax
revenue resulting from a change in law,
regulation, or interpretation, the ARPA
provides that the state or territory must
repay to Treasury an amount equal to
the lesser of (I) the amount of the
applicable reduction attributable to the
impermissible offset and (if) the amount
of SLFRF funds received by the state or
territory. A state or territory that uses
SLFRF fonds to offset a reduction in net
tax revenue does not forfeit its entire
allocation of SLFRF funds (unless it
misused the full allocation m offset a
reduction in net tax revenue) or any
non-SLFRF funding.
The interim final rule im lemenis
these conditions by establishing a
framework for states and territories to
determine the cost of changes in law,
regulation, or interpretation that reduce
tax revenue and to identify and value
."u Ms eub mnlian. "recipient .v,ue—. i.
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satlbns."retipienl gave n,li n,5u, non
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aen ibe sl.MlF.
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funds (total value ofrevenue reducing recipient government of such amounts
changes). along with an explanation of such
• Second, the interim final rule
recognizes that It may be difficult to
predict how a change would affect net
tax revenue in future years and,
accordingly, 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 ter pay for revenue
reducing changes and will not be
subject to recoupment.
• Tlurd, a complain government will
consider the amount of actual tax
revenue recorded in the year for which
it is reporting. If the recipient
government's actual tax revenue is
greater than the amount of tax revenue
received by the recipient for the fiscal
year ending 2019, adjusted annually for
inflation, Ore recipient government will
not be considered to have violated the
offset prevision because there will not
have been a reduction in net tax
revenue.
• Fourth,fftherecipient
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 used to permissibly offset the total
value of covered tax changes other than
SLFRF funds. These are:
0 State or territory tax changes that
would increase any source of general
amounts. This process is discussed in
greater detail in section Remediation
and Rccoupment of this Supplementary
Information.
Together, these steps allow Treasury
to identify the amount of reduction in
net tax revenue that bath is attributable
to covered changes and has been
directly or indirectly offset with SLFRF
funds.
Overview c fCammems: Many
commenters supported the framework
established under the interim final rule.
These commenters argued that the offset
provision, and the interim final ride's
implementation of the offset provision,
was essential to ensurine SLFRF funds
statute's defined eligible uses and, in
particular, no support the use of SURF
funds to build public sector capacity.
Several commenters argued that the
framework should be made more
restrictive: for example, some comments
advocated that the offset provision be
apKd m local governments.
ne commenters argued that the
offset provision and the interim final
role's implementation of the offset
prevision is too restrictive, with some
essential; that the onset p .vision
prohibits states from making changes to
reduce taxes. Many of these commenters
argued that the offset provision presents
constitutional concerns. 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, I8/Thursday, January 27, 2022/Rules and Regulations
argued that the generous amount of would otherwise have been needed to of the offset provision Treasury took
SLFRF funds provided to those cover the costs of the reduction. As several steps to minint burden for
governments gave recipient discussed below, the scope of changes recipient governments in ills interim
governments little choice as to whether in law, regulation, or intelp nation is final role. For example, the interim final
to accept the SLFRF funds and, as a further limited to those that the rule incorporates the types of
result, the offset provision is counter. recipient government voluntarily information and modeling already used
enacted
In describing these concerns and during the covered period, by states and territories in their own
arguments, several of these commenters Congress has the authority under the fiscal and budgeting processes. By
referenced litigation regarding the offset Spending Clause in Article I, section 8 incorporating existingg budgeting
provisiono4s Many of these commenters of the Constitution to specify the processes and capabiltiies, states and
also expressed concern regarding the permissible and impermissible uses of territories will be able to assess and
interim final rule's implementation of federal grants. The Supreme Court has evaluate the relationship of tax and
the offset provision. Some of these repeatedly "upheld Congress's authority budge[ decision. to uses of SLFRF funds
commenters argued that Treasury lacked to condition the receipt of funds on the based on information they likely have or
the authority to implement the States' complying with restrictions on can readily obtain. This approach
provision, asserting that the significance the use of those funds, because that is ensures that recipient governments have
of the provision required Congress to the means by which Congress ensures the information they need to understand
make an explicit delegation of that the funds are spent according to its the implications of their decisions
rulemaking authority and provide view of the 'general Welfare"'350"Tim regarding the use of SLFRF fardsand,
clearer principles by which Treasury power to keep a watchful eye on in particular, whether they are using the
should implement the Provision. expenditures ... is bound up with funds to directly or indirectly offset a
Finally, one commenter argued that the congressional authority to spend in the reduction in net tax revenue resulting
offset provision should only apply if the first plans. "ss1 Assertions that the from a change In law. regulation, or
recipient expressly and intentionally amount of SLFRF funds are sufficiently interpretation, making the funds
uses SLFRF funds to offset a reduction large to W coercive are inconsistent potentially subject W recoupreent. To
in revenue, arguing that the term with the Supreme Court's reasoning in further reduce burden, Treasury is
"offset' implies a deliberate use SLFRF NFIB, which distinguished between considering whether the scope of
funds to "pay for' a tax cut, conditions placed on new federal funds reporting requirements can be further
As discussed in the interim final role, and conditions placed on existing tailored.
the offset prevision does not prevent a federal funds and not based an the size As described in greater detail below,
recipient government from enacting a of funds.sss Further, the conditions Treasury is finalizing its
broad variety of tax changes. Rather, the played on the use of SLFRF funds under implementation of the offset provision
offset provision prevents a recipient the ARPA—both the eligible uses and largely without change. This approach
government from using SLFRF funds to additional limitations col deposits into Is consistent with the text of the ARPA.
offset a revenue reduction resulting pension funds and the offset The remainder of this section discusses
from a tax cut. A recipient government provision —were well known to and responds to comments on specific
would only be considered W have used recipient governments prior to recipient aspects of the framework.
SLFRF funds to offset a reduction in net governments requesting to receive 1. Definitions
tax revenue resulting from changes in SLFRF funds. Finally, the ARPA Covered change. The offset provision
law, regulation, or interpretation if, and provides Treasury with the express is triggered by ri reduction inot tan
to the extent iha4lhe recipient authority "to issue such regulations as revenue resulting from "a change in
government could not identify sufficient may be necessary or appropriate to carry low, regulation, or administrative
funds from sources other then SLFRF out' section 602. which includes the interpretation." Consistent with this
funds to offset the reduction in net Wx offset provision. language, the interim foul rule defines
revenue. Only if sufficient funds from A number of commanten expressed a "covered change" to include any final
other sources cannot be identified W concern regarding the burden associated legislative or regulatory action, a new or
cover the full cost of the reduction in with complying wlih the offset changed administrative interpretation,
net lax revenue resulting from changes provision and the interim final rule. and the phase -in or taking effect of any
in law, regulation, or interpretation, will Similarly, other commenters argued that statute or role where the phase -in or
the remaining amount not covered by the framework provided in the interim taking effect was not prescribed prior to
these sources be considered to have final rule complicated implementation the start of the covered period. Thus, the
been offset by SLFRF funds, to offset provision applies only to actions
contraventionh the statutory
provision. ss°Nnoond ped'n oflndep1D..v.bebdlru
P far which the change in policy occurs
approach
Consistent within t statutory text, the rule
MFIB), sW u.5. ukr s6a (oor.) iplmallty opinlan);
a roach taken in the interim final rule ' x" s, On n°r'v. V. sure°. ass ofs an. see- during the covered parted; it excludes
PP Zee ufsjurr Sue Unix. ellnr adr/snp°nmore regulations aor char radians that
recognizes that, because money e F dif Uisi183 beh UNv.an. Allow. SUe14 Coll., 65a implement a change or law
fungible, oven if SLFRF funds are not Craw r F rad Ism chore rem. dmhd, as S. Cl. soy substantively enacted prior to March 3,
costs of c a directly reed to cover the .1 eapis additional rAppelln of Ohiov.a., 2021. For example, covered changes do
costs o(chan es that reduce net tax °' `I A757 (slf ibely mr. Appellants.Ohior. rotten, p g
g no. 01olid v Ism cn. hor. 26. 1 not include a change in mW that is
venue, those funds may the
used in e a "I Solid v. umhd srd.a, su U.S.us. wo, see triggered automatically and based on
manner inconsistent with the statute by I2—T statutory or regulatory criteria to effect
indirectly being used to substitute for oidablhe raweederal Artttends IN baby coo nor to thecovered eriodsss Changed
the state's or territory's funds that Even thesasses Art totaled armninon Cryan. P� P S
runs me dia.dibtthcas fundmar Coremrond.de.
mold din ACAc osai ma now N.0 pmfflar a^ve For to. r nplge TC)in. reed a—tua of
+40ed
5., ere&rah. of Wesf Welfare NoliraUS. I... f AG arose fo,oaa.,' Ilhe,h in coo lax nadir -its eta fixedHIM ounin age of fire
fMpm ell SOL mehemary,Nod:v.cv,WDI); IaesendNorthe nd6xpan°ian:'alddw,t a [°gaol OTC wilieea its
LSC.RORr WL395.e.3(N.a. Ali. iu1. 19. N1311: d1Kg.ed wide me majority absurd wnMM1re W°I ardrmedi.IlyiMtmm—eutl rLu°ira hx revenue
S(We rJOdlo v. Yells No, 1:21w.v-tat, Vul WL funding condition was severable. Hire to e87-0.8 teetered—Hera—dWuhd°.ISovcmmcnr's
2712220(S.D. Ohio iul. 1. 2021). (joint dl.en), eapantlrn of the HIM in the ARPA Son, rag - Tin
Federal Register/Vol. 87. No. 18/Thursday, January 27, 2022/Rules and Regulations 4425
administrative interpretations would
not include corrections to replace prior
inaccurate interpretations; such
corrections would instead be treated as
changes implementing legislation
.acted or regulations issued prior to
the covered period. The operativA
change in those circumstances is the
underlying legislation or regulation that
occurred prior to the covered period.
Moreover, only changes within the
control of the slate or territory are
considered covered changes. Finally,
covered changes do not include changes
that simply conform with recent
changes in federal law (including these
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 commenters requested that
Treasury clarify that the offset provision
applies In tax 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, increasing income, and
increasing Area omit growth. On the
other hand, some commenters argued
that, because subsidies were
economically similar to some not cuts,
neither action should be considered a
covered change and subject to the offset
provision. Finally, other commenters
requested that Treasury clarify whether
covered changes must be haddefbased
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 a rate, a rebate, a
deduction, a credit, or otherwise or
delays the imposition of any tax or lax
increase." Accordingly, and consistent
with this statutory text, the final rule
applies to covered changes that reduce
Any tax, which can include tax
abatements, but does not apply to loans,
Policy Ganger, glow do dare maned hirers tax
credits work?. hump—arxiaheyeenter.mg/
brief)nBno haeedoumfnmenedin__.or.-
evetex id Ilan visited May a, Coto.
fronts, or other types of interventions
that do not reduce tax revenue.3s• In
addition, by including changes in
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 non
limited to, to a sub -unit of 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 change. in law,
regulation, or administrative
interpretation. With respect to the
question of whether covered changes
could include administrative decisions
applicable to individuals, as discussed
above, a covered change includes a
change in mew, regulation, or
administrative interpretation that
reduces any lax. 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 Enacts ent and Pba..4.
Public Comment: A number of
commenters expressed concern, 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.
7 min ury Response: As discussed
above, the offset provision is triggered
by a reduction in net tax revenue
resulting 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
start of the covered period.
Conformity
Public Comment A number of
commnentere requested clarification on
the scope of covered changes.
Specifically, several commenters
'er Astidnnce meat be coneie as with eligible
caner nA FRF funds See sealw Eligible Uses of
tNa WrreflRMNn"rdlWlpa.
requested clarification on the scope of
changes that would be considered as
conforming to meant changes in federal
law. These commenters 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 role
maintains the treatment of changes that
simply conform with recent changes in
federal law, such as three to conform to
recent changes in federal taxation of
unemployment insurance benefits and
taxation of loan forgiveness under the
Paycheck Protection Program ass and
including other changes over the pest
several years. Regardless of the
particular method of conformity and the
effect on net lax revenue, Treasury
views such changed as permissible
under the offset provision.
Accordingly, and for the reasons
discussed above, Treasury is
maintaining the definition of covered
change without change.
Tax revenue. The interim final ride's
definition of "tax revenue." is based on
the Corona Rureau's definition of used,
used for its Annual Survey of State
Government Financea.esd It provides a
consistent, well -established definition
with which stales and territories will be
familiar and is consistent with the
approach taken in section Revenue Loss
of this WPPLE WARY INMRMVM
describing the implementation of
Well... 602(c)(1)(C) and 603(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 finalizing
the definition of tax revenue without
"' See swamanr onside Meet becnvery F1nda
card Tax Conformity. April 7. 2m1, ava.able d
)YoU?ovay/Home.rreneurr2m�news/Preve-rekax./
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and Local (:wemmmn enemaneetohn.oa . min///
sus.gav/Pmgted Ap, 30. 211. car/
gloewry.nlndflml visited Apr. 30.2m1.
4426 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
change and maintaining a consistent
definition of "tax revenue l'sa,
Baseline. For purpasea of measuring a
reduction in net tax revenue, the interim
final rule measures actual changes in his
rev ... a relative to a revenue baseline
(baseline). The baseline is calculated as
fiscal year 2019 (FY 2019) tax revenue
indexed for inflation in each year of the
covered period, with inflation
calculated using the Bureau of
Economic Analysis's Implicit Price
Deflatontoor
Public Cannot Some commenters
expressed concern regarding the choice
of FY 2019 as die baseline, arguing that
the choice lacked justification and
would make the offset prevision 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 b..... dead
only by comparing two amounts. The
Ad defines "covered period" to begin
on March 3. 2021, and thus the baeelina
year must end prior to March 3, 2021.
A. discussed in the interim final rule,
FY 2019 is the last full fiscal year prior
to the COVID-19 public health
emergency, and thus is consistent with
the statutory definition and dead not
include the examordinary 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 w
"pay foe's reduction in net box 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,s+n
suggesting that an FY 2019 pre -
too do elections in suction Seven. Lou of this
supplemenruy hdormarlvr, 6r potion, d
reserves revs tie het due to the pevdem under
.I-. eac[Igi d and msk)O)(6). rorcuors
mint salmithe amount of revwaaw low wreawt
dozen thin resubed from a her hncrwee or
do—. no. adl.tmmto do not apply boar
effect me desNunn of cox reA—
... U.S. oeputment ill Co—..11urmu N
Soonest; suatnie. GIV Nice DethHm, h tio:11
viobou Voleatulproon.mAatmNgdpPneP
d Puna, N.. visited Ape.0. 2021). Th. PY 201.
buehne revenue 6 adjusted naturally for initiative
in allow for dent comparison of ecWd tax revenue
I.it y wr hoore ed in nomiwa t—N to hudin.
a afro cot; without
mated. adlue diem eech dean of mpowo ntual
in roweraw would be worth lees than ucb dollar
retention revmme mineeeW in 2mtrevs.
.wacarwmy Stm®®t by Glhenrre Women.
Arco, Aminnat aeveNry for consent Policy, for
the Tower, Borrowers Advieury Committee
November L 2021 (Nov. 1, w21), awfloble at
he, Hhometernw,,rho arever-releaaaal
laticesr
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
803[c)(1)fC), which identify the "most
recent full fiscal year of the [state,
territory, or Tri hot government) prior to
the emergency" as the comparator far
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 offset
provision, such as the term'Yoporting
year. "sae Commenters did not express
concern regarding other definitions in
the interim final rule.
2. Framework
The interim final rule provides a step.
bystopframework, 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 002(c)(2) and
the interim final role, the final rule
appplies to states and territories:
ll) Covered changes that reduce tax
revenue. Under the interim final role, a
recipient government identifies and
values covered changes that the
recipient government predicts will have
the effect of reducing tax revenue in a
given reporting year, similar to the way
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 values produced by a
budget model, incorporating reasonable
assumptions, that aligns with the
recipient goveroment's existing
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
bawd on actual value. uefngg a statistical
methodology to isolate the change in
year -over -year revenue attributable to
the covered change(s), relative to the
not use dynamic
uopne come..." .red dwlB.lion that
referm¢er to had fair cote to the flaw year of
the ,ecipient'Bapuding ywiis denied in nm
interim soil rele and any Me to areen ". erndae
year or retail yew within the canned noted.
diard to the cutrwa Racal yew of an Stun or
Territory done and wwred pwind -
e' ay P.]at, rarriem gov¢mmevb to ma
.1 u wbimatod view.,'he 'abmim fine[ m1.
and find col. parvid. lnxmai,to mnpivnb and
this minima brown.
projected effects of macroeconomic
growth because macroeconomic growth
is accounted for separately in the
framework.
Estimation
Public Comment: A number of
commenters expressed dinden that
estimating the value of covered changes
required a number of assumptions and
that the actual effects of covered
changes on tax revenue would be
difiim It to predict. Several commented
expressed support for the interim final
mis's approach to dynamic scoring
methodologies, and and commenter
.good that the final Is should
prohibit the use of prior cash balances
in calculations of permissible tax cuts.
Treasury Response: Treasury
recognizes that estimating the effects of
covered changes requires assumptions
and that many other factors influence
the amount of tax revenue received. The
interim final rule addresses these
concerns in several ways. First, in
general and where possible, reporting
should he produced by the agency of the
recipient government responsible for
estimating the costs and effects of rascal
policy changes. This approach offers
recipient governments tha flexibility to
determine their reporting methodology
based on their existing budget scoring
which the sum of covered changes will
be deemed not to have any revenue
reducingeffects.
Timing of the Impact of Covered
Changes
Public Germinal; Several commenters
expressed concern that recipient
governments. to evade the offset
provision, may bre kload the casts of
xrtefn covered changes outside of the
divided 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 wine tax cuts
could have effects on tax revenue far
many decades or could be structured to
take effect after the and of the ..it
period.
Treasury Response: As discussed in
wd ke, Timeline for Use of SLFRF
Funds, SLFRF binds 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
Public Comment commenters
for the masons discussed above,
reduction in net lax revenue occurring
expressed a range of views regarding the
Treasury is maintaining the
after December 31, 2024.
amount ofthe de minimis. Some
measurement of actual lax revenue
For these masons, Treasury is
commenters argued that the de minima
without adjustment for population
maintaining this element of the interim
was too generous, noting that the choice
growth.
final rule without change.
of 1 percent could, in some cases,
(4) Consfdcamon efother sources of
(2) In excess of the de minimis. Under
permit reductions in net tax revenue of
funding. The recipient government will
the framework established in the
hundreds of millions of dollars. These
than identify and calculate the total
interim final rule, after establishing that
commenters advocated that the de
value of changes that could pay for
a covered change occurred, the recipient
minimis be lowered (e.g., to 25 basis
revenue reduction due to covered
government next calculates the total
points) or be tied to a fixed Oman.[.
changes and sum these items. This
value of all covered changes in the
Other commomera argued that the
amount can be need to pay for up to the
reporting year msultiig in revenue
chaise of de minimis wee not well
total value of mvanue-reducing changes
reductions, identified in Slop 1. If the
supported by the statute, advocated for
he the reporfing year. These changes
total value of the revenue reductions
a larger its minimis and suggested that
consist of two categories:
resulting from these changes is below
the amount be tied to the recipient
(e) Tax and other increases in
the its ancimfs level, the recipient
government's total expenditures in the
revenue. The recipient government must
government is deemed not to have any
prior fiscal year
identify and consider covered changes
revenue -reducing changes for the
Treasury Response: Treasury adopted
in policy that the recipient government
purpose of determining the recognized
a its minimis threshold as an
predicts will have the effect of
net reduction. lithe total is above the de
administrative accommodation for the
increasing general revenue in a given
minimis level, the Incipient government
reasons discussed above. As discussed
reporting year. Recipient governments
must identify sources of in -year revenue
In the interim final rule, Treasury
should use the same approach to
to cover the full costa of changes that
determined that the 1 percent its
identify and value covered changes that
educe lax revenue. Under the interim
m to! is level reflects the historical
increase tax rev..... a applied to
final role, the de minimis level is
reductions in revenue due to minor
covered changes that reduce tax
calculated as 1 percent of the reporting
changes in stale fiscal policies and was
revenue. For the reasons discussed
year's baseline.
determined by assessing the historical
above, Treasury is adopting these
Public Comment Many commenters
effects of state -level tax policy changes
aspects of identifying and valuing
supported the inclusion of the do
in state EPfCa implemented to offset
covered changes without change.
minimis, noting that the de minimis
protects recipients from penalty
policy goals other than reducing net tax
revenues.'°•
(b) Covered spending cuts. A recipient
government also may cut spending in
resulting from minor or incidental
changes, minimizes
For these reasons, Treasury is
ado ti the 1 t de minimis
P ng percent
certain erase to pay for covered changes
that reduce tax revenue, up to the
t. predictability
burden, andenhancespredictabilityof
withoutchange.ch a.
bar or. Next, under the
(erim
amountofthe incipient government's
se ng so
the . rearrtian of the anized provision.
Some cemmd expressed concern
final revenue
interim foal rule, y
delreductionribedbelow.
owlTh changes
deduction below. These changes must be
that the this
threshold could result in
the
reduction caused by the severed
changes exceeds
reductarea where
to government g outlays a an
has
govemmalign
cts.
cliffaffects.
se: A clear ne
Treasury Reapeathreshold
minimis threshold supports recipient
mt
inimis threshold. the recipient
d, the recient pient
government compares the reporting
not spent SLFRF funds.[
not spent SLFRF funds. To better align
with misting reporting and accounting,
the interim final
govemon. A compliance v with the offset
provision. A minimis level
year's actual tax revenue to the baseline
If actual tax revenue is greater than the
rule considers the
department, agency, or authority from
e I
mcognlzes the inherent
baseline, Treasury will deem the
recipient government not to have any
which spending has been cut and
whether the recipient government has
ent gochallevern en
uncertainties that recipient sly small
face, and thus allows relatively small
recognized net reduction for the
spent SM, IF funds on that same
department, agency, or authority. If the
reductions elax revenue without
reporting year, and therefore to be in a
safe harbor and outside the ambit of the
incipient government has not spent
consequence. . )n other words, states and
territories may its many smell
offset provision. This approach is
SLFRF funds in a department, agency,
or authority, the full amount of the
changes to alter the composition of that
consistent with the ARPA, which
contemplates recoupment of SLFRF
reduction in spending counts as
tax revenues or implement other
policies with marginal affects an tax
funds only in the event that such funds
covered spending cut, up to the
revenues. They may also make changes
are used to offset a reduction in net lax
ounces. If net tax revenue has not been
recipient government's net reduction in
total spending. If they have spent SLFRF
based on projected revenue affects that
turn out to differ from actual affects,
reduced, the offset provision does not
funds in such department, agency, or
authority, the SLFRF funds
unintentionally resulting in minor
apply. In the event that actual tax
revenue is above the baseline, the
generally
would be deemed to have replaced the
revenue changes that are not fairly
described as "resulting from" tax law
organic revenue growth that has
amount of spending cut and only
reductions in spending the
changes. However, a de minimis dcee
occurred, plus any other revenue -raising
changes, by definition must have been
above
amount of SLFRF funds spent on the
not automatically result in
consequences under the offset
enough to offset the inyearcosts of any
department, agency, or authority would
count. This appromili'llowin only
prevision, since a recipient government
P P 8
could demonstrate that other, non-
covered changes. One commenter
argued that the offset For organic growth
spending reductions in areas w ere the
SLFRF funds to offset a net reduction in
be adjusted to reflect population growth.
To minimize administrative burden, and
recipient government has not spent
SLFRF funds m he used ss an offset for
tax revenue. Accordingly, any cliff
Y
a reduction in net tax reverea.ims to
effects associated with a clear its
minimis threshold are mitigated by
•uuea prar;dea by me u b®-spore®'ran
sou, Gear@ear owe oval arrc changes for mar-
prevent recipient governments from
using SLFRF funds to supplant state or
other aspects of the framework.
am7.
territory funding in the eligible use
4428 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
areas, and then using those state or
territory funds /o offset tax cuts. Such
an approach helps ensue that SURF
Fonda are not used to "indirectly" offset
revenue reductions due to covered
changes.
Department, Agency, or Authority
Public Comment. Several commenters
supported the interim final rule's
approach to considering spending cola
at the department, agency, or authority
level, on the basis that this approach is
supported by the statutory language
prohibiting SURF funds from being
used to "directly or- indirectly" offset a
reduction in net tax revenue. On the
other hand, some commenters argued
that the methodology for identifying
offsetting spending cuts was too
restrictive; specifically, that
measurement at the agency or
depa tmenl-level may nor 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 flexibl lity would come at the
cost of transparency and clarity.
Treasury Comment: Treasury
recognizes that some recipients may
very 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 their budgeting process.
Spending Cuts Baseline
Under the interim final rule, to
calculate the amount of spending cuts
that are available to offset a reduction in
tax revenue, the recipient government
must first consider whether them has
been a reduction in total net spending,
excluding SLFRF funds fact reduction
in total spending). This approach
ensures that reported spending cuts
actually create fiscal space, rather than
simply offset other spending incises...
A net reduction in total spending is
measured as the difference between
total spending in each reporting year,
excluding SURF funds spent, relative
to total spending for the recipient's
fiscal year ending in 2019, adjusted for
inflation. Measuring reductions in
spending relative to 2019 reflects the
fact that the fiecal space cleated by a
spending cut pardets so long w
spending remains below its original
level, even if it does not decline further,
lnlafive to the same amount of oremo e.
Public Comment: Several commenters
expressed concern regarding the
measurement of spending cuts relative
to the recipient's FY 2019, for example
arguing that the choice did not take into
account increases in spending in 2020.
As one commenter noted, 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 tiered year prior
to the COVID-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 to year would,
by contrast, not recognize any available
funds to 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) Idenliffoetion of amounts subject
to recoupment. Its recipient
government (i) reports covered changes
that reduce tax revenue (Step 1). (it) to
a degree greater than the de reminds
(Step 2); (tit) has experienced a
reduction in net tax revenue (Step 3);
and (iv) lacks sufficient revenue from
other, permissible sources to pay for the
entirely of the reduction (Step 4), then
the recipient government will be
considomd 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 capped at the difference
between the baseline and actual tax
revs nue?ss 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
growth has Implicitly offset a portion of
the eduction. The revenue reduction
sop implements this approach for
—This me in Voted Insetlion 35.8k1 orthe
enai,me, wnuistre me ocnean ormnas u.eem
vidaticn of 0Nser pmvieon.
permitting organic revenue growth to
cover the cost of tax cuts.
Finally,. recipantigovernment may
request reconsideration of any amounts
identified in a notice from Treasury as
subject to recoupment under this
framework. Comments and responses to
the racoupment process are discussed in
section Remedistion and Racaupment of
this Supplemental Information.
3. Reporting
To facilitate the implementation of
the framework shove, and in addition to
reporting required on eligible uses,
recipient governments are required to
report certain information. The interim
final rule indicated that Treasury would
provide additional guidance at a later
data and that, on an annual basis, it
expected each recipient government
would be required to provide the
following information:
. Actual net tax revenue for the
reporting yen,
Rathrevenue-reducing change
made to date during the covered period
and the in -year value of each change;
• Each revenue -raising change made
to date during the covered period and
the in -year value of each change; and
• Each covered spending cut made to
date during the covered period, the in -
year value of each cut, and
documentation demonstrating that each
spending cut is covered as prescribed
under the interim final rate.
Since the adoption of the interim final
rule. Treasury has provided guidance on
reporting regarding eligible uses and has
required recipient governments to
indicate whether they have made
mvemd changes and the value of such
changes aas
Reporting lumen
Public Comment: Some commenters
argued that the framework for
identifying and reporting impermissible
offsets was burdensome and that the
burdens should be amounted for under
Executive Order 13132 (Federalism,
Auggue14, 1999).
Treasury Response: Taking into
consideration comments received
regarding burden, Treasury is
considering a tiered approach to
reporting on the offset provision.
Specifically, under this approach, a
recipient would only be required to
report information to the extent needed
to detemdne whether SURF funds had
been used to offset a reduction in net tax
revenue. Poo example, a recipient
government would be required to report
um see eeportirg Gui,Imm,aMion C.11,
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m F-r:omplimm�ond-lkpm'fing
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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 in excess of
the de minimis and had reported a net
reduction be lax revenue. Treasury will
provide additional guidance and
instructions on the reporting
requirements at a later date.
As discussed in section Regulatory
Analyses of this Supplemental
Information, Treasury maintains that the
filial 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 food. to client reductions in net
tax revenue, and it authorims the
Secretary to issue regulations to carry
out this limilatime and other
requirements of the statute. Section 6(b)
of Executive Order 13132 contemplates
that certain regulations will be required
by statute, as is the case with the
interim final rule and the final rule, in
which use section 6(b)(2)(Ills
requirement to fueled.. federalism
summary impact statement in the
Supplementary Information to the
regulation does not apply.
Notwithstanding the above, Treasury
has engaged in efforts to commit and
work cooperatively with affected state,
local, and Tribal government officials
and mourriaffons in the process of
developing the interim final rule.
Reporting Transparency
Public Co...(: Several comnamere
argued that information supporting the
net tax offset calculation should be
publicly available. Some of these
commenters requested that reporting be
made available in a machine-readable
format, and others advocated that
recipient governments disclose this
information on their local budget
agency's websfte. These commenters
argued that making information
regarding tax changes publicly available
would into.es transparency and
accountability. Further. several
commenters suggested that Treasury
provide a mechanism for citizens to
register that, concern. about particular
fax 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 how slate, 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: Treasurys Portal
for Recipient Reporting (User Guide),
which addresses the particular content
and form of required reporting. Treasury
will continue to issue updated guidance
prior t0 each reporting period clarifying
any modifications to requested report
content and will continue to consider
how reporting can best support
tomparency and accountability while
minimizing recipient administrative
burden. Further, as discussed in the
section Remediation and Recruitment
Treasury may address potential
violations of this final rule based on
both 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: Subtraction 602(c)(2)iR)
of the Social Security Act provides that
"Info State or territory may use funds
made available under this section for
deposit into any pension fund."
Similarly, subsection 603(c)(2) of the
Social Security Act provides that "Info
metropolitan city, nonentitleam nt unit
of local government, or county may use
funds made available under this section
for deposit into any pension fund."
For purposes of this restriction on
grain. deposits, the interim final rule
fined deposit to mean "an
extraordinary payment of an accrued,
unfunded liability." The interim final
rale also specified that a deposit does
not include routine contributions made
as part of s payroll obligation, such as
the normal cost component of a pension
contribution or the component that
consists of amortization of unfunded
liabilities ®Iculoted by reference to the
employer's payroll cost.. The interim
final role applied the restriction on
pension deposits to all recipnts ie.
Public Comment: Seveml commenters
observed that the statutory restriction an
deposits into pension funds does not
apply to Tribal governments.
Treasury Response: In reap...,
Treasury is clarifying in the final rule
that the pension restriction does not
appply to Tribal governments.
Pubh'c Comment: Treasury also
received a comment expre.ing concern
that the interim final role permitted
recipients to make a larger than usual
Peter
contribution, . long as the
timing of that contribution aligns with
the historical timing of contributions.
Treasury Response: The interim fiord
role prohibited the use of S= funds
from the ARPA to make extraordinary
payments, and the SuFFunearriarr
INFORMATION 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
COVW-19 public health emergency and
occurs 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 Commend: Other commenters
asked which pension contributions are
permitted.
Treasury Response: To be an eligible
use of SLFRF funds, a use must (1) be
eligible under one of the eligible use
categories and (2) not contravene any of
the applicable restrictions on uses of
funds. Some pension contributions may
be eligible because they both fit within
On eligible use category and do not
contravene the restriction on deposits
into pension funds (i.e., they are not an
extraordinary payment of.. ..ad,
unfunded liability). For example,
payroll and covered benefits for public
health and safety staff responding to
COVID-19 am an eligible use of funds
to respond to the public health and
negative economic impacts of the
pendemi, routine pension
contributions as part of an emplayea's
regular covered benefits are permissible
under that eligible use category.
B. Other Restrictions on Use of Funds
1. Debt Service and Replenishing
Financial Reserve.
The 111"LEtrENTMY INFORMATION to
the interim firm] 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 Ioohnss
The interim final rule also provided that
replenishing financial reserves
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 prevision of
ffi'1clevammant emvicee would me eirloda
inbrevI or primal nn err in ilereding data
L,vwme r. including, far maniple, e6on-Imm
m tux anerhouan nmer, or boa or
rnae aroauded with the lower. of new
date Pnr16eearn.moan., ceernmmJ aervicm
.wild not nidedr utdoxim .fee, rhetoric.
ryAsine order terraria to. meeninrrt axera erni,
townmtt, tamers do—.. or dakely—fin ad
debt restructuring in a judicial,.dministumn, or
modems procedure. except if the footloose or
mm.ment exceed the provision.fgavwmmt
smvlma"9e In 267W-a2(My 11, tocut
4430 Federal Reglsler/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
government services to the extent of
revenue lass. —
As explained in greater detail below,
Treasury, in the final rule, has retained
these reetrictione and is clarifying that
these restrictions on the use of SURF
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 to the amount of
revenue lose due to the pandemic. Many
commenters indicated that they had
been forced io borrow money or dip into
reserve funds to con0me providing
government services during the public
health emergency and that using SURF
funds for resulting debt service or
reserve replenishment costs should
therefore be considered a government
Service.
Many comments from Tribal
gover menu noted that their
governments depend an revenue from
Tribal enterprises to pay government
debts and provide Services. The
comments suggest that it should be an
eligible use of SLFRF to replace last
revenue from these enterprises that
Auld typically be used to pay debt
service costa. Other commenters argued
that paying the interest or ppvrelied on
some
debt should in e cases be considered
provision of goverment services and an
eligible use of funds as such
expenditures facilitate the prevision of
government services.
Some commenters argued that debt
costs 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 impact. For example, several
commenters suggested that there should
be a specific carve -out allowing the use
of SLFRF funds for debt service on debt
incurred for government services after
January 27, 2020, the start aides 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 in 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
o."Inaddmoa. MI mahing firnnen] res.rvw
sou, -my day a, omv ve Susan r.muld not
Ice 11nd"oves' of a saw WIN.
sinte ,col aepan a. do nm direnlsuite to the
'ermi.e ofe mrsmr—ine.-
constitutes a negative economic impact
of the pandemic.
Some commenters argued that the
specific impacts of the pandemic on the
travel, tourism, and hospitality sector
had affected their ability to meet debt
service costs. For example, some
commenters explained that specific tax
streams (e.g., hotel room taxes) or
revenue sources (e.g., hospitality
generally) are tied to specific debt
instruments and that these revenue
souroes 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 servicing debt incurred after March
3. 2021 for an otherwise eligible project
(e.g., a broadband Infrastructure project)
would not be an elggible use of funds.
On the other banA, many commenters
expressed support for the interim final
rate's prohibition on use of funds for
debt service and reserve replenishment.
These commenters largely argued that
SURF funds should be used to provide
current services to cummunities in
response to the public health emergency
and that use of funds for debt service or
reserve replenishment represented,
respectively, payment for past costs or
savings for potential future costs. In
addition to the prohibition on debt
service and reserve replenishment, some
mentors suggested that the Snal rule
should also prevent funds tram being
used for state IR trust fund
replenishment or for paying off debt
owed through UI trust funds. One
commit argued that Treasury should
further restrict recipient governments,
for example by preventing recipients
from making cuts to an allowable budget
item, filling the budget gap with SURF
funds, and than 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 for debt
service or reserve replenishment for the
reasons described below and clarifies
that this restriction applies to all eligible
usecalegernes.
First, 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 net
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 into
section Timeline for Use of SLFRF
Funds). The interim final rule provided
that funds may be need for costs
incurred beginning on March 3, 2021,
which Treasury has maintained in the
final ode. Use of Ponds for debt service
an indebtedness issued prior to March
3, 2021 necessarily entails using funds
for costs incurred during prior time
periods, rather than the present
response to the public health emergency
and its negative economic impacts or to
provide government services.
Third, SURF 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 and local
governments generally do not face high
levels of fiscal stress. Limits on debt
service or replenishment of reserves
would rat have a substantial impact on
recipients' ability to provide services.
The ratio of state and local debt -to -GIN,
which spiked briefly during the
pandemic, has recovered to its pre -
lendemic level and remains well below
evels seen during the Great
Recession.367
2. Settlements and Judgments
The interim final rule also I
that sa0sfaction of any obligal
under or pursuant to a se0len
or
public health and negative economic
impacts of the pandemic or as a
government service provided under the
revenue lass eligible use reneger yI
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 servicos to respond to the
COVID-19 public health emergency, or
its negative economic impacts or to
provide government services, then that
costs are eligible uses of SURF funds.
'°'Tolle Z r of he Fit..] scco mb of the
united Stew,...d of Gor3rnom of am reienl
Nerve Slaves, and Telile ir5 oMm aod Luume
.nd rose. w¢ounta, aurae of E,smmo c
swy,a.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 9931
In other words, satisfaction of a
itself is
practices included in the CDC's
and gender identity), mlr'gron, dis ibility,
settlement or judgment not itself
guidelines and recommendations for
o age, or familial status (having
an eligible use of funds, unless the
stopping the spread ofCOVHD 19. This
children under the age of 18).
settlement requires the mciplery to
services or incur other costs
includes programs that impose a
condition to discourage compliance
N. Program Administration Provisions
that are eligible uses of SLFRF funds.
with practices in line with CDC
The interim tins] role included
In the final role, Treasury is
guidance (e.g., paying off fines to -
several writer that described the
maintaining the interim final rule
businesses incurred for violation of
processes and requirements for
approach and clarifying that it applies
OOVID-19 vandenton 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,
of funds, transfer of funds, use of funds
3. General Restrictime
In addition to the above restrictions,
there am three general restrictions that
apply to SLFRF funds, Theses restriction, which reflect relating 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 step
the spread of COV10.19.see A.
discussed above, recipients of SLFRF
flu
ids am required to comply with the
Award Terms and Condition.
established for the use of such funds.
The interim final role and final role
implement this objective by, in part,
providing that recipients may use
SLFRF funds for COVID-19 mitigation
and prevention?°° See 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
a two of the best tools to prevent the
spread of COVID-19. The interim final
rule and final rule help support
recipients in stopping 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 sery a program, ice, or capital
expenditure that includes a term or
condition that undermine. efforts to
stop the spread of COV 19. A
program ar service that imposes
condition. on participation or
acceptance of the service that would
undermine efforts to stop 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
masse sec. NVAll)', 6os1aN21:...(s)In:
6m1.)IA.
+see ase(b); Co sass ma she and Incal Here]
however, Foods, w Fa at 26786.
nonprofits. or other entities net to rise
fractions in line with CDC guidance as
far program administration, reporting on
the use of funds, and remadiation and
a condition of receiving funds
(e.g.,
mcoup rmat offends used for ineligible
requiring that businesses abstain
from
purposes.
requiring mask use or employee
To enhance clarity, this
vaccination as a condition of receiving
SUPPtfMEWARY INFORMATION for the
SLFRF funds).
final rule organics these issues into one
Second, a recipient may not 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 the iform
Recipients are reached to establish
Guidance.
to manage
on
procedures net 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 loss
funds, for instance, to violate other
background laws that limit the scope of
activities that may be conducted as
"government ..wine.," including other
state and federal laws. State and local
procurement, contracting. and conflicts-
of-interat laws and regulations may
include applicable requirements,
including, for example, required
procurement promised fro contractor
selection or competitive price setting.
Furthermore, recipients are also
required to comply with other federal,
state, And local background laws,
including environmental laws a'e and
federal civil rights and
antidiscrimination requirements, which
include prohibitions on discrimination
on the basis of race, color, national
origin, sex, (including sexual orientation
I-Spacin®lly.IAe Award t'etma and ruMi,iov
pensde that"IdrJpianl undentends and agrees, it
mom maintain a conllle of interest polley
consistent with 2 Us nualad and that an&
conflict hoariest he, is upplirablo t...
h
..deny funded tinder be award. Recipient. and
subm,,iens suet diacla.e in writing 1. Treasury
onhu pa —hough egencY, an opyope.t.. any
pawed.] o dtliel of hosece same, lM swedes]
N,We In eanNance with 2 dot 2anr12:'
— An —,It.. is societies Net do nM said Y
aidY
ordeas explicitly season, including, eg., the National
Brviromnemal valley Act and the u ilaccean Act,
A. Payments I. Tmnches to Local
Governments and Certain Stotes
Section 602[b)(e)(Agii) of the Social
Security Act seductions the Secretary to
withhold payment of up to 50 percent
of the amount allocated to each state
and territory For a period of up to 12
months from the data on which the state
or territory provides its statutorily -
required certification to the Secretary.
The Soda[ Security Ad requires any
such withholding be based on the
unemployment rate in the state or
territory as of the date of the
certification.
Under the interim final in, Treasury
provided that it would withhold 50
percent of die amount allocated from
any slide that had an unemployment
rate lass 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
602(d)(1) of the Social Security Ad.
Based on data available at the time of
the issuance of the interim final role,
this threshold was expelled to result in
a majority elevates being paid in two
trenches. Treasury did not split the
payments of any territories.
Public Comment: One commenter
asked Treasury to allow a state to
request release of the portion of the
slate's second burden payment after the
Who could demonstrate that it had
allocated the entirety of the first
tranche, a need to continue ongoing
programs, and a dust. to avoid
bormwing costs. Another commenter
asked Treasury to clarify whether states
that received half their funding In the
4432 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
first payment would receive their operating budget, including its general Commentem addressed how a locality
second half payment within 12 months. fund and other funds, as of lanuary 27, was classified ase an NEU or
Similarly. Snms recipients requested 2020." The interim final rule further metropolitan city, deviations between
elimination an whether they could provided that states and territories must Treasury's allocation calculations and
obligate second tranche funds before permit NEUs without formal budgets es earlier estimates from other sources,
receipt or use second tranche lands fat of January 27, 2020 to self certify their treatment of unincorporated areas,
casts incurred prior to receipt. most recant annual expenditures as of sources for population data, and
Treasury Response: The final rule January 27, 2020 for the purpose of Treasury's allocation of NEU funding to
maintains the approach in the interim calculating the 75 percent budget cap. states and territories based on the
final rule with two modifi n/ions. As Further, the interim final rule population of a state and territory
described in the interim final rule, prohibited states and militaries from outside of its metropolitan cifies. Two
splitting payments for most states placing additional conditions or commenters proposed that Treasury
provides consistency with payments to requirements on distributions to NEUs provide an appeal procoss for localities
local governments and encourages stales beyond those required by the statute, that were not identified on the List of
to adapt their use of Ponds to the interim final rule, or Treasury's Local Government. used by states and
developments that arise in the course of guidance and from offsetting any debt territories Be part of the process in
the economic recovery. Moreover, owed by such NEUs against such which a state or territory determines the
SLFRF funds may be used for costs distributions. eligibility of an NEU in accordance with
incurred during the period of Commentere predominantly focused Treasury guidance, or for Minor Civil
performance. Recipients may use then on the definition of an NEU's budget for Divisions (MCDs) that were denied
jurisdiction's budgeting and purposes of calculating the 75 percent funding as pert of a facto -and -
procurement practices Bud laws to budget cap, NEU allocations and circumstances test undertaken by a
determine how and when second eligibility, and the prohibition on states weak-M® state.
mosche funds may be obligated, and territories imposing additional Treasury Response: Neither the
The final rule makes two adjustment. conditions or requirements in the NEU interim final rate nor the final rule
for operetioml purposes. First, the final distribution process. addresses eligibility or allocations
rule provides that Treasury expects to Definiissues, and comments on these topics
make all second trench¢ payments to are of NEU Budget ate outside the scope of this d in other
sales available at binding
n 12 months Public Comment: Commentere These questions are addressed in other
from the date that funding was first suggested that Treasury provide an Treasury guidance, including the
made available by Treasury (May 10, NEU's" o s re the budget" of an Guidance on Distribution of Funds to
i202 1)ndividual
regardless of when each NEU's "moat recent budget" for Non -entitlement cad Units of Local
indti idual state submitted its initial purposes of the s percent budget cap GBVgrrllfGovand ant Definitional
Unit
certification. This should increase calculation. its interpretation
provided updated of t.aM Methodology
Definitional and
clarity and consistency is the liming es guidance on its interpretation of the, Data Methodology guidance documents
secondasury. payments for bath states percent budget cap an June thteal, availablea.re Treasury's rated the
and Treasury. Second, also administrative ease and scommenter suggested Thal Became Treasury interpreted or
recipient states' ikesarequire burden, Treasury incorporate into th such updated with the s of to NEU st in accordance
the final rule strikes a requirement nt from interpretationsaviinto l rals MPNTAIIY with the statute and established an NEU
the interim final rule that sites ..at INFOeasury of esthe final rule. final role
d es not incorporate to May teal, plus
paymefor theirsecondquiree Treasury Response:Consistenthe7 finalruledogsnotarding an
payments and file all the date n whirr at the Update Budget
Interpretation for the 75 appeals process regarding the
least 3e days prior to the date av which percent Budget Cap Calculation definitions or [het used nd-
11'.fecondpayment amade tha0abte. published on June 3gteal?o the circumstances maid for eligibility
'flue final rule simply requiresranch that states raPPIEMENra. IN NEU's
bug of the final determinations.
certify for their second [concha payment rile defines al NEU'. budget [or
and file all required rapistsbefore
pa purposesof calculatingthe l udgen, ProhibitiononAdditional Conditions or
receiving their second rind re payment, budget cap as its petal annual budget. RequirP... manta in the NEU Distribution
with no 30 day wait period required. excluding both operating and caporal £rouble
expenditure budgets, in effect as public Comment: One commenter
B. Payments toDement Unite of January 27, 2020. The guidance also expressed support for Treasury's
Local Governmentent (NE (NEUs) and Units of gives slates end territories flexibility to prohibition on stelae and territories
Local Government (UGLGa) Within Non- -
UGLG Counties
The interim final rule established
requirements related to distributions of
SLFRF funds by states and territories to
NEU, soil UGLGs within non-UGLG
counties. Specifically, the interim final
rule provided that the total distribution
to an NEU cannot exceed 75 percent of
the most recent budget for the NEU (the
75 percent budget rep); a requirement
set forth in section 603(b)(2)(C)(iii) of
the Social Security Act. The interim
final lute SOPPLEMPall INPORMAIION
defined the NEU's budget for purposes
of calculating the 75 percent budget cap
as the NEU'. "most recent annual total
definition will better facilitate states'
and territories' distribution of SLFRF
funds to NEUs.
Allocations and Eligibility
Public Comment: Many commenters
provided feedback on spet allocation
calculations and eligibility of local
governments for NEU funding.
s'a Ttrasya Updae an Interpre tivn fro the 75
Percent Butler Gp G4deUvu wn be found ne'.
hilpYlhometrt auggv/eyste lfilestl3VNEU-
Updma75- haennaudgenCappd/.
—The (sodi. an nieaibuti® dFunda to
Nwsndtkment Unite ritual Govemmanl can be
found at thin link: heouslhome.rmssurygw/
tron—Ailee/11BINEU Good. —pis/ TM
Nwenlltkment Unit of lure Cornmeal
Definitional and me Methodology can be found at
this link: hap :lAosso nsusuryg-1swasonl Ilea/
I38/NEUl rinnaoingypdf
—Treasury has Worsened Nall lu gmrtdly
aided. both inrommvred places and Mlm with
erns finuionmg governorates. subhnt to the eras
internal nine, in the rsen of week Milan Stubs, that
week MM be the lead and vforest ... I eapeeny
oacme[ SLrRr funds and pvida btmd made
f mss eervi«e chit—.1d,nnsnwb islands uses under
AIIPA. More details ®n be round in the
Nvossallement Unit of fgm)( vhrruaosod
.final®] and no. MeanaloaM, available at
hhadhodh000pay. ury{w/syaram/J'IeYlga/NEU_
Marnnmmer.pd/.
Federal Register/Vol. 87, No. 18/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 oa an
NEU's proposed spending plan in other
policies, offsetting any debt owed by an
NEU against the NEU's distribution, or
providing funding an a reimbursement
model. In particular, the commenter
noted that a reimbursement model
world lead to inequities in accessing
SURF funds.
Treasury Response: The final rule
maintains and finalizes the prohibition
on states and territories placing
additional conditions or requirements
on distributions to NEUs as well as to
any UGIGs within counties that are
non-UGLGs. Such conditions or
requirements may contravene the
statutory requirement that states and
territories make distributions based on
population and within the statutorily
defined lousiness.
Other Provisions
Treasury did not receive substantive
comments on the requirement that states
and territories permit NEUs without
formal budgets as of January 27, 2020 to
self -certify their most recent annual
expenditures a. of January 27, 2020 for
the purpose of calculating the 75
percent budget cap, or Treasury's
Interpretation of the 75 percent budget
cap applying only to a consolidated
government's NEU allocation under
section 603(b)(2) but not to a
cansolidaled government's county
allocation under section 603(b)(3).
Further, Treasury did not mcatvo
substantive comments on the interim
final rate's allowance that states and
territories be able to use SLFRF funds
under section 602(c)(1)(A) to fund
expenses related to administering
peymente to NEUs and units of general
'oral government. As such, the Real 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 not
authorized by the statute, including
comments related to state accounting
practices, reallocations of NEU
allocations that exceed the 75 percent
budget cap, 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
"(al recipient may only use funds to
cover costs intoned during the period
beginning March 3, 2021 and ending
December 31, 2024." The interim final
role also provides that the period of
performance will run until December
31, 2026, which will provide recipients
an additional two years during which
they may expend Ponds for costs
incurred (i.e., obligated).
As explained in more detail below, in
the final role Treasury is maintaining
these time periods. Treasury will retain
Marsh 3. 2021 as the first data when
coats may W 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 costs to be incurred —
which the final rvle clarifies means
obligated —December 31, 2024, is
specified in the ARPA statute, and
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 commentere
expressed concerns about costs incurred
before March 3, 2021 not being covered
and recommended the "start date" 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 January
2020 and that prior federal fiscal relief,
such es relief provided in the
Coronavirns Aid, Relief, and Economic
Security Act, did not fully compensate
recipient governments for these costs.
These mmmenter recommended that
costs incurred before Marsh 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 am
subject b the same covered period as
states and territories beginning March 3,
2021. Commenters paled that section
603(g) of the Social Security Act does
not contain the same definition of
"covered period" as section 602(g)(l) of
the Social Security Ad, which
references a statutory provision that
only applies to states and territories.
Many commenters requested that the
deadline far costs to be incurred and the
period of performance be extended due
to the longer timeline for completing
water and sewer projects. One
...enter requested that mcipients be
able to split projects into different
phases so that funds could be expended
on larger, longer term project. leg., by
obligating funds on one port on of the
project by the statutory deadline). One
commenter recommended that the
period of performance be extended for
at least two additional years beyond the
expenditure deadline set faith in the
interim final rule, i.e., until December
31, 2028. One commenter wrote that the
final role should allow for extended
projects (e.g., over a time horizon of
more then ten yeas) far recipient.
working to develop long-term water
so It to prepare for extreme drought.
7leasury Response. In the final rule,
Treasury is maintaining March 3. 2021
as the data when recipients may begin
to incur costs using SLFRF funds. As
deardinal in the interim final rule, use
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 to negative economic impacts
that occurred during 2020, the costs
incased to respond to these impacts
remain prospective. Further, Treasury
considers the beginning of the covered
period for purposes of determining
coerplience with section 002(c)(2)(A) to
be a relevant mistiness point for this
purpose that provides some Flexibility
for recipients that began incurring costs
in the anticipation of enactment of the
ARPA or in advance of the issuance of
the interim final role and receipt of
payymment.
Firmlly, establishing an earlier start
date would permit governments to use
funds tacetvad in 2021 to satisfy
obligations incurred in 2020. This use
raises a substantial risk of SLFRF funds
being used to supplant other recipient
funds previously used to ppay for such
2020 obligations, basing funds for
recipients to use for any purpose rather
than eligible uses of SLFRF funds under
the ARPA. Permitting such usage would
undermine the provisions setting forth
permissible and impermissible one 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. Treasury is also
maintaining the deadlines by which
funds must be obligated (i.e., December
31. 2024) and by which such obligations
..at be liquidated (I.e., December 31.
2026). The December 31, 2024 deadline
by which eligible costs must be incurred
is established by statute. Treasury is
finalfideg 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 performance,
which will run through December 31.
2W6. and provides the deadline by
Bich recipient. at 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 previous 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
a Tribal organization ... a
benefit cooperation involve
603(cj(31 authorizes a local government
to transfer SLFRF funds to the same
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
that the lists of transferees fit these
sections are rat exclusive and that state,
local, territorial, and Tribal governmeats
may transfer funds to other constituent
units oftmearnment or private entities
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
listed in Treasury's examples ofeligible
subrecipients, such as nonprofits and
Tribal governments, were eligible
transferees. One commenter also asked
whether a recipient may transfer SLFRF
funds to a higher level of government,
such as a locality to the county in which
it is located.
Treasury Response: The final rule
clarifies that, in addition to the eatities
enumerated in sections 602(c)(3) and
603(c)(3), recipients may transfer SLFRF
funds to any entity to carry out as a
subrecipient an eligible use of funds by
the transform, as long as they comply
with the Award Terms and Condition.
and other applicable requirements,
including the Unitome Guidance at 2
CFR 200.331-200.333. Eligible
subrecipients include, but arc not
limited to, other units of government
(including Tribal governments),
nonprofits and other civil society
organizations, and private entities.
Further, the final rule derifies that
transfers may be made to both
constituent or nonCoeartituent units of
government. For example, county A
may transfer SLFRF funds to comity 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 rule
Supplementary Information, once
transfers are received, the bassists.
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
responsble for monitoring and
overeceing the subrecipient's use of
SLFRF funds and other activities related
to the award to ensure that the
subrecipient 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 tram the
SLFRF for the duration of the award.
Peeling 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 a transfer to another
entity, such as a regional organization or
government that undertakes projects on
behalf of a number of local
goveopmenM. Commenters also asked
for clarification on the oversight and
reporting obligations that would reselt
from such numbers.
Treasury Response: Consistent with
Ruidance issued fo7lowinR the interim
track the use of finds in line
e reporting and compliance
funds
the
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
SUPPLEMEMARY INFORMATION. A
"11 m.-ee, So. end Incd Fwal B.,
Fmda, R {nen11Y NMed goatliona. a of IoIY la,
2021; hips ilSame rxoaurygw/system/file✓na/
SLFRFFAQ.pe).
incipient may transfer funds to a
government outside its boundaries (e.g.,
county transfers to a neighboring
county), provided that the transferor ran
document that the transfer constitutes
an el igibla 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 final mle
that, consistent with further guidance
issued byy Treasury following the
interim final rule,srs recipients may
fund a project with both SLFRF funds
and other sources of funding, provided
(hat the costs are eligible costs under
each source program and are compliant
with all other related statutory and
regulatory requirements and policies.
The recipient must comply with
applicable reporting requirements for al I
sources of funds supporting the SLFRF
projects and with any requirements and
restrictions on the use of funds from the
supplemental funding sources and the
SLFRF program. Specifically,
• All funds provided under the
SLFRF program most be used far
projects, investments, or services that
are eligible under the SLFRF program.
SLFRF funds may not be used to fund
an activity that is not, in its enfuety, an
eligible car under the SLFRF program.
For example:
o SLFRF funds may be used in
conjunction with other sources of funds
to make an investment in water
infrastructure that is eligible under
section 602 or 603 of the Social Security
Act and the final rule.
o SLFRF funds could notbe used to
fund the entirety of a water
infrastructure project that was partially,
although not entirely, an eligible use
under Treasury's final 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 der not
constitute an eligible use. In this case.
the "project" for SLFRF purposes under
this program would be only the eligible
use comyo...t of the larger protest.
e In addition, because SLFRF funds
mist he obligated by Oecamber 31,
2024, and recipients must expend all
funds under the award no later then
December 31, 2026, ract iertt. must he
able to, al a minimum, determine and
report to Tmasmy on the amount of
SLFRF funds obligated and expanded
and when such funds were obligated
and expended.
"°Sec FAg9.ra.ld.
Federal Register/Vol. 87, No. 18/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 SUPPLEMENTARY
INFORMATION specified that translate
ham a local government to die state
under section 603(c)(4) will result in a
cancellation or termination of the award
on the pan of the transferor local
government and a modification of the
award to the transferee state.
Public Comment Two commenters
suggested that Treasury expand section
503(c)(4] beyond transfers from
localities to the state to include transfers
from counties to their constituent local
governments, which would inceativem
counties to augment funds to address
the needs of local governments. These
commenters, noted that counties are
disincentivized to make transfers under
section 603(c)(3), as is currently
allowed, as such transfers would require
that cmmies provide oveeright and
monitoring over Its subrecipients.
Treasury Response: Section 6o3(c)(4),
by its terms, applies only to transfers
from [oral governments to states.
Accordingly, the final rule must
maintain the interim final rule'.
limitation of section 603(c)(4) tansfem
as applicable only to transfers from local
governments to states. Expansions of
section 603(c)(4) transfer authority
beyond transfers from local
governments to states were not
explicitly authorized by Congress. As
such, transfers under section 603(e)(4)
may only be made by local governments
to the state in which they are located.
Congress enumerated two separate
transfer provisions for local
govarnments—section 603(c)(3) and
section 6031c)(4)—that 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 uses) that section
603(c)(3) does net. In other words,
section 603(c)(4) transfera are not
required to constitute an eligible use of
the funds from the perspective of the
transferor local government, but section
603(c)(3) transfers are required to
constitute an eligible use. A transfer to
accomplish an eligible use her within
the recipient-subereipient framework.
Further, treating section 603(c)(3)
transfers as leading to a cancellation of
the award for the transferor local
government would result in sceneries
that are inconsistent with the statutory
language. An award cancellation
pursuant to a section 603(c)(3) transfer
would result in either (I) non-
governmental coffee becoming award
recipients under the program, which
would contravene the purpose of SLFRF
or (2) transfers to governmental and
non -governmental entities being treated
In a distinct and Inconsistent manner.
That is, section 603(c)(3) transfers to
governmental entities would lead to
award cancellation but section 603(c)(3)
transfers to non -governmental entities
would lead to a recipient-subrecipient
relationship. Therefore, in the final role,
Treasury maintains its distinct
treatment of a section 603(c)(3) transfer
and section 603(c)(4) transfer.
The Final role clarifies that a transfer
under section 603(c)(4) will result in a
modification, termination, or
cancellation of the award con the part of
the transferor local government and a
modification of the award to the
transferee state or territory. As detailed
I. the SUPPLEMENTARY INFORMATION to
the interim final Is. the transferor
must 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
an such uses of the ...,it funds to
Treasury.
A state that receives a transfer from a
local ggovernment under section
6031cJ(4) will be bound, by statute, by
all of the use restrictions set forth:
section 602(c) with respect to the use of
those SLFRF fmda, including the
prohibitions on use of such SLFRF
funds to offset certain reductions in
tree a to make depoaite 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
stale in connection with its SLFRF
award.
Subreclpiant Transfers
Public Comment: Commenters sought
clarification as to how foods may be
transferred from a recipient to another
entity. For instance, one commenter
requested that recipients be able to
advance funds to subrecipients as
opposed to reimbursing subrecipients
for expemes incurred.
TreasuryResponse: 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 subrecipients,
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 subrecipients. Ultimately,
recipients must comply with the eligible
use requirements and any other
applicable laws or requirements and are
respanaible for the action. of their
subrecipients.
E. Administrative Expenses
The interim final rule permitted,
under the beading "(expenses to
improve efficacy of public health or
economic relief program use of funds
for "laldromistrative costs associated
with the recipient's COVID-19 public
health emergency assistance programs,
including services responding to the
COVID-10 public health emergency or
He 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 for
ensuring compliance with legal,
regulatory, and other requirements.
Farther, costs ..at be reasonable and
allocable as outlined in 2 CFR 200.404
and 2 CM 200.405, Pursuant to the
SLFRF Award Terms and Cement. ,
recipients are permitted to charge both
direct and indirect costs to their SLFRF
award as administrative costs. Direct
costs are those that are identified
specifically as costa of implementing the
SLFRF program objectives, such as
contract support, materials, and
supplies for a project. Indirect costs we
general overhead costs of an
organization where a portion of.uch
costs are lsfcl allocable to the SLFRF
award such as the cost of facilities or
administrative functions like a director's
office."a77 Several commenters
"I US. CepMnwnt of the Trenmry, meeipienr
CienPliance and Repmtin8 Reaponslbinder, an of
November a. 2021; h11pa://A—...w,,e,/
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and-4iLerlg,verm„enn/rtmaund-lomlj'aml
rman„aa
4436 Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
requested clarity on which
administrative.. enses are permissible
uses of funds and how recipients should
structure administrative costs.
In it,. final rule, Treasury is clarifying
that direct and indirect administrative
expenses are permissible uses of SLFRF
funds and are a separate eligible use
category from "lelxpenses to improve
efficacy of public health or erhnomic
relief programs," which refers to efforts
to improve the effectiveness of public
health and economic programs through
use of data, evidence. and targeted
consumer outreach. For details on
permissible direct and indirect
administrative costs, recipients should
refer to Treasury's Compliance and
Reporting Guidance.378 Costs incurred
for die same propose in like
circumstances must be treated
consistently as either direct or indirect
coats.
F. Treatynmtof Loans
The interim final rule allowed
recipients to use SURF funds to make
loans for uses that are otherwise eligible
(for example, for .all business
assistance). Subsequent guidance
clarified how recipients must track and
dispose of program income from loans,
consistent with the statutory
requirements for the timing of SURF
expenditures.
SURF funds must be used to cover
"costs 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 must be able to determine the
amount of funds used to make a loan
and must comply with restrictions on
the timing of the use of funds and with
restrictions in the Uniform Guidance.
When SURF funds ere used a. the
principal for loans, there is an
exportation that a significant share of
the loaned funds will be repaid. Thus,
recipients may not simply consider the
full amount of loaned fund. to be
permanently expended and must
appropriately account for the return of
loaned fund..
For loans that mature or are forgiven
on or before December 31, 2026. the
recipient must account for the use of
funds on a cash Bow basis, consistent
with Treasury's guidance regarding
1. made by recipients using
payments from the Coronavims Relief
veery-fvndshecilror t-vomplmme vnd-reporting.
xsponaieilities.
old.
Fund.328 Recipients may use SLFRF
funds to fund the principal of the loan
and in that case must track repayment
of principal and interest (i.e., "program
income," as defined under 2 CFR 200).
When the loan is made, recipients most
report the principal of the loan as an
expense.
Repayment of principal may be re-
used only for oligible uses and is subject
to restrictions on the liming of the we
of funds. Interest payments received
prior to the end of the period of
performance will be considered we
addition to the total award and maybe
used for any purpose that is an eligible
use of fiords under the statute and final
role. Recipients are not subject to
restrictions under 2 CFR 200.3071e)(1)
with respect to such payments.
For loans with maturities longer then
December 31. 2026, the recipient must
estimate the cost to the recipient of
extending the loan over the life of the
loan. In other words, at origination, the
recipient most measure the projected
cost of the loan and may use SURF
funds for the projected cast of the loan.
Recipients have two options for
estimating this amount: They may
cabinets the subsidy cost (i.e., net
present value of estimated cash flows)
or the dlscounted reah Bow under
current expected credit losses (ia.,
CELL method). See further guidance
issued by Treasury fro further
explanation.380
Public Comment: Many commenters
asked for further clarification on the
treatment of loan. and the calculation of
"costs incurred." Some commenters
requested that grants made far 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 end 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 uses outaide of the
covered period.
Treasury Response: The final rule
maintains the treatment of loans from
the interim final mle and subsea ent
guidance, as discussed above. "this
approach is consistent with the
statutory requirement that funds be used
for new incurred for eligible purposes
by December 31. 2024 and is consistent
•soCrvnavims Haler ",a Iv, Sales, Tnbg
Wvvnmmn, and C rein lah ihle W19
Ce—un le, as FR el U.2.
m See FAQ 9.1r. CcrvnavWa Sate and Lwl
Fiscal Re—, Funds, rre wen, Adel
Q'sntians, ae oI July 19. 202n hope//
hwne ueesO,rgyV1e cez ww/rJs1SURPFAQ.P.if.
with standard accounting pradices and
the Uniform Guidance.
G. Use offends for Match or Cost -Share
Requirements
As a general matter and as referenced
in the SUal'tEMEWasly 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 of another federal
proggrram.
F.owever, Treasury has since
determined that, consistent with this
general principle and the requirements
of the Uniform Guidance at 2 CFR
200.306(h)(5), the funds .,.liable under
section. 602(c)(1)(C) and 603(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
meet the non fail.. cost -share or
matching requirements anther federal
programs. Federal funds that constitute
revenue sharing to state and local
governments may generally be used to
new con -federal match
requirements.''' The broad eligible uses
of the SLFRF foods available under
section. 602(c)(1)(C) and 6133(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 ]oases due
to the public health emergency).
dwomam ate that these funds are
revenue sharing. They thus should
generally be permitted to be used to
meet the non-federal match and cost -
sham requirements of other federal
program.. 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 need to most the non-federal
match requirements of the Drinking
Water State Revolving Fund and Clean
Water State Revolving Fund programs
administered by the EPA, for exam a.
Pursuant to 2 CFR 2W.306(b) of the
Uniform Guidance, if funds are legally
available to meet the match or cost -
sham requirements hire agency's
federal program, such awarding agency
is required to accept such funds for the
purpose of that progerm's match or cost -
share requirements except in the
circumstances enumerated in that
section. The Office of Management and
Budget has authority under 2 CFR
eu See U S. Cueemmenl Amounlabuity OMm,
Prineiplea vfFedemlAVlunPnnfions bw, nurd
Fd➢ion, Volume n, p. 10A9. GA"b 3825P
(February Elam, hwp lane ea,ullaesmoao
aeon,Pee,
Federal Register/Vol. 87. No. 18/Thursday, January 27, 2022/1gules and Regulations 4437
200.102 of the Uniform Guidance to
issue waivers of this requirement on
request of the relevant awarding agency.
Analogous require mans and waiver
authorities may be present in other
regulations. If a recipient seeks to use
SLFRF funds to satisfy match or cost -
share requirements for a federal grant
program, it should fast 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 costshamrequirement, and that there
is no other statutory or regulatory
impediment to using the SLFRF fonds
for the match or cost -share requirement.
Note that SLFRF funds may not be used
as the nun -federal sham for purposes of
a slate's Medicaid and CHIP programs
because the Office of Management and
Budget hea approved a we, as
requested by the Centers for Medicare &
Medicaid Services pursuant to 2 Cm
200.102 of the Uniform Guidance and
related regulations.
SLFRF funds beyond those that are
available under auctions 602(c)(1J(C) or
603(c)(1)(C) of the Social Security Act
for the provision of government services
may not be used to meet the non-federal
match or cost -sham requirements of
other federal programs other than as
specifically provided for by statute. For
example, as discussed in other sections
of this final rule, section 40900 of the
Infrastructure Investment and Jobs Act
provides that SLFRF funds may be used
to meal the non-federal match
requirements of any authorized Bureau
of Reclamation project, and section
60102 of the Infrastructure Investment
and lobs Act provides that the SLFRF
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 tolled
information from recipients through
requested reports and any additional
requests for information. The interim
❑na] rule also provided Treasury
flexibility to extend or accelerate
reporting deadlines and to modify
requested content for the Interim
on
territories, metropolitan cities, counties,
and Tribal governments were required
to submit one minim report and
quarterly Project and Expenditure
reports thereafter. Non -entitlement units
of local government were not required
to submit an interim report. States,
territories, and metropolitan cities and
counties with a population greater than
260,000 residents were also required to
submit an annual Recovery Plan
Performance Perlin
Treasury. The
Supplementary Information of the
interim final rule provided guidance on
the deadlines and content required for
each type of report.
Pabhc Comment: Treasury received
many comments on the content and
specific data elements required of
program reporting. Some commented
expressed enthusiasm for including
particular details in 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
particular elements of reporting content.
Some commenters requested that
reports and specific mporting elements
be public, including a request for u
public website with a number of
programmatic data metrics about tare use
of SLFRF funds. Some commenters
sought clarification and guidance for
using the reporting pored, which allows
recipients to upload the required
information, or requested user
modifications to the portal. Finally,
some commenters requested that
Treasury provide example materials and
reporting metrics to aid recipient
mulmoandmg.
Treasury Response: Since the
publication ofthe interim final role,
Treasury issued supplementary
reporting guidance in the Compliance
and Reporting Guidance and in the User
Guide: Treasury's Portal for Recipient
Reporting (User Guide].382 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
content and data elements required in
reporting, the reporting portal or
submission process, and the specific
— us. IMpanmanl of Ne Tux"emi Pim,
Cmnpllence and P rrfi ,g f e„p,meibiliriee. e: of
Noaembm 5, 2021 Ia,vJZhomeaxnsuggov1
pd4nWi-shn vaur/oe and-lo fi-fi ae-loml.
ndo,g-funsa6mnenr tcoannd-laml-fbup
rury-Jul'rds/m'iyienf camp4anccand�mpwfing
rexpms,
form of reporting (e.g., example
templates, machine readability);
comments an these topics are outside
the scope of the final rule and, as noted,
are addressed instead in Compliance
and Reporting Guidance.
Reporting Deadlines
Public Comment: Treasury received
comments requesting various changes to
reporting deadlines to ease compliance
burdens. 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 SLFRp
allocations. Commentary also requested
changes to the immediacy of reporting,
for example requesting that Treasury
allow expenses to be reported with a lag
instead of the quarter in which they
were accrued or that reports be due W
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 meaning deadlines in the
deadline
line also etigns with practices
other federal programs. The
discretion to extend or delay reporting
deadlines.
Administrative Costs for Reporting and
Compliance
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
an the limits of such use.
Treasury Response: Treasury notes
that administrative costs am generally
allowable uses of SLFRF funds,
including for reporting. For additional
information on administrative expenses,
please sm section Administrative
F."penses under Program
Adminietrotion Provisions.
Uniform Guidance
Public Comment: The SUPPLENEI1TARy
INPDRYRTON of the interim final role
clarified that SLFRF foods were
generally subject to the provisions of the
Uniform Administrative Requirements,
Cast Principles, and Audit
4438 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
Requirements for Federal Awards (2
L Remedeition and Recomiuma t
authority and created ambiguity. Other
CFR part 200)(the Uniform Guidance),
Sections 602(e) and 603(e) of the
commenters urged Treasury to establish
including the cost principles and
Social Security Act provide the
.robust enforcement and compliance
restrictions on general provisions for
Secretary with the power to recoup
progrm and process and advocated for
selected items of cost. Treasury received
"funds used in violation" of the Social
the creation its whhstleblower
many comments requesting clarification
Security Act. The interim final rule
mechanism or public complaint process
about or modifications to the
implemented these provisions by
to allow public and private entities to
applicability of the Uniform Guidance
establishing a process for recoupment,
report suspected misuses of funds.
on various issues.
For example, one commenter
Treasury may identify hinds used in
violation of the Social Security Act
Finally,same commenters requested
clarificano. regarding the process after
requested that Treasury remove
requirements expenditures funds
based on information submitted by
recipients including as part of reporting
a violation is identified and becomes
final. One commenter also asked to
road. a
be made in conformance with the
Uniform Guidance,pparticularly in case
requirements, as wall as information
from other sourimaes if a potential
allow recipients to amend reports
deemed to contain ineligible expenses
ofectmedilureareadeduringperivd
from March 0. 2021 the release of the
violation is identified, Treasury will
provide the recipient an initial written
and inform recipients how the agency
intends to resolve instances where a use
le other
coteme nters final role, while
commerested that Treasury raise
notice of the amount subject to
recoupment along with an explanation
was later deemed unacceptable. Another
commenter asked if recouped funds
the single -audit threshold from
$750,000 to $5 million. Commenters
of such °mounts, A recipient then has
60 calendar days following receipt of
could be released bock to the recipient.
Commenters also expressed concern
sought clarification on items such as:
The applicability of the Uniform
recoupment notice to submit a request
for reconsideration containing any
about Treasury's authority to recoup
funds used in violation of the tax offset
re use Guidance for funds that are for the
information it believes supports its use
Provision. Some commenters requested
proision
of overnmentso v if'y rifludicider a ryine., the
applseli... of the
of funds. Within 66 calendar days of
receipt of the request for
additional clarity a round when tax cuts
would trigger Treasury's mcoupment
cast principles provided in subpart E of
the Uniform Guidance, the applicability
reconsideration. the interim final rule
provided that a recipient will receive a
authority and the duration of Treasury's
authority to seek recoupment of such
of the procurement provisions of the
Uniform Guidance, and requirements
final notice of the Secretary's decision
funds.
for subrecipient reporting.
to affirm, withdraw, or modify the
escarpment notice. If the recipient did
Treasr Res onse
ry P
Treasury Response: Recipients of
SLFRF funds are subject to the
not submit a request for reconsideration,
The final rule largely preserves the
process established in the interim final
provisions of the Uniform Guidance (2
thannotice of recoupment would
be deemed a final notice. A recipient
rule but includes several adjustments to
CFR pod 200) from the date of award to
the and of the period of performance an
would then be required t° repay any
clarify caffein elements.
Like the interim final rule, the first
31, 2026 unless otherwise
amounts subject to recoupment within
120 calendar days of either the initial
rule provides that, sitar an initial
specified in this rule m program.
p p gre
specific guidance. Costs most follow the
e notice, if the recipient fines
`et
determination is made that a recipient
has used SLFRF funds in violation of
requirements in 2 CFR 200 Subpart E,
t
request
not request reconsideration, or the final
recuastroonotice, recipient does
the law, a recipient may submit a
Cast Principles, including procurement
standards. Recipients that receive an
request reconsideration.
imr.
request for reconsideration concerning
any amounts identified i a notice
aggregateunt financial
Public Comments
provided a
assistance in i given fiscal resr oldt
exceeds the Single Audit threshold ace
Treasury received several comments
the process for recoupment For
con.Ifrationient
chooses ti seek consideration tee of b
seek ft
initial notice, the recipient must submit
subject to the requirements in 2 CFR unless
Subpart F, Audit Requirements, unless
in
instance, some commenters, including
many Tribal governments, requested
a request for reconsideration the fin atiul as
provided under the final rule. Ba
otherwise specified in progrem-specific
additional time to file a request for
recipient does no[ request
guidance
SLFRF funds transferred to
reconsideration and submit repayment
to ensure that small entities have the
reconsideration, the initial notice that
the recipient received will be deemed
subrecipients are also subject to
reporting and Uniform Guidance
time necessary to carry out any
logistical steps and consult with
the final notice.386 Treasury has
clarified that a recipient must invoke
requirements. Additional information
counsel Treasury was else asked to
and exhaust the procedures available
about the definition of subredidents is
align its -.an process with Nat
under section 35.10 of the final rule
available in the section Distinguishing
:at
the Office of the Inspector General
oIto
prior to seeking judicial review of a
Subeecipients versus Beneficiaries.
Recipientsshouldr
end other departmental adminisiretive
recoupment decision. Consistent with
details on
Assistance Listing for details on the
processes to resolve findings,
decisions, and related timelines. One
de Donations. Dan
f . state orR) of or Social
Sectioty Act, if.
Security Act, ff t state or territory
specific provisions of the Uniform
Guidance that do note 1 to this
PP➢
asked If
required 's repay funds pursuant to the
o
program. The Assistance Listing is
daytime limit
daytimelimitfor repaymentwas based
repayment
ant was based
then initial notice, rawer final
Secretary's recoupmentealhount the
may reduce the amount
Additional
chaavanges to compliay.nce
changestocompliance and reporting
de
decisionissuedtes the etu .
Secretary.
payable
payable tothe state or territory iae
guidelines, including any
a
Several r the rec are expressed concern
process,
regarding Neonside
second tstate o payment by the amount
that the state a territory would
Uniform Guidance requirements,
requirements,
will
will be addressed in Compliance and
arguing that s and deratiomencall
atio
relevant facts and
repel, as meet.
reqquthe final inyasreasury has
In lied that, rule, Treasury has
Reporting Guidance and the User
Guide."°
provided Treasury with too much
with too
derided that, if it identifies a potential
Hr ld.
® Tesar, will ale. —id., the ex arts.
pmvman.n.nn Ibaste.
•^^Fmde subjen to recoupment enmot lets, be
mtumed.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4439
violation sto it may request additional to ex edits or extend timelines in any only upon a reasoned determination
information from a recipient before adjudication or pre -adjudication process that their benefits hatifv their costs
initiating the recoupment process and,
where necessary, provide written notice
to the recipient along with au
expplanation of such amounts potentially
suhjed to recoupment. Furthermore,
Treasury has also made clear that it
retains the ability to expedite or extend
maintained in the Final
is is intended to provide
with an adequate
information regarding its uses of funds
and provides flexibility for recipients to
determine the information relayout to
the particular fade and circumstances. It
is Also flexible enough to elfin with
other adjudication procedures in other
ARIBA 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 provide 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.'°" This
process also will allow the Secretary to
lake into consideration the information
provided by recipients, along with other
relevant information, to ensure SLFRF
funds ere used in a manner consistent
with the Social Security Act.
Finally, Treasury expects to work
with recipients to support the use of
SLFRF funds consistent with the law.
For exam le, Treasury may request
additional information from a recipient
before initialing the recoupment
process. In addition, Treasury may
pursue other forms of reenediation and
monitoring in conjunction with, or as an
alternative to, recoupment'°" These
efforts may include working with
recipients to identify and substitute
permissible uses of SLFRF funds or
amending uses of SLFRF to. to
comply with Applicable restrictions.
Inrsepim to comments regarding
the amount of time Picot ded to respond
to an initial notice, the final rule
clarifies that Treasury retains the ability
'••Taeevry may addma pmenael vblatiom
hand on information auhnJnea ham reapiems.
either through quarterly repose or witreponed
infoemaHon, and how other eanw al intomentioo
ee Treawy do—. aecnnry and apse ryiah (e.g..
Pines
, Meadvion submitted fine the public).
'-"'Tray intends to watt with ert,miu to
ywpon the uae aS. (code enoo sove wnh No
pursuant to section 35.4(b) of the final
role, although the general timelines set
forth in the interim foal rule are
maintained in the final rate.
V. Regulatory Analyses
Randall. Orders 12866 and 13563
Regulatory Impact Assessment
This final role 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 more.
As explained below, this regulation
meets a substantial need: ensuring that
recipients states, territories, Tribal
governments, and local governments —
of SLFRF Ponds fully understand the
requirements and parameters of the
program as set forth in the statute and
deploy funds in a mariner that beat
reflects Congress' intent to provide
necessary relief to recipient
governments adversely impaled 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 role to recipients
and their communities far outweigh any
costs.
The rule has been reviewed by the
Office of Management and Budget
(DMA) in accordance with Executive
Order12866.
Executive Orders 12866 and 13563
Under Executive Order 12866, OMB
must determine whether this regulatory
action is "significant," cord therefore,
subject to the requirements of the
12806 defines a significant regulatory
action as an action likely to result in a
rule that may, among other things, have
an annual effect an the economy of $IM
million or mare. This mla is likely to
have an annual effect on the economy
of $100 million or more, and therefore,
it is subbed to review by OMB under
explicitly reaffirms the principles,
strodures, 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: (1) Propose or adopt regulations
burden on society, consistent with
obtaining regulatory objectives taking
into account, among other things, and to
the extent practicable, the costs of
cumulative regulations; (3) select, in
choosing among alternative regulatory
approaches, those approaches that
maxtmlze net benefits (including
potential economic, environmental,
public health and safety, and other
advantages; distributive impacts; end
equity); (4) to the extent feasible, specify
performance objectives, rather than the
behavior or manner of compliance a
regulated entity must adapt; and (5)
identify and assess available alternatives
to duect regulation, including providing
economic incentives —such as user fees
or marketable permits —to encourage the
information that enables 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 to as accurately as possible."
OMB's Office of Information and
Regulatory Affairs (OIRA) has
emphasized that these techniques may
include "identifying changing future
compliance costs that might result from
technological innovation or anticipated
on the enalvsis that follows ..it
final rule is consistent with the
principles set forth in Executive Orders
12866 and 13563. This Regulatory,
and
exceed the costs. 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, Trebel governments, and
localities respond to the ongoing
COVIO-19 public health emergency and
its economic impacts. As the agency
charged with execution of these
programs. Treasury has concluded that
this fiord role is mashed to ensure that
recipients of SLFRF funds fully
4440 Federal Register/Vol. 87, No. 18/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 best reflects Congress'
mandate for targeted fiscal relief. This
final ode governs the use of $350 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
anatomize 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 burdens.
Analysis of Benefits
Relative to a pre -statutory baseline,
the SLFRF funds provide a combined
$350 billion to state, local, and Tribal
governments for fiscal relief and support
for cost. incurred responding to the
COVID-19 pandemic. Treasury believes
that this transfer will generate
substantial additional economic
activity, although given the flexibility
accorded to redid its In the use of
funds, it is not possible to precisely
estimate the extent to which this will
occur and the timing with which it will
actor. Economic research has
demonstrated that state time] relief is an
economic
exert a prolonged drag on the
economic recovery, as occum
defined in statute: strengthening the
response to the COVID-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; and
making necessary investments in water,
sewer, and broadband infrastructure.
These benefits are achieved in the
final rule through a broadly Flexible
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approach that sets clear guidelines on
eligible uses of SLFRF funds and
provides stale, larval, and Tribal
government officials discretion within
those eligible uses to direct SLFRF
hinds to areas of greatest need within
their jurisdiction. While preserving
recipients' overall flexibility, the final
rule includes several provisions that
implement statutory requirements and
will help support use of SLFRF funds to
achieve the intended henefits.
Preserving flexibility for recipients not
only serves an important public policy
goal by allowing them to meet
particularized and diverse needs of their
local communities but also wilmocos the
uses
rule. In particular, eligible uses include
hiring up to a pre -pandemic baseline
that is adjusted for historic
underinvestment in the public sector by
allowing funds to be used to pay for
payroll and roomed benefits associated
with the recipient increasing its number
of employees up to 7.5 percent above its
pre -pandemic baseline. 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
deliver services to
Treasury the interim final o
panaemrc. me su nv program as
implemented by the fleet mle provides
even greater flexibility to recipients for
uses of funds in undwserve l
communities, recognizing that pre-
existing health and economic disparitias
in these communities amplifted 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 new -term economic
and public health benefits, in addition
to the longer -term benefits arising from
the allowable investments in water,
sewer, and broadband infrastructure.
The remainder of this section clarifies
how Treasury's approach to key
provisions in the final rule will
contribute to greater realization of
benefits from the program.
Public Health and Negative Economic
Impacts
The eligible use category for
responding to the public health end
negative economic impacts of the
pandemic covers a wide range of
eligible uses of funds. Treasury
addresses several key uses of funds I.
this analysis, as well as ways that
Treasury box structured this eligible use
to minimize recipient adminisiative
burden while also maintaining targeting
tithe 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
rule allows for a broader set of eligible
uses to restore and support public sector
employment relative to the interim final
pandemic levels, the final mis'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 most responsibilities. It
also provides recipients greater roam to
employ funds toward building back the
public sector workforce after years of
chronic underinvestment since the
Great Recession. Treasury arrived at the
7.5 percent adjustment factor through an
analysis of data from the Bureau of
Labor Statistics on state and [me]
government employment and date from
the Census Bureau on population to
estimate the extent of underinvestment
in the public sector 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
errs 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 lumaver 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 recipients options to
identify eligible populations with
minimal administrative burden, while
also maintaining targeting of the funds
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4441
to entities impacted by the pandemic.
Recipients also retain flexibility to
identify and serve other populations
and entities that experienced pandemic
impacts, ensuring that recipients can
.at the particularized needs of their
local communities.
Defining Low and Moderate looms:
To streamline the provision of funds
relating to negative economic impacts
.if lung 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
and document a specific negative
economic impact. Populations falling
under the definition of low income are
presumed to have been
disproportionately impacted by the
pandemic, while those falling under the
presumed to have been impacted by the
pandemic. In addition, the final rule
recognizes categorical eligibility for
certain enumerated programs and
populations if a recipient chooses to
implement categorical eligibility when
seveal options for eligibility standards
determining who qualifies as low and
moderate income.
One option involved defining a
household as low income or moderate
income based only on FPG thresholds
and could use levels lower than those
selected. This option involved setting
uniform thresholds throughout the
country.
A second option took a broader
approach, defining a household as low
income if it has (I) income at or below
185 percent of the FPG for the size of
its household or (ii) income at or below
ao pemnt of the AMI for its county and
size of household. The option defined a
household as moderate income if it has
(I) income at or below 300 percent of the
FPG for the size of its household or (til
income at or below 65 percent of the
AMI for its county and size of
household. The combination of an FPG
floor with AMI allows for a regional
adjustment in areas with substantially
higher costs and incomes. Finally,
Treasury also considered a range of FPG
and AMI thresholds above and below
these levels.
Treasurychose the second option.
Treasury believe. that the higher FPG
floor will ease administrative burdens
by making more households
presumptively eligible for funds meant
to address negative economic impacts in
a targeted manner. 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 -gamer household
where bath earners receive the median
wage in occupations, such as waiters
and waitresses and hotel clerks, that
were heavily impacted by COVID-i 9.
As such, this cutoff is likely to include
more wmkere in industries heavily
impacted by COVIO-19, who may be
most likely to face disproportionate
impacts of the pandemic, than a lower
thenhold.a9z With respect to the
moderataincome 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
moderate income.
Income
governments —were disproportionately
impacted. In the final rate, to further
decrease administrative burden and
enhance recipient flexibility, Treasury is
allowing recipients to also presume drat
low-income households were
disproportionately impacted. Treasury
anticipates that adding low-income
households os a presumed eligible
population will maintain targeting of
fonds to populations and communities
most likely to have experienced severe
pandemic impacts, while providing a
more flexible approach for recipients.
Identifying Impacted Glasses: In the
final rule, Treasury reiterated its stance
in the interim final role allowing
recipients to designate a class of
households or mine entities as impacted
or disproportionately impacted and
Provide responsive services. After
considered relatively d
Is for both an FTIG and .
higher -income workers, who generally
experienced fewer economic impacts
from the pandemic, would become
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 less
benefit than serving households that
2perienced more severe impacts,
ming the benefits of the SLFRF
funds.
In all, Treasury anticipates that these
selected thresholds, combined with the
regional adjustment, will allow
cols and households with the
need while also reducing
a broader
of die preexisting health, economic,
and scend disparities that contributed to
disproportionate pandemic impacts in
certain communities and that
addressing root causes of those
di pact
consmutes 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 QGTs and
those being served by Tribal
"I Sar U.S. Bureau of le6m Slaliatics.
oanpeliwal Eaploymmt and wage F timates.
hap, ://wxw.bbgw/oealcanenr/ma�weben Uan
v led Nwamber 9. 2021).
serve
must demonstrate that the designated
class experienced negative economic
impacts or meaningfully more severe
approach maintains the requirement
that entities served have to have
experienced a negative economic
impact, while simultaneously
minimizing any administrative costs
associated with meeting this
requirement.
Additional Imumerefail Uses
The interim final rule enumerated
eligible uses of SLFRF funds to serve
both impacted and disproportionately
impeded communities. For example,
enumerated eligible uses to serve
impeded communities included food
assistance; rent. mortgage, or utility
assistance; and counselling and legal aid
to prevent eviction or homelessness.
Examples of enumerated eligible uses to
serve disproportionately impeded
communities included f rm dimim, of
lead paint or other lead hazards and
housing vouchers and assistance
relocating to neighborhoods with higher
levels of economic opportunity. In the
final role. Treasury had the option to
retain, expand, or reduce enumerated
eligible uses, or shift use eligibility
between disproportionately impacted
and impacted communities. Many
4442 Feder.] 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 account,
Treasury generally tack this approach,
in anticipation that the benefits of the
program will increase while recipient
administative costs in identifying and
just fling non -enumerated uses of funds
willecrease.
Specifically, Treasury added
enumerated eligible use. for impacted
populations including paid sick.
medical, or family leave; health
meat nce..held!..; and services for the
mdand ed and underbanked, on the
basis that impacts of the pandemic that
were broadly experienced by many
communities would be addressed 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, benefit
and services, affordable housing
development, and service. to promote
childcare and early teaming. 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
that investments I. parks and Other
public outdoor recreation spaces are
....rated eligible uses far
disproportionately impacted
communities. In including these new,
Treasury took into account evidence on
the social demand ... is of health, or the
ways that social context, like the
neighborhood built environment,
impacts health outcomes, By taking a
more holistic approach to public health,
the final rule allows recipients to
respond more broadly to factors that
contributed W the pandemic's health
impacts end more fully mitigate those
health impacts.
To balance administrative flexibility
with a maintenance of focus on impacts
of the pandemic. Treasury considered,
but did not include, other proposed
enumerated uses that did no/ respond to
the impacts of the pandemic or
responded to impacts that were not
experienced generally across the
country by many jurisdictions and
populations. For example, Treasury did
not include pollution romediation
broadly, a proposed enumerated eligible
use for disproportionately impacted
communities, an the basis that
associated projects would only respond
to disproportionate impacts of the
pandemic depending on the specific
issue addressed. In sum,'Ileasury
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.
Capitol Expenditures: In the interim
final rule, Treasury permitted funds to
be used far a limited number of capital
expenditures mostly related to the
COVI0.19 public health response. This
decision granted recipients some
discretion W use SI.FRF funds to
address COVID-19 prevention and
mitigation through certain investments
in equlpmenh real property, and
facilities, which Treasury recognized as
critical components of the public health
response. In the final rule, Treasury
considered maintaining the provisions
in the interim feral rule or expanding
allowable capital expenditures to
provide recipients greater flexibility to
puaue other capital investments that
risk that recipients will undertake large
expenditures that do not sufficiently
address intended harms, or address
harms in a less cosFeficlant manner
than an alternative investment (e.g., a
program or service), expending
allowable capital expenditures would
likely help fill critical gaps in
rocipleni omi apse to the pandemic
and provide equipment and facilities
that generate benefits beyond SLFRF'a
period of performance. To preserve
flexibility while mitigating risks, the
final role allows recipients to undertake
an expended set of capital expenditures
while requiring additional written
juatifcations for projects with an
expected total can at or over $1 million.
Treasury believes this approach
balances the implementation of
appropriate risk -based compliance
requirements and the provision of
administrative convenience for smaller
capital expenditues, while generally
allowing recipients the flexibility In
undertake a greater variety of responsive
capital expenditures.
Revenue Lass
Revenue Loss Formula: In this final
rule, Treasury's approach to revenue
loss allows recipients to compute the
extent of eduction 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 prior to the
public health emergency (as required by
statute) and projects forward with an
annualized growth adjustment. Treasury
ties made several adjustments in the
final role to decrease administrative
burden, reducing costs for recipients,
while still accurately capturing
reductions in revenue due to the
pandemic.
Under the interim final role, Treasury
specified that recipients colonists
revenue lose on a calendar year basis. In
this final rule, Treasury is providing
recipients the option to calculate
revenue lass on a calendar year or fiscal
year basis, which will allow recipients
the administrative Flexibility to
minimize administrative burdens based
on the data available to them.
'Treasury's decision to inmrporste a
growth adjustment into the calculation
of revenue loss ensures that the formula
more fully captures revenue shortfalls
relative to recipients' pre -pandemic
expectations. Recipients will have the
opportunity to calculate revenue loss at
recognizing that
This option to recalculate revenue lass
on an ongoing basis is intended to result
in more support for recipients to avoid
harmful cutbacks I. future year. In
calculating revenue lose, recipients will
look at general revenue in the aggregate,
rather than on a source -by -source basis,
given that recipients may have
experienced offsetting changes in
revenues across sources. The final rule
also provides for removing the impact of
tax incromine or decreasing chanties.
conemea our are at Us ra me
pandemic. from the calculation of
revenue lass due to the public health
emergency. Both of these components of
Treasury's approach provide a mare
accurate representation of the effect of
the pandemic on overall revenues.
Revenue Love Standard Allowance: In
addition 10 largely preserving the
formula to calculate revenue lass from
the interim final rule, Treasury also
added an alternative "standard
allowance" option for the revenue loss
calculation to this final role. Treasury's
decision to elect to allow a fixed amount
allow that can be used to fund
"government services" allows recipients
the flexibility to use minimal
edministatie. rapacity 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
variations 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 ppremium pay. While the final
rule pmvid. 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
mount Uy is already above that
lhresho d. To set this threshold,
Treasury analyzed data from the Bureau
of Labor Statistics to determine a love]
that would not require further
justification for premium pay to the vast
majority of essential workers, wet la
requiring higher scrutiny for provision
of premium pay to higher eamen 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 justiBretion to
Treasury if the worker receiving
premium pay is eligible for overtime
under the FLSA. Treasury believes this
alternative, which I. an addition to the
final rule, will give recipients more
flexibility and will simplify application
of the final rule ea employers, public
and private, are already legallyy required
to determine whether an employee is
eligible for overtime pay under the
FLSA. Treasury believes the threshold
and overtime eligibility provision to the
final rule strike the appropriate balance
between preserving flexibility and
helping encourage use of these
resources to help those m greatest need.
The final rule also requires that workers
eligible for premium pay have regular
in -person interactions or regular
physical handling of Items that were
also handled by others. This
requirement will help encourage use of
MI resources for those who have
endured the had htened risk of
8
performing essential work.
Water and Sewer Infrastructure
In the interim final role, Treasury
aligned eligible uses of funds for water
and sew. infreatruclur, 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 uodor 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 role, Treasury has
expanded eligibility to include eaveral
additional project types beyond those
covered by the CWSRF and "SRF.
Treasury believes that expended
eligibility will benefit recipients by
allowing them additional Flexibility to
pursue beneficiel projects, including
project celegoriesihat support the
Inn,of drinking water and the
removal, amongemenl, and treatment of
wastewater and stormwator. Additional
stormwater management projects,
private well infrastructure, 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 uses beyond
the CSWRF and DWSRF may have less
public guidance available to understand
project eligibilities. However, Treasury
anticipates that this eligibility
expansion will provide a net benefit to
recipients by allowing them to pwave
projects relevant to their goals that were
ineligible under the interim final role.
The expansion to allow private well
mbeemacture may also a(fecl the
distributional impact of SLFRF. Private
wells disproportionately serve rural
Americans, including low -Income
households, and expanding eligibility to
include this use may allow SLFRF funds
to benefit such households. While
distributional impacts are uncertain,
Treasury believes that the potential for
benefits to gram, to must and low -
Income households makes It important
to clarify that these types of projects are
eligible.
Broadband Infrastructure
In the final rule, Treasury expands
investment
invest in
' service to
with an
®Fmhao me finot cola encomagw. bur doe. not
equVm, Use motion, p no-bmedband
inhe.Wtlum pmpere in locations not cumnny
Treasury considered multiple
alternatives when selecting this
standard. The threshold for the interim
final rule allowed benefits to accrue in
a more targeted manner to the
approximately 9 percent of the country
with access to speeds under the 2513
Mbps threshold. -re However, since
SLFRF funds are distributed to tens of
thousands of governments across the
country with a variety of broadband
needs, Treasury believes that allowing
recipients greater Flexibility to
determine locations to some in their
jurisdictions —including considering
affordability and competition barriers —
will lead to greater long-term public
benefit. Further, given that many federal
broadband grant programs are focused
solely on unnerved and underserved
areas, Treasury believes that the final
rate's Flexibility enables these funds to
fill an important role in the overall
federal broadband landscape.
In the final rule, Treasury also
requires that broadband projects net
meet a standard of reliably delivering at
least 1U0 Mbps download speeds and
upload speeds, or in rases where it is
not practicable to do so, reliably
delivering at least 100 Mbps download
speed and between at least 20 Mbpa and
100 Mbps upload speed while being
scalable to 100 Mbps upload and
download ap¢ads. Treasury expects that
[his threshold will yield long-term
benefits and allow networks to meet
both pandemic -related and future needs.
The Federal Communications
Commission (FCC) estimates that
currently a household with two to three
remote leamers using the internet
simultaneously needs a connection
supporting 100 Mbps download
speeds.'°, While a lower threshold may
have resulted in lower nearterm costs
to build, it would have potentially
constrained future utility from the
infiestracture by producing
infrastructure that would more
quickly —potentially in the near-mrm—
become obsolete and no longer meet
household needs, potentially requiring
sooner replacement and generally
decreasing the return on investment As
derood by a wimnne connmion thatrehably
livam.11-11 0 Mops of d.—I.d q,e.d and
20 Mbpa naugoaa speed.
"' Dam Pram the Fedeml Communlretlona
Gvominion Aowe doa or diune Me, 9 W
,anent ofthe u a. populotion hul no avalable
able or!tor beadtand pn—dm peoviding gmmr
than 2n Mbpa download apeede and a Mbpa upload
speed.. redmal eons anoxonm,a cnmmiwinn.
Find eroWbmd Deployment, haps.11
bmadbvndm ,.ft,,xovGa1 are meaed May a, zo.,
ooe Soo Fodem I Communlution a rnmmuaus,
I roadbond Spend Gu de, available at hnp.11
guide Donn o1mdO.obe ze Mal).dhmW-apaN.
4444 Federal Register/Vol. 87, No. 1Bl Thursday, January 27, 2022/Rules and Regulations
such, projects meeting a lower threshold two payments separated by at least individuals mid communities with the
could not be considered "necessary" twelve months, and the interim final greatest need.
investment. to broadband role provided for split payments to a Analysis of Costs
infrastructure, so Treasury has retained majority of states as well. As discussed
the threshold from the interim final above, splitting payments ensures that This regulatory action will generate
rule. red Tents can adapt spending place to administrative coals relative to a pre -
Further, the final rule adds s evolving economic conditions and that statutory baseline, This includes,
mouirement that recipients address the at laser some of the economic benefits chiep costs required to administer
networks funded by SLFRF, either by
requiring service providers that provide
service to households to either
participate in the FCC's Affordable
Connectivity Program (ACT), or a broad -
based affordability program with
commensurate benefits. Treasury
believes that this requirement will
increase the number of customers that
are able to take advantage of broadband
infrastructure funded by SLPRF,
increasing the effectiveness of funds in
connecting households and businesses
to high-speed internet that is critical to
work, health, and education. Them is a
potential that this requirement may
marginally increase project costs for
recipients and providers, but this
impact is uncertain. given the varying
business models and pricing structures
of broadband projects and providers.
Labor Standards
In this Supplementary Information for
the final Is, Treasury encaumgas
recipients to ensure that capital
expenditures to reepoad 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 provisions.
Treasury believes that its
encouragement of labor standards
carries benefits because it will ensure
that workers have access to stone
also benefit from stronger
ds due to the potential of
skilled labor supply and minimize labor
disputes and workplace injuries, which
can result in costly disruptions to
Erojects. Treasury assesses that these
enefits will increase the economy and
efficiency of infrastructure projects
undertaken through SURF and will
outweigh the potential for a marginal
increase in labor costs.
Splitting Payments to Recipients
Treasury is required by statute to
deliver funds to local governments in
will be realized in 2022 or 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
and stimulate the recovery. Therefore,
for a subset of state governments.
Treasury has provided fund. in one
payment. Treasury believes that this
approach strikes an appropriate balance
between the general reasons to provide
funds in two payments and the
heightened additional near -[arm needs
in specific orates. As discussed shove,
Treasury set a threshold based an
historical analysis of unemployment
Mies in recessions.
Reaching Undmameed Communities
Finally, the final mle 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 Racial Equity and Support
for Undeserved Communities Through
the Federal Government;" which laid
out an Administration -wide priority to
support "equity for all, including people
of color and others who have been
historically underserved. marginalized,
and adversely affected by persistent
poverty and inequality." To this and,
the final mle enumerates a list of
services that may be provided using
SLFRF funds in disproportionately
impacted communities, including low-
income, areas, to address the more
severe impacts of the ppandemic in these
communities; establishes the
characteristics of essential workers
eligible for premium pay and
encouragement to some workers based
an financial used; provides that
recipients may use SLFRf funds to
restore stet. and local workforce..
where women and 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
Y
SLFRF funds, oversee subrecipients and
beneficiaries, and file periodic reports
with Treasury. It also requires states to
allocate SLFRF funds to nonentillement
units, which are smaller unite of local
government that are statutorily required
to receive their funds through slates.
Treasury expece that the administrative
burden associated with this program
will be moderate for a grant program of
its man. Treasury expects that many
MCI Tents 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. be particular,
states, territories, and hege localities
will have received funds from the
Come vires Relief Food (CRF) and
Treasury expects them to rely heavily
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 leaver amounts of
SLFRF funds are required to submit less
frequent reports than recipients
receiving greater amounts of funds.
Treasury is noting administrative coats
as a generally allowable use of SURF
funds, which defrays administrative
expanses to recipients that may be
needed to comply with reporting
requirements. Treasury has also
provided options for recipients to use
eligibility thresholds they are already
familiar with during edmintstraiion of
SURF funds, whirl will enable
recipients to avoid the costs of setting
up new programs and reporting
mechanisms to meet reporting and
compliance requirements. For example,
Treasury has permitted recipients to use
"categorical eligibility" when delivering
assistance to pparticular groups, such as
impacted or dispinportionately
impacted households.
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4445
In making implementation choices,
Treasury has hosted numerous
consultations with a diverse range of
direct recipients —states, cities,
emarties,and Tribalgavernments— -
along with various communities across
the United States, including those that
are r nderserved. Furthermore, Treasury
has made clear Voidance that SLUFF
funds maybe used to cover certain
expenses related to administering
Kn
itters established using SURF
f[unds.'se
Executive Order 13132
Executive Order 13132 (entitled
Federmlism) prohibits an agency from
publishing any rule that has federalism
implications lithe rate either imposes
substantial, direct compliance costs on
stale, local, and Tribal governments, and
is not required by statute, or preemppts
state law, unless the agency merge the
consultation and funding requirements
of section 6 of the Executive Order. This
Executive Under and does not impose
substantial, direct compliance casts an
slate, local, and Tribal governments or
preempt state law within the meaning of
the Executive Order. The compliance
casts 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 above, Treasury has engaged in
efforts to consult and work
cooperatively with affected state, local,
and Tribal government officials and
associations in the process of
developing the interim final rule and
this final role. Pumuant to the
mquimments act forth in section Ole] of
Executive Order 13132, Treasury
certifies that it has complied with the
roquirements of Executive Order 13132.
Administrative Procedure Act
The Administrative Procedure Act
(APA), 5 U.S.C. 551 at seq., 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.C. 553 do not apply to the extent
that them is involved .. , a matter
relating to agency ... grants." The
APA also provides an exception to
ordinary noticeandcomm mt
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 themon are
impracticable, unnecessary, or contrary
to the public interest." 5 U.S.C.
553(b)(B). The interim final rule was
issued without prior notice and
comment procedures because it
Implemented statutoryconditions on
the eligible uses of SLFRF funds, and
addressed the payment of those funds,
the reporting an uses of funds, and
potential consequences of ineligible
uses to help address the economic and
public health emergency. See the
SUPPLE MTARY INFORMATION section of
the May 17, 2021 interim final role 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 do net
apply to this final role. After careful
consideration of the comments received,
this final role adopts the May 17, 2021
interim final rule with the revisions
discussed in this SUPPLEMENTARY
INFORMATION.
Congressional Review Act
The Administrator of OIRA has
determined that this is a major rule for
purposes of Subtitle F. of the Small
Business Regulatory Enforcement and
Fairness Act of 1886 (also known as the
Congressional Review Act or CRA) (5
U.S.C. 804(2) at sail). Under the CRA.
a major rule generally may take effect no
earlier than 60 days after the rule is
published to the Federal Register. 5
U.S.C. 801(a)(3).
Paperwork Reduction Act
The information collections
associated with the SLFRF program
have base reviewed and approved by
OMB pursuant to the Paperwork
Reduction Act (44 U.S.C. Chapter 35)
(PRA) and assigned control number
1505-0271. Under the PRA, an agency
may net 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 set forth in the table below.
Reporting
Number
respoMen
Number
responses
Per
respondent
Taml
responses
Were Per
response
bu Can
la been
Cost to
rmpondenla
ass np pM
haur'I
Recipient Payment time ...... ....
51050
1
5,050
.25 (15 marries) ....
1,262.5
861,610
Acceptance of Award Times ..................... ..........
5,a50
1
5,050
25 (15 minutes) ....
1,262b
61.610
T81e VI Asgoas................................................
51050
1
5.050
.50 (30 mines) ....
2,525
123.220
Tribal Employment IrHunrratlnn Farm ...................
504
1
584
.75 (45 minutes) ....
Cie
21,3]4
Request for Extension Form ................................
95
1
96
1 ............................
96
4,685
Annual Recover, Plan Pedormarce Repod ........
430
1
430
100 .......................
43.000
2,09e,400
NEU Distinction Template ...................................
55
2
110
10 ............. ............
1.100
53,680
Non-UGLG Distribution Template ._.....................
55
2
110
5 ............................
550
26,e40
Transfer Forms .....................................................
1.500
1
1500
1 .......... _................
1,500
73,200
Peeled ant FxpenNaAE Repod ........__........_.....
3],000
1
37,000 15
............................
1 186noto
9,02e,000
54,8]0
....................
59.9e0
......................_.......
23fi.]35
11.552,619
Tgel......._.....................................................
-Hursau M tabor Slanities, U.S. Deparment of labor, Omup dkxrrg DUUnok feedback, sacraments and Auditors, on the Memet at hays://
wwwds.gov/oohDualneasaM-NnanaeUaccounraMa-arMaudfors.hhn instead Merck 28. 202%ease wage of =89Rwur Inrreasetl by 44 Per.
wet to aunt for Uw l loud employer cast of empbyas mnpensation (benefds, etc) for a ly loaded wage rate of lmo se.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed role, or a final rule
pursuant to section 553(b) of the
Admin istrafive Procedure Act an
another law, the agency must proper. a
regulatory flexibility analysis that masts
the requirements of the RFA and
1-y-Cmmmvimr Stateand liml Flied azaj.ly it, zort hrfyfl/xomaarensarYB^vl
Rnmvory Fundv fiqu®tly naked Dumnan410.2, rye J;uWi,,vSWH FAq,df.
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
9996 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
requirements, including the requirement
f3&3 Winiions.
calculated by reference to the
to conduct a regulatory Flexibility
Baseline means lax revenue of the
employer's payroll costa.
analysis, when among other things the
recipient for its fiscal year ending in
Eligible employer means au employer
agency for good cause finds that notice
2019, adjusted for inflation in each
of an eligible worker who performs
and public procedure are impracticable,
reporting year using 0ae Bureau of
essential work.
unnecessary, or contrary to the public
Economic Analysis's Implicit Price
Eligible workere means workers
interest Because this role is exempt
Deflator for the goose domestic product
needed to maintain continuity of
from the notice and comment
of the United States
operations of essential critical
requirements of the APA, Treamry is
Capital expenditures has the same
infrastructure sectors, including health
not required to conduct a regulatory
meaning given in 2 CFR 200.1.
care; emergency response; sanitation,
flexibility analysis.
County means a county, parish, or
disinfection, and cleaning work;
other equivalent county division (as
maintenance work; grocery stores,
Rule Text
defined byy the Census Bureau).
restaurants, food production, and food
rt List of Subjects in 31 CFR Pa35
Covered heneflts include, but are not
deliverryy; pharmacy; biomedical
limited to, the coats of all types of leave
ressarrh; behavioral health work;
Executive compensation, State and
(vacation, family -related, sick military,
medical testing and diagnostics; home -
Local Governments. Tribal
bereavement, sabbatical, jury duty),
and community -based health care or
Governments, Public health emergency.
employee insurance (health, life, denial,
assistance with activities of daily living;
For the reasons slated in the
vision), retirement (pensions, 401(k)),
°°employment benefit plans (Federal
family or childcare; social mnicas
work; public health work; vital services
preamble, the United States Department
of the Treasury amends 31 CFR part 35
and State), workers compensation
to Tribes; any work performed by an
as follows:
insurance, and Federal Insurance
employee of a Stale, local, or Tribal
Contributions Act taxes (which includes
government; educational work school
PART 35—PANDEMIC RELIEF
Social Security and Medicare taxes).
Covered change means a change to
nutrition work, and other work required
PROGRAMS
law, regulation, or administrative
to operate a school facility; laundry
work. elaclions work; solid waste or
to t. Revise Subpart A to read as follows:
interpretation that reduces any tax (by
providing for a reduction in a rate, a
hazardous materials management
Subpart A�ocoveryus Stale and
rebate, a deduction, a credit, or
response, and cleanup work; work
requiring physical interaction with
Local Fiscal Recovery Funds
otherwise) or delayincrea the imposition la
any tax or tax increegi la change in law
patients; dental care work:
Sec.
includes any final legislative
transportation and warehousing; work el
hotel and commercial lodging facilities
35.Purpose.
regulatory action, a new or changed
that are used for COVI0.19 mitigation
35.2 Appinature....
administrative the
and containment; work a mortuary;
35a Definitions.
atim authouty, reponin8.
orinterpretation, statute
phase in th taking effect of any statute
or ruleif the taking effect
is
and work in critical clinical research,
35.5 Useof35.4
funds.f
poor
thesnot prescribed prior to the alert Of
development, and tasting necessary for
CO1)Withresponse.
35.6 Eligible naea.
35.8 Pensions.
overedsperiod
the covered period.
Covered period means, with respect m
1 With rea act to a reci tent that is
O p P
35.8 Tax,
35.e. Compliance applicable laws.
a state or territory, the period that
(1) B ns on March 3, 2021; and
o metropolitan city,, one only. entwor unit
of local government, or countye workers
t.
35.11 Rxnupment.
s on the last day of the fiscal
inanyadditional non-public sectors as
35.tt Payments to staaa.
f s
yearnsack State or territory
year
each chief executive officer of such
35.to Distributors to nrnwmitsofg unite
of lord emment and unite aF ai
gmnmenc Beaer
owhich
all fiords received by the State
recipient may designate as -being) f
protect the health and well-being the
lord government
u
territory from a payment made under
sectione02en e03ofded Social Security
residents of their metropolitan city,
y,
Authority:92 U.S.C. ea210; 92 U.S.C.
Art have been expended er retum¢d to,
coin of local
B03(6.
or recovered Secretary.
govemment, or county; or
government, or
g 35.1 Purpose.
meths
COV10.19 means the Corenavirus
(2) With respect to a State, territory,
Disease
or Tribal overnment workers in an
g y
This part implements section
D-19.
COs public health emergency
additional non-public sectors as each
the American ubt le
Rescue Plan Am (Subtitle
the p
means the period beginnings Jenuery
Governor of State territory, each
M Title IX Pub. L. illalS which
2$ 2020 and lasing until the
era ea
Tribal government may designate
to
Tire
amends Title.8 of the Social Security
e
termination of the national emergency
eas
l
critical to protect the health and well -
Act U.S.C. at by
the
concerning the (n outbreak
being of the residents of Scale.
establish
to establish the
ion d 6 to es
sections 602 end 6Fiscal
declared to the National
pursuant to the
ertheir
territory, or Tribal government.
State Fia Fund
i
Emergencies Act (50 U.S.C. 1601 of
TiesAd(
Essential work means work that
and Covious
l Fiscal
and Coronavhva Local Fiscal Recovery
aeDe
(1) is not performed while
Ptmd.
Deposit means an extraordinary
teleworking from o residence; and
payment of an accrued, unfunded
(2)Involves:
535.2 Applicability,
liability. The term deposit does not relay
(i) Regular in -person interactions with
This part applies to states, territories,
to routine contributions made by an
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:
nonentitlement units of local
employer's obligations related to
or
government, counties, and units of
payroll, such as either a pension
(ii) Regular physical handling of items
general local government that accept a
contribution consisting of a normal cost
that were handled by, or am 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 is component addressing the
coworkers of the individual that is
Security Act.
amortization 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
recipient, amounts provided to the
recipient pursuant to a payment made
under section 602(b) or 603(b) of the
Social Security Act or transferred to the
recipient pursuant to section 693(c)(4)
of the Social Security Act.
General revenue means money that is
received ham tax revenue, curtent
charges, and miscellaneous general
revenue, excluding refund. end other
correcting "Mentions and pracceds
from issuance of debt or the sale of
nvestments, agency or private trust
transactions, and intergovernmental
transfere from the Federal Government,
including transfers made pursuant to
section 9901 of the American Rescue
Plan Act. General revenue also includes
revenue from liquor stores that are
owned and operated by state and local
governments. General revenue does not
include revenues from utilities, except
recipients may choose to include
revenue from utilities that are part of
their own government as general
revenue provided the recipient does so
consistently over the remainder of the
period of performance. Revenue from
Tribal business enterprise. must be
included in general revenue.
Intergovernmental transfers means
money received from other
governments, including grants and
shared taxes,
law-fre. household ma.,. a
household with:
(1) Income at or below 185 percent of
the Federal Poverty Guidelines for the
size of its household based on the
poverty guidelines published most
recently by the Department of Health
and Human Services; or
(2) Income at or below 40 percent of
the Area Median Income for its county
and size of household based on data
published most recently by the
Department of Housing and Urban
Development.
Micro -business means a small
business that has five or fewer
employees, one or more of whom owns
the small business.
Moderate -Income household means a
household with:
(1) Income at or below 300 percent of
the Federal Poverty Guidelines for the
size of its household based on poverty
guidelines published most recently by
the Department of Health and Human
Services; or
(2) Income at or below 65 percent of
the Area Marian Income for its county
and size of household based on data
published most recently by the
Department of Housing and Urban
Development.
Metropolitan city has the meaning
given that term in section 102(a)(4) of
the Housing and Community
Development Ad of 1974 (42 U.S.C.
5302(a)(4)) and includes cities that
relinquish or defer their status as a
metropolitan city for purposes of
receiving allocations under section 106
of such Act (42 U.S.0 5306) for fiscal
year 2021.
Net reduction in total spending is
measured as the State or territory's total
spending for a given reporting year
excluding its spending of 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.
Nonentitlement unit of Imal
government means. "city," as that farm
Is defined in section 102(a)(5) of the
Housing and Community Development
Act of 1974 (42 U.S.C. 5302(a)(5)), that
is not a metropolitan city.
Nonprofit means a nonprofit
organization that is exempt from Federal
income taxation end that is described in
section 501(e)(3) or 501(c)(19) of the
Internal Revenue Code.
Obligation means an order placed for
property and services and entering into
contracts, subawards. and similar
transactions that require paymeal.
Pension fund means a defined bevaftt
plan and does not include a defined
contribution plan.
Period of performance means the itme
period described in § 35.5 during which
a recipient may obligate and expend
funds in accordance with sections
602(c)(1) sad 603(1)(1) of the Social
Security Act and this subpart.
Premium pay means an amount of up
to $13 per ham that is paid to an
eligible worker, in addition to wages or
remuneration the eligible worker
Otherwise receives, for all work
performed by the eligible worker during
the COVM-19 public health emergency.
Such amount may not exceed $25,000 in
total over the period of performance
with respect to any single eligible
worker. Premium pay may be awarded
to non -hourly and part-time eligible
workers performing essential work.
Premium pay will be considered to be
in addition to wages or remuneration
the eligible worker otherwise receives if,
se measured on an hourly rate, the
premium pay is:
(1) With regard to work that the
eligible worker previously performed,
pay and remuneration equal to the sum
of all wages and remuneration
previously received plus up to $13 per
hour with no reduction, substitution,
offset, or other diminishment of the
eligible workers previous, current, or
prospective wages or remuneration; or
(2) With regard to work that the
eligible worker continues to perform,
Fey of up to $13 per hour that is in
addition to the eligible worker's regular
rate of wages or remuneration, with no
reduction, substitution, offset, or other
diminishment of the worker's current
and prospective wages or remuneration.
Qualified census treat has the aeme
meaning given in 26 U.S.C.
42(d)(5)(13)(ii)(1).
Recipient means a State, territory,
Tribal government, metropolitan city,
nonentitlement unit of local
government, county, or unit climaxed
local government that receives a
payment made under section 602(b) or
603(b) of the Social Security Act or
transfer pursuantm am, an 603(c)(4)of
the Social Security Am.
Reporting year means a single year or
partial year within the covered period,
aligned to the current fiscal year of the
State or territory during the covered
period.
Secretary means the Secretary of the
Treasury.
State means each of the 50 States and
the District of Columbia.
Small business means a business
concern or other organization that:
(1) Has ao more then 500 employees
or, if applicable, the sire standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates, and
(2) Is a small business concern as
defined in section 3 of the Small
Basins. Act (15 U.S.C. 632).
Tax revenue means revenue received
from a compulsory contribution that is
exacted by a government for public
purposes excluding refunds and
correction and, for purposes of § 35.8,
intergovernmental transfers. Tax
revenue does not include payments for
a spad l privilege granted or service
rendered, employee or employer
assessments and contributions to
finance retirement and social insurance
trust systems, or special assessments to
pay for capital improvements.
Territory means the Commonwealth
of Puerto Rico, the United States Virgin
Title I eligible schools means schools
eligible to receive aervices under section
1113 of Tftle 1, Part 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) of that Act.
Tribal enterprise means a business
concern:
4448 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
(1) That is wholly owned by one or
mom Tribal governments, 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 that is wholly owned by one
or more Tribal governments, if all other
owners are either United States citizens
or small business reunions, as these
terms are used and consistent with the
definitions to 15 U.S.C. 657.@)(2)(D).
Tribe] 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 into 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 force.
Unemployment trust fund means an
unemployment trust fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104).
Unit ofgenerol local government has
the meaning given to that term in
section 102(a)(1) of the Housing and
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 to criminal, civil,
or micamistratly. xSections, including
Does, imprisonment, civil damages and
penalties, debarment from participating
in Federal awards or contracts, and/or
any other remedy yet [able by law.
§35.5 0seoffunds.
(a) In general. A recipient may only
use funds to cover costs incurred during
the period beginning March 3. 2021, end
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 set forth in
sections 602(c)(2) and 603(p(2) of the
Social Security Act, as applicable.
(b) Costs incurred. A cast shall be
considered to have been incurred for
purpose. of paragraph (a) of this .action
if the recipient has incurred an
obligation with respect to such met by
December 31, 2024.
(c) Return of funds. A recipient must
return any funds not obligated by
December 31, 2024. A recipient must
also return funds obligated by December
Community Development Act of 1974 31, 2024 but not expended by December
(42 U.S.C. 5302(a)(1)). 31. 2026,
§35.4 Peservatoa of am eray, raoordrag.
(a) Reservation of authority. Nothing
in this pan shall limit the authority of
the Secretary to take action to enforce
conditions or violations of law,
including actions necessary to prevent
evasions of this subpart.
(b) Fxtensions 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 dimensions that
such extension or acceleration is
appropriate. In determining whether an
extension or acceleration is appropriate,
the Secretary will consider die 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 accounting of the uses of funds,
modifications to a State or Territory's
tax revenue son..., and such other
information as the Secretary may
§35.6 EIIgiblemme.
(a) In general. Subject to §§ 35.2 and
35.8, a recipient may I.. fonds far 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 meals the criteria provided in
paragraph (b)(1) of this section or is
enumerated in paragraph (b)(3) of the.
section; provided that, in the case of a
use of funds for a capital expenditure
under paragraphs (b)(1) or (b)(3) of this
or tars section. Treasury may moo
articulate additional eligible programu
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 or its
negative economic impacts. (i) A
program, service, or capital expenditure
is eligible under this paragraph (bill) if
a recipient inkimiftes a harm or impact
to a beneficiary or class of beneficiaries
caused or exacerbated by the public
health emergency or its negative
economic impacts and the program,
service, or capital expenditure responds
to such harm.
HU A program, service, or capital
expenditure responds to a harm or
impact experienced by an identified
benmficiary or close of beneficiaries Hit
is reasonably designed to benefit the
beneficiary or class of beneficiaries that
experienced the harm or impact and is
related and namma hly proportional to
the extent and type of harm or impact
experienced.
(2) Identified harms! Presumptions of
impacted and disproportionately
impacted beneficiaries. A recipient may
rely on the following presumptions to
identify beneficiaries presumpptively
impacted or disproportonalely
Impacted by the public health
emergency or its negative economic
impacts for the purpose of pproviding a
response under paragraph CH or (b)(3)
of this section:
(1) Households or ppopulations that
experienced unemploymenq
experienced inerms, food or housing
Insecurity; qualify for the Children's
Health Insurance Program (42 U.S.C.
139288 0 sag.), Childcare Subsidies
through the Child Care and
Development Fund Program (42 U.S.C.
W57 et seq. and 42 U.S.C. 6181, or
Medicaid (42 U.S.C. 13% at seg.); if
funds are to be used for nflmdable
housing programs, qualify for the
National Housing Trust Fund (12 U.S.C.
4568) or the Home Investment
partnerships Program (42 U.S.C. 12721
at seq.); if funds are to be used to
address impacts of lost instructional
time for students in kindergarten
through twelfth grade, any student who
did not I.. acmes to in -person
instruction for a significant period of
time; and low- and moderate -income
households and populations am
presumed to be Impacted by the public
health emergency or its negative
emergency
the uses set
communities, small businesses, end
nonprofit organizations are presumed to
be disproportionately impacted by the
public health emergency or its negative
economic impacts:
(A) Households and populations
residing in a qualified census tract;
Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rules and Regulations 4449
households and populations receiving
services 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
Nearly Families (42 U.S.C. 601 a<seq.),
the Supplemental Nutrition Assistance
Program (7 U.S.C. 2011 of seq.), Free
and Reduced Price School Lunch and/
or Breakfast programs (42 U.S.C. 1751 et
seq. and 42 U.S.C. 1773), Medicare Part
D Low-income Subsidies (42 U.S.C.
1395w-114), Supplemental Security
Income (42 U.S.C. 1381 at seg.), Hand
Start (42 U.S.C. 9831 at seq.), Early Hard
Start (42 U.S.C. 9831 an acef), the
Special Supplements] Nutrition
Program for Women. Infants, and
Children (42 U.S.C. 1786), Section 8
Vouchers l42 U.S.C. 1437f), the Low -
Income Home Energy Assistance
Program (42 U.S.C. 8621 at will, Pell
Great (20 U.S.C. 1070a), and, if SLFRF
funds era to be used for services to
address ed.catio.1 disparities, Title I
eli ible schools;
�B) Small businesses client. ig in a
qualified census tract, operated by
Tribal governments or on Tribal lands,
or operating in the territories; and
(C Nonprofit organizations operating
in a qualified causes tract, operated by
Tribal governments or on Tribal land.,
or operating in the territories.
(3 Enumerated eligible uses:
Responses prtsumadreasonably
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 are 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
economic impacts;
(() Responding to the public health
impacts of the public health emergency
for urposes including:
(�) COVID-19 mitigation end
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 Vadng;
isolation Rod quarantine; mitigation and
prevention practices in congregam
settings; acquisition and distribution of
medical equipment for prevention and
treatment of COVID-19. including
personal protective equipment; COVID-
19 prevention and treatment expenses
far public hospitals or health care
facilities, including temporary medical
facilities: establishing or enhancing
public health data systems; installation
and improvement of ventilation systems
in congregate settings, health facilities,
or other public facilities; and assistance
to small businesses, nonprofits, or
impacted industries to implement
o
lrr'ggation measures;
m(BI Medical expenses related to
testing and treating COVII119 that are
provided in a manner contention with
recommendations and guidance from
the Centers for Disease Control and
Prevention, including emergency
medical response expenses, treatment of
long-term symptoms or effects of
COVID-19. and costs to medical
provider: or to individuals for testing or
treating COVID-19;
(C) Behavioral health care, including
prevention, treatment, emergency or
first -responder programs, harm
reduction, supports for long-term
recovery, and behavioral health
facilities and equipment; and
(D) Preventing and responding to
increased violence resulting form the
public health emergency, including
community violence intervention
programs, or responding to increased
gun violence resulting from the public
health emergency, including payroll and
a .... d benefits associated with
community policing strategies;
enforcement efforts to reduce Run
for
needs;
and assistance
(2) Paid sick, medical, or family leave
programs, or assistance to expand access
to health insurance;
(3)Childca e, early learning services,
home visiting, or assistance for child
welfare -involved families or foster
youth
Programs to address the impacts of
lost instructional time for students in
kindergarten through twelfth grade;
(5) Development, repair, and
operation of affordable housing end
services or programs to increase long-
term housing security;
(6)Finandal services that facilitate
the delivery of Federal. State, or local
benefits for unbanked and underbenked
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-l9;
(8) Assistance for individuals who
want and are available for work,
including those who am unemployed,
June looked for work aromatme to the
past 12 months, who are employed part
time but who want and are, available for
full-time work, or who are employed but
seeking a position with greater
opportunities for economic
advancemen;
(9) Facilities and equipment related to
the provision of services to households
(10) The following expenses related to
Unemployment Trust Funds:
(i) Contributions to a recipient
Unemployment Trust Fund and
repayment of principal amounts due on
advances received under Title 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 az of May 17, 2021 plus
the principal amount outstanding as of
Me 17, 2021 on any advances received
under Title XB of the Social Security
Ad between January 27, 2020 and May
17, 2021; provided that if a recipient
repay. principal on Title XII advances
or makes a contribution to an
Unemployment Trust Fund after April
1, 2022, such recipient shall not reduce
everegs weekly benefit amounts or
maximum benefit entitlements prior to
December 31. 2024; and
(it) Any interest due on each advances
mceived under Title XII of the Social
Security Act (42 U.S.C. 13211; and
(11)A program, service, capital
expenditure, or uther assistance that is
provided to a disproportionately
impacted household, population, or
community, including:
fi) Services to address health
disparities of the disproportionately
impacted household, population, or
community;
OV Housing vouchers and relocation
Resistance;
(fill Investments In communities to
promote improved health outcomes and
public safety such as parks, recreation
facilities, and programs that increase
access to healthy foods;
(iv) Capital expenditures and other
services to address vacant or abandoned
Properties;
(v) Services to address eduantimad
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. ID/Thursday, )emery 27, 2022/Rules and Regulations
(B) Assistance to small businesses,
capital expenditures, including support
provided that funds shall only he used
including:
for payroll costs and covered benefits
for additional budgeted full-time
(1) Programs, services. or capital
for employees, compensating relearning
equivalent employees above the
expenditures that respond to the
employees, support for operations and
recipient's number of budgeted full-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; and
2021;
including loans or grants to mitigate
(E) Expenses to support public sector
(3) Casts to improve the design and
financial hardship such as declines in
capacity and workforce, including
execution of programs responding to the
revenues or impacts of periods of
(1) Payroll and covered benefit
COVID-19 pandemic and to administer
business closure, or providing technical
expenses for public safety, public
or improve the eff.cy of programs
assistance; and
health, health care, human services, and
addressing the public health emergency
(2) A program, service, capital
similar employees to the extent that the
or its negative economic impacts; and
expenditure, or other assistance that
employee's time is spent mitigating or
(4) Costs associated with addressing
responds to disproportionately
responding to the COVID-19 public
administrative needs of recipient
impacted smell businesses, including
health emergency;
governments that were caused or
rehabilitation ofrommoci.] properties;
(2) Payroll, covered benefit, and other
exacerbated by the pandemic.
storefront end bgade improvements;
costs associated with programs or
(41 Capital expenditures. A recipient.
technical assistance, business
services to support the public sector
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;
(i) Hiring or rehiring staff to fill
capital expenditures according to Table
and programs or services to support
budgeted full -lime equivalent positions
1 to paragraph (b)(4) of this section.
micro -businesses,
that existed on January 27, 2020 but that
Such written justification must include
(C) Assistance to nonprofit
were unfilled or eliminated as of March
the following elements:
organizations including programs,
3, 2021; or
(i) Describe the harm or need to be
services, or capital expenditures,
(ii) Increasing line number of its
addressed;
including loans or grants to mitigate
budgeted full-time equivalent
(ii)Explain why a ®pilot expenditure
financial hardship such as declines in
employees by up to the difference
is appropriate; and
venues or increased costa, or technical
between the number of its budgeted full-
(iii) Compare the proposed capital
assistance;
time equi .lard employees on January
expenditure to at least two alternative
(D) Assistance to murism, travel,
27, 2020, multiplied by 1.075, and the
capital expenditures and demonstrate
hospitality, and other impacted
number of its budgeted full-time
why the proposed capital expenditure is
industries for programs. services, or
equivalent employees on March 3, 2021,
superior.
TABLE 1 TO PARAGRAPH (b)(4)
a a project has Mal expected and Me use a gummed in (b)(3). Men and the use is not emu a mled in (b)(3), then
omilal expenditures of
Less than $1 millicn ........................
No Writes Justli1.Wn required ...............................
No tension Justification required.
Greater than or equal to $1 million,
Women Juslieration requked but recipients am nd
Wntlen JusMlratipn required and recipients must
that less Man $10 million,
required to submit ee part W regular soorinq to
submit as pad of regular reporting to Treasury.
Treasury.
$10 rndlbn or mom .........................
veneen Justification requlmtl and recipients must
submit as part of regular moping to Treasur,,
workers who perform essential work,
provided that any premium pay or
grants provided under this paragraph (c)
must resound to elieible 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 COVID-19
public health emergency if,
(1) The eligible worker's total wages
and re ncragedon, including the
premium pay, is less than or equal to
150 percent of the greater clench
eligible worker's residing State'. or
county's average annual wage for all
occupations ab defined by the Bureau of
Labor Statistic Occupational
Employment and Wage Statistic.;
(2) The eligible worker is not exempt
from the Fair Labor Standards Act
overtime provisions (29 U.S.C. 207); or,
(3) The recipient he. 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 descripiton
of the eligible workers' duties, health, or
financial risks faced due to COVID-19,
and by the recipient determined that
the premium pay was responsive
despite the worker's higher income).
(d) Providing government aerobics. A
recipient may use funds for the
prevision of government services to the
extent of the reduction in the recipient's
general revenue due to the public health
emergency, calculated according to this
paragraph (d). A recipient ..at make a
one-time election to calculate the
amount ofthe 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 in the
recipient's general revenue due to the
public health emergency over the period
f 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)(2)(f) of
this section:
Federal Regislm/Vol. 87, No. Ill/Thursday, January 27. 2022/Rules and Regulations 4451
(I) A recipient must make a one-time
election to calculate the reduction in its
ground revenue using information as of
either
(A) December 31, 2020. December 31,
2021, December 31, 2022, and December
31. 2023; or
(B) The last day of each of the
recipient's fiscal years ending in 2020,
2021, 2022, and 2023.
Jill A reduction in a recipient's
general revenue for each date identified
in paragraph fd)(2)(1) of this section
equals:
Max flDose Year Revenue ` 11 a Growth
Adjustmentl-Dall2)7-Actual
General Revenue; 0)
Where:
(A) Base Year Revenue is the
recipient's general revenue for the most
recent full fiscal year prior to the
COV 19 public health emergency;
(B) Growth Adjustment is equal to the
greater of 5.2 percent (or 0.=) 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 Geneml Revenue is a
recipient's actual general revenue
collected during the 12-month period
ending an curb calculation date
identified in paragraph (d)(2)(f) of this
section, except:
(1) For purposes of all calculation
dales 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
reduces any tax (by providing for a
reduction in a rate, a rebate, a
the reciWarn actresses
the 12-month period ending en 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 decrease in
tax revenue;
(2) For purposes of any calculation
dale 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 credit, in
otherwise) or accelerates the imposition
of any tax or tax increase and that the
remprent assesses has had the erect of
increasing the amount of tex 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 subtract
from actual general mvenue 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 I. paragraph (d)(2)(i) 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 tex revenue
cullecmd during the 12-mmul, period
ending on the calculation date 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
each decrease in tax revenue; and
(it) In the as of env thanes mad.
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 on the calculation
data relative to the amount of tax
revenue that would have been collected
in the absence clench change, the
recipient must subtract from actual
general revenue the amount of such
increase in tax revenue; and
(4) With respect to any calculation
dale during the period Jeannine on
election in par,
secure, the reef
the adjustments
(d)(3) ofthis ser
such changes in
period beginning on January 6, 2
ending on such calculation date.
(a) Making necesecryinesiaments in
water, sewer, and broadband
inJmstructure. A recipient may use
funds to make the following
investments in water, sewer, and
broadband infrastructure.
(1) Wmrrandsawe.H.vestments�i)
Clean Water State Revolving Fund
project., Projects ar activities of the type
that meet the eligibility requirement. of
section 6031c) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(c));
(it) Additional stationer r projects.
Projects to manage, reduce, treat, or
recapture stormwater or subsurface
damage, water regardless of whether
such projects would improve water
quality If such projects would otherwise
meet the eligibility requirements of
section 603(c)(5) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(e)(5));
(III) Drinking Water State Revolving
Fund projecs. Projects or activities of
the type [list 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 Agent (EPA) under 40 CFR
35.3520, provided that;
(A) The recipient is not required to
comply with the limitation under a0
CFR 35.3520(c)(2) to acquisitions of
land from willing sellers or the
prohibition under 40 CFR 35.3520(e)(6)
on uses of funds for certain Tribal
or acts; and
(,) 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.
fa) Additional land remedfatum 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 sections 1459A(b)(2),
1459B(b)(1), 1464(d)(2), and 1465 afthe
Safe Drinking Water Act (42 U.S.C,
(AJ 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
Ill) In the case of projects within the
'tr any Act, there
or income all
dng the served by I
022 a projects fn
(e) Drin
and
line replacement
king 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
(b)(1) of such regulation to address
present or prevent future violations of
healthbaseddrinking water standards,
if the following conditions are met:
(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
na more then a reasonable level of
projected increased need, whether due
to population growth or otherwise;
C) The project is a cost-effective
means for achieving the desired level of
service; and
(D) The project is projected to
continue to provide an adequate level of
drinking water over its estimated useful
:habilitation of dams and reservoirs if
e following conditions are met:
(A) The project meets the
qutrements of 90 CFR 35.3520 Other
e pronounce on the
[.firm of dams and reserve
35.3520(e)(1) and (3); and
35.3520(b)(1) that the project is needed
to address present or prevent future
violations of health -based drinking
water standards, provided that if the
Lem 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 data
or reservoir is for drinking water supply;
(C) The project is needed for the
provision of drinking water supply,
with need assessed as of the time the
project is initiated;
(D) The project is designed to support
no more than a reasonable level of
projected increased used, whether due
toppulation growth or otherwise; and
The project is a cost-effective
means for achieving the desired lewd of
service.
(vii) Private wells. Rehabilitation of
private wells, testing initiatives to
identify contaminants in private wells,
and treatment activities and remediation
projects that address coma ruination in
private wells, if the project meets the
requirements of 40 CFR 35,3520 other
than the limitation to certain eligigible
systems under 40 CFR 35.3520(a).
(2) Broadband fnvestment"l)
General. Broadband infrastructure if the
following conditions an met:
(A) The broadband infrastructure is
designed to provide service to
households and businesses with an
identified need, as determined by the
recipient, fur such infrastructure:
(B) The broadband infrastructure is
designed to, upon completion:
(1) Reliably meet or exceed
symmetrical too Mbps download speed
and upload speeds; or
t2) In cases where it is not practicable,
because of the excessive cost cities
.ad geed and upload speeds:
eliably meet or exceed 100 Mbps
red speed and between at least 20
and 100 Mbps upload speed; and
3e scalable to a minimum of 100
download speed and 100 Mbps
I speed; and
the service provider for a
to households is required, for as long as
the SLFRF-funded broadband
i rdaetructure is in use, by the recipient
to:
(I) Participate in the Federal
Communications Commission's
Affordable Connectivity Program (ACP)
through the lifetime of the ACP; or
(2) Otherwise provide access to 9
broad -based affordability program to
low-income consumers no the proposed
service area of the broadband
infrastructure that provides benefits to
households commensurate with those
provided under the ACP through the
lifetime of the ACP.
(B) C},bemecuriiy infmstrudere
investments. Cybemecurity,
infrastructure investments that am
designed to improve the reliability and
resiliency of new and existing
broadband infrastructure. Such
investments may include the addition in
randomization of network security
hardware and software tools designed to
strengthen cyharsecurity for the and -
users of these networks.
(1) 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 authorized Bureau
of Reclamation project.
135.7 Fanalona.
A recipient (other than a Tribal
government) may not use funds for
deposit into any pension fund.
§35.5 Tax.
(a) Restriction. A State or Territory
shell not use funds to either directly or
indirectly offset a reduction in the net
tax revenue of the State or Territory
resulting from a covered change during
the covered period.
(b) Violation. Treasury will consider a
State in Territory to have used funds to
offset a m It ction in net tax revenue if,
duringg a repong year:
(1) to change. The Stale or
Territory has made a covered change
that, either based on a ro"enable
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 Stale or Territory
assesses has had or predicts to have the
effect of reducing tax revenue relative to
current law:
(2) Rxcecds the de mfninds threshold.
The aggregate amount of the measured
or predicted reductions in lax revenue
caused by covered changes identified
under paragraph (b)(1) of this section, in
the aggregate, exceeds 1 percent of the
Slate's or Territory's baseline;
(3) Reduction in net tax revenue. The
State car Territory reports a reduction in
net tax revenue, measured as the
difference between actual tax revenue
and the State's or Territory's baseline,
each ineasanreit a. of the and of the
repQorting year; and
`4) Consideration of other changes.
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
rase, 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 coveted 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
(ii) 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 in which the State or
Territory is not using food.; suit
tB) 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 ream as reduction
cop. If a State ce Territory is considered
to be in violation pursuant to paragraph
(b) of this section, the amount used in
Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4453
A olation of paragraph (a) of this section
under paragraph (b) of this section. To
602(d)(1) of the Social Security Act that
is eq al to the lesser of:
f 1) The reduction in net tax revenue
request inconsideration of any amounts
suhjsct to recoupment, a recipient must
is less than two percentage points above
its unemployment rate in February
of the State or Territory for the reporting
submit to the Secretary a written request
2020, the Secretary will withhold 50
year, meant red as the difference
between the State's or Territory's
that lncladde
(1) An explanation of why the
percent of the amount officials allocated
under section 602(b) of the Social
baseline and its actual tax revenue, each
recipient believes all or some of the
Security AM to such State or territory
measured as of the end of the reporting
amount should not be subject to
until at least May 10, 2022 and not mom
year, and.
(2) The aggregate amount oflhe
encu mein and
(2) A discussion of supporting
than twelve months from the date such
initial certification is provided to the
reductions in lax revenues caused by
mesons, along with any additional
Secretary,
covered changes identified in paragraph
information.
(b) Payment of wifhheld amours. in
(b)(1) of this section, minus the sum of
(a) Final amount subject to
order to receive the amount withheld
the amounts in identified in paragraphs
reroupment. Unless the Secretary
under paragraph (a) of this section, the
(b)(4)(1) and 60 of this section.
ex tends or accelerates the time period,
Stale or Territory ..at submit io the
§35.9 Complier with appocabb laws.
within 60 calendar days of receipt of the
recipient's request for inconsideration
Secretary the fallowing information:
(1) A certification, in the farm
A recipient must comply with all
other applicable. Federal autmas,
provided pursuant to paragraph (it) of
this section or the expiration of the
provided by the Secretary, that such
regulations, and executive orders, and a
period for requesting reconsideration
State or Territory requires the payment
to carry out the activities specified in
recipient shall provide for compliance
with the American Rescue Plan Act, this
provided under paragraph (d), the
recipient will be notified of the
section 602(c) of the Social Security Act
and will use the payment in compliance
subpart, and any interpretive guidance
by other parties in any agreements it
Secretary's decision to affirm, withdraw,
or modify the notice of recoupment.
with section 602(c) of the Social
Security Act; and
enters into with other parties relating to
these funds.
Such notification will include an
(2) Any reports required to be riled by
explanation of the decision, including
that date pursuant to this part that have
§35.10 ReeoupmenL
responses to the recipient's supporting
not yet been filed.
(a) Identification .f arid) In
reasons and consideration of additional
irdormalion provided. A recipient ..at
§35.12 Ustributions to noit om matent
general. Any amount ussaedd in violation
of § 35.5, 35.6, or 35J may be identified
nvoke and exhaust the procedures
units of local government and units of
general local government.
at any time prior to December 31. 2026.
available under this subpart prior to
seeking judicial review of a decision
(a) Nonentitlement units oflocal
(2) Annual meaning of amounts of
under § 35,10.
government. Each State or Territory that
violations. On an annual basis, a
(f) Repayment officials. Unless the
receives a payment from the Secretary
recipient that is a State or territory must
calculate and report any amounts used
Secretary extends or accelerates the time
period, a recipient shall repay to the
pursuant to section 603(b)(2)(B) of the
Social Security Act shall distribute the
In violation of § 35.s.
(b) Calculation of amounts subject to
Secretary any amounts subject a
recoupment in accordance with
amount of the payment to
nonentillement units of local
recoup ant—(1) In geneml. Except as
provided in (b)(2) of this
instructions provided by the Secreary:
government in such State or Territory in
paragraph
(1) Within 120 calendar days of
accordance with the requirements set
sect!., the Secretary will calculate any
receipt of the notice of recouprmad
forth in section 603(b)(2)(C) of the
amounts subject to reroupment
resulting from a violation of § 35.5. 35.6
provided under paragraph (cl of this
vacua., in the case of a recipient that
Social Security Act and without
offsetting any debt owed by such
or 35.7 as the amounts used in violation
of such restrictions.
does not submit a request for
nomenlitlement units of local
(2) Violations of §35.8. The Secretary
reconsideration in accordance with tire
governments against such Palestine.
(b) Budget cap. A State or Territory
will calculate any amounts subject to
requirements of paragraph (it) of this
section; or
may not make a payment to a
recoup rim resulting from a violation of
(2) Within 120 calendar days of
nonantitlement unit of local government
§ 35.8, equal to the lesser of:
(i) The amount set forth Lr § 35.8(c);
receipt of the Semetery s decision under
paragraph (a, of this aectlon, in the case
pursuant to section 603@)(2)(C) of the
Social Security Act and paragraph hd of
end,
(if) The amount of funds received by
of a recipient that submits a request for .
reconsideration in accordance with the
this section to excess of the amount
equal to 25 percent of the most meant
such recipient.
(c) Initial notice. if the Secretary
requirements of paragraph (it) of this
section.
budget for the nonentitlement unit of
!.cal government as of lemony 27, 2020.
calculates an amount subject to
(g) Other remedial actions. Print to
For purposes of this section 35.12, a
recoupmenl under paragraph (b) of this
seeking recouperenl or taking other
nonantitlement unit of local
section, Treasury will provide the
recipient an initial written notice of the
appropriate action pursuant to
paragraph (c), (it), (a), or (1) of this
govemment's most recent budget shall
mean the nonentitlement unit of local
amount subject
with an explanation
to recoupment along
of such amounts.
section, the Secretary may notify the
recipient of potential violations and
government's total annual budget,
including both operating and capital
(d) Request for reconsideration.
Unless the Sensory extends or
provide the recipient an opportunity far
expenditure budgets, in affect as of
informal convolution and maceration.
January 27, 2020. A State or Territory
calends days of receipt of an initial §35.11 Payments to liums. local government without a formal
coffee of comil Bent provided under (a) In general. With respect to any budget as of January 27, 2020, to
paragraph (cl of this section, a recipient Stale or Territory that has an provide a certification from an
may submit a written request to the unemployment rate as of the dale that authorized officer of the ....filter.
Secretary requesting reconsideration of it submits an initial certification for unit ofl.c.1 government of its most
any amounts subject to recoupment payment of funds pursuant to section recent annual expenditures as of
4454 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations
January 27, 2020, and a State ce
distribute the amount of the payment to
dialributions to nonentidemset units of
Territory may rely on such certification
units ofgeneral local government within
local government or units of general
for purposes of complying with this
such county in accordance with the
local government beyond those required
section 35.12.
requirementa set forth in section
by section 603 of the Social Security Act
(c) Units ofgeneml loco] government.
603(h)(3((11((ii) of the Social Security
or this subpart.
Each State or Territory that receives a
Act and without offsetting any debt
payment from the Secretaryry pursuant to
owed by such units of general local
I.Oh leibenlnft.
section 603(b)(3)(B)(ii) oft Social
government against such payments.
a i'J'ReCoveryofficar.
Security Act, in the case of an amount
(d)
Additional Conditions. A Slate or
Ifs 0«. 2022-00292 filed 1- 6- 2: e,as eml
to be paid to a County that is not a unit
Territory
may not place additional
m, w CODE e
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Compliance and
Reporting Guidance
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Sepe ether 20, 2022
Version: SaY
U S. DEM3tTMENT OF THE TREASURY
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 April 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 rule's flebbilities and simplifications
ahead of the effective date. Recipients may consult the Statement Regarding Compliance with the
Coronavirus State and Local Fiscal Recov&Z Funds Interim Final Rule and Final Rule 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 concertwith the Award Terms and
Conditions, the authorizing statute, the final rule. other program guidance including the Final Rule
FAQS, and other regulatory and statutory requirements, including regulatory requirements under the
gpun[e gnu [v[[ a�rnr l,gm DllanCe Jupplement Fleass ace me 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
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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
7:17�:iriTN7l33�dR�51[i7`JSa5i3[aSiC�T-.
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 concerning 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 collection of information unless it displays a valid control number assigned by OMB.
Coronavims state and Local Fiscal Recovery Funds
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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 Ad 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 rule 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 effective 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 Advancing Racial Equity and Support for Underserved
Communities -f hrouah 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-212120 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 rule 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
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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 flexibili ies and
simplifications prior to April 1, 2022. Recipients may consult the Statement Regarding Compliance
with the Coronavirus 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 projects 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 COVIDA9 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 a judgment or settlement, or contribute to a "rainy day" fund. Recipients should refer
to Treasury's final rule for more information on these restrictions.
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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 ("OMB") 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/Negative Economic Imoacts: 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 forwork 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 Me 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 pudic
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
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U.S. OEPAmMENT OF THE TREASURY
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 must submit one initial Interim Report, quarterly or annual Project
and Expenditure reports which include subsward 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 Apnl 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 Recovery 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
organ¢ation'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 Tens and Conditions, to determine and record eligible uses
Coronavirus State antl Local Fiscal Recovery Funds
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U.S. UEPMThIENTGF THE TRFPSUR!
of SLFRF funds. Pert 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 CostslCost 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 identified specifically as costs of implementing the SLFRF program objectives, such as
r 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).
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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)(Ill
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
records, to determine and monitor implementation of criteria for determining the eligibility of
beneficiaries and/or subrecipients. 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.
5. 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 13.15, 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. 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.
x 2 CFR 200.414 Indirect Costs.
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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).
8. 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 FAG
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 noncompetitive
procurements only in certain circumstances. Recipients must have and use documented
procurement procedures that are consistent with 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, ordiscounts. 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. Your organization
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
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(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") andfor 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.
It. Subrecipient Monitoring. SLFRF recipients that are pass -through entities as described under 2
CFR 200A 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 ofany given Subrecipient should reflect its assessed
nsk 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 other entities 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 submicipient 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 best practices
for development of internal controls in Table 1 below, with an example of each best practice.
Coronavirus Stale and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
U.S. oERiRMENTOF THE I REASunY
Table 1: Internal controls best oractices
Description
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") (hops.//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.'
2. Recordkeeping Requirements. Generally, your organization must maintain records and financial
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 or 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 Act and
its implementing regulation at 2 CFR Part 200, 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
^ See flexibility provided in haps:/Avww.whitehouse.govlwp-contenUuploads2021/03/M_21_20.pdf.
a 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 DIG.
Coronavirus Slate and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
12
U.S. OEP ENTOF THETHEASURY
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:
httgs/lwww.whitehouse.gov/ombYoffice-federal-financial-management/ 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 She 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 gender 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-i 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 at 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 at 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
wil I 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, Coordinalion of
Non-discrimination in Federally Assisled Programs, 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 FAQ 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 Slate and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
13
US OEEWRTMENT OF THE TREASURY
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 26.
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 Stats and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
U.S. CEPPRiMENT OF THE iREASUFY
Table 2: Re
ortin re uirements
bv minlent ne
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 if
of each quarter
annually
funding was
thereafter
thereafter by
received by
October 15,
Note: NEUs were
Jul 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: NEW
31, 2022. The first
funding, and NEUs that
were not
reporting date for
are allocated more than
required to
NEW was April 30,
$10 million in SLFRF
submit an
2022.
funding
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.
ue
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 tow
and where to submit required reports are posted at www.treasury.goy/SLFRPReportino and updated
on a regular basis.
Coronavirus state and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
15
U.S. OERMTMENTOFTHETREASURY
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 mirror 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 or 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 expenddures6 by Expenditure Category covering the period from March
3rd to July 31, 2021, by August 31, 2021 or sixty (60) days after first receiving funding if the recipient's
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
c 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 State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
16
US DEPARWENTOFTHEMEASUPY
• Estimated revenue loss due to the Covid-19 public health emergency as of December 31,
2020
• An explanation of tow 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 until 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
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
17
u.s. peewraisvror —mce—
• 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: Quarteriv Proiecl and Expenditure Report Timeline
Report
1
Quarter
2021 2-4
March 3, December 31
• e Date
Janua 31,2022
2
2022 1
January1 — March 31
Aril 30. 2022
3
2022 2
Aril 1 — 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
Aril 30, 2023
7
2023 2
Aril 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
A 'I 30 2024
11
2024 2
Aril 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
2026 1
January 1 — March 31
Aril 30 2025
15
2026 2
Aprill —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
April 30 2026
19
2026 2
Aril 1 —June 30
Jul 31 2026
20
2026 3
Jul 1 — September 30
October 31, 2026
21
2026 4
October 1 — December 31
Aril 36, 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 $0, 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 Reponing Guidance
18
US OkSWTMENTOP THE TRIASURY
Table 4: Annual Proiect and Expenditure Report timeline
Report
1
Period Covered
March 3, 2021 — March 31, 2022
Due Date
Aril 30, 2022
2
April 1, 2022—March 31, 2023
Aril 30, 2023
3
Aril 1 2023—March 31, 2024
Aril 30, 2024
4
April 1 2024—March 31, 2025
Aril 30, 2025
5
April
1, 2025 — March 31, 2026
April 30, 2026
6
April
1, 2026 — December 31, 2026
April 30, 2027
3. Required Information
The following information is required in Project and Expenditure Reports for both quarterly and annual
reporting:
a. Proiects: 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
project'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. Prooram Income: Recipients should report the program income earned and expended to cover
eligible project costs, if applicable.
e.
exceeds 250,000 residents only): Each state, temtory 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 projects or budgets.
Cwonavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
US DEPARTAENTOF THE TREikSURY
• 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, Fa 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.aov/SLFRPReporting.
f. Proiect Demographic Distribution (applicable to Public Health and Negafive Economic Impact ECs:
EC 1.1-2.371—Collection began April 2022
Recognizing the disproportionate public health and negative economic impacts of the pandemic
on many households, communities, and other entifies, 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 served.
Recipients will select from the following options:
ublic Health
Impacted
• General Public
Disproportionately
Assistance to
• Low- or -moderate income
• Low-income households and
Households
households or populabonsa
populations"
• Households that experienced
encetl
Households and populations
unemployment
residing in Qualified Census Tracts
• Households that experienced
Households that qualify for certain
increased food a housing insecurity
federal programs12
• Households that qualify for certain
• Households receiving services
federal programst'
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
9 Low or moderate -inane households and communities are those with O income at or below 300 percent of the Federal
Poverty Guidelines for the size of the household based on Me most recently published poverty guidelines by the
Department of Health and Human Services (HHS) or (it) 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 Me Department of Housing and Urban
Development (HUD).
to 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.
" Low-income households and communities are those with (i) income at or below 185 percent of the Federal Poverty
Guidelines for the size of the household based on the mast recently published poverty guidelines by HHS or (it) income at
or below 40 percent of Area Median Income for its county and size of household based on Me most recently published
data by HUD.
1z For Disproportionately Impacted households, these programs are Temporary Assistance for Needy Families ('TANF'),
Supplemental Nutrition Assistance Program ('SNAP"), Free- and Reduced -Pace Lunch ("NSLP") anchor School Breakfast
('SBP") programs, Medicare Part D Low-income Subsidies, Supplemental Severity Income ('SSI-), Head Start, Special
Supplemental Nutrition Program for Women, Infanta, and Children ("PAC"), Section 8 Vouchers, Low -Income Home
Energy Assistance Program ('UHEAP"), and Pell Grants.
Coronavirus Stale and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
20
Impacted
Disproportionately Impacted
• Other households or populations
• For services to address educational
that experienced a negative
disparities, Title I eligible schools13
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
ndemic lease specify)
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)
Aid to Impacted
. Travel, tourism, or hospitality sectors
N/A
Industries
(including 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. Transfersand Direct Payments: Each recipient shall also
provide detailed obligation and expenditure information for any contracts and grants awarded,
bans 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
's For educational services and other efforts to address educational disparities, Treasury will recognize Tile I eligible
schools as disproportionately Impacted and responsive services that support the school generally or support the whole
school service as eligible. "Tkle I eligible schools' means schools eligible to receive services under section 1113 of The I,
Part A of the Elementary and Secondary Education Ad of 1965, as amended (29 U.S.C. 6313), Including schools served!
under section 1113(b)(1)(C) of that Ad.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
/.S nEPMUMFu 0FTnETNFAWRY
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 or 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 names)
• Related project identification numbers) (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 entifies,
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 subrecipieri 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 infonmadon 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 Vl, along with other questions and
assurances. This collection does not apply to Tribal governments"
i. Ineligible 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.
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US. DEcWmMENTOFTHETREPSUW
Offset Provision may be subject to rewupment. 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 2019,15 (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 change(s) 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 1 and additional fields.
• Is the aggregate value of your revenue -reducing covered change(s) for the requested fiscal
year less than the de minimis? YesfNo.
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
lax 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) and/or 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
15 Tax revenue for fiscal year ending 2019 is relevant for calculating the recipient's baseline.
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• Do you have revenue -reducing covered change(s) 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 change(s) for the requested
fiscal year. °
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 estimated
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 idenfification 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 change(s) for the requested fiscal
year less than one percent of baseline revenue? YIN
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
'a 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 tax or tax 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'
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N.5. OEPNRMENTOf TNETREM W
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 ParM 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 cop.
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.
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V.S. CEPWTMFNTOF THE TREPSUW
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 specific 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: if 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 govemment.
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 govemment
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
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U.S. DEPARTMENTOF THEmEASnRT
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) [pre -
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. Required 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 1.1-3.5) - 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 COVID-19, 11
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 specific 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 Welfare System includes a vide 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 andtorservice 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 I.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
• COVID-19 vaccination 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 harts except as provided in the final rule.
Comnavirus State and Local Fiscal Recovery Funds
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• 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 facifi ies, 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 CONAD-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., inpatientoroutpatient 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 Internet (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)
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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)
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 ww ii casurv.00v/SLFRP)
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.18
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
r° For more information on NCES identification numbers see Mrs n/ncesad gOvlccd/distridsearch) (districts)
and Mips Imces ed gov/ocdischoolsearchl(schools).
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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 or 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 Apnl
2022)
11. Revenue replacement fEC 6.11—Coilecb'on 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 change 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 or 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 rule.
• 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.treasgaE2v/SLFRPRe2orting).
For information on treatment of future tax changes, please see the Statement Regarding
Compliance with the Coronavirus State and Local Fiscal Recovcry 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 projects (EC 5) — Collection began in January 2022.
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US 0EPoRTMENT OF THE TREPSORY
• Projectedlactual construction start date (monthlyear)
• 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 intonation 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 sate 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 (if applicable;
for projects aligned with the Clean Water State Revolving Fund) (Collection began in
January 2022)
12 As determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of ti le 40,
United Stales Code (commonly known as the "Davis -Bacon Ad'), 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.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
u.S. DFFWVVENTa THE TREavm
• 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 Apr# 2022)
• Lowest Quintile Income of the service area (Collection began in April 2022)
3. Broadband oroiects (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 Conti" 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.
• Cord'" 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 Information
• 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 2513 Mbps and 100/20 Mbps
• Post-SLFRF Investment(Planned/Actual):
• Number receiving minimum 1001100 Mbps
• Number receiving minimum 100120 Mbps and scalable to minimum
100/100 Mbps
o Total number of funded locations served, broken out by type (Planned/Actual):
• 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 2022, as
specified below):
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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LL5. OEPAPMENT OF THE TRFhSUPY
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)
a 2513 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
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 categones:
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. Lona-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 2.101 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 2.24-2.26) and Addressina Impacts of Lost
Instructional Time (EC 2.27):
• Number of students participating in evidence -based tutoring programs10
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
- For more information an evidence -based tutoring programs, refer to the U.S. Department of Education's
2021 ftD COVIL)-19 Handbook (Volume 21, which summarizes research on evidence -based tutoring programs
(see the bottom of page 20.
Coronavirus state and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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11.SMRV MEMCFTIiETR UW
in. NEU Documentation (NEUs onlvl: 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 descnbed 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 websde of the recipient by the same date the recipient
submits the report to Treasury. Treasury recommends that Recovery Plans be accessible within three
dicks 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. While 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 wmvtieasurv.ocv/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:
Coronavlrus state and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U 5 0EP oW1JE, r0F THE mMURY
Annual
Reprt
July
Period Covered
, 2022— June 30,
2023r
Due
Date
20
4
Jul
1, 2023—June 30,
2024
Jul
43
31,
5
July
1, 2024—June 30,
2025
July
31 2025
6
July
i 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 junsi icfion's
SLFRF program, such as how theirjurisdiction'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 haw 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 Flealth-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 NEC 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 Justice401nifiative.21
31 See Executive Order 140.08, On Tackling the Climate Crisis at Home and Abroad and the Interim
Implementation Guidance for the Justice40 Initiative, OMH M_21_28.
Coronavirus Stale and Local Fiscal Recovery Funds
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11 S. GEPMPId TO THE TREASURY
I. Revenue Replacement (EC 61: Describe the loss in revenue, including if electing the standard
allowance, due to the COVID-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 information 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 Eguity 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. Project Implementation: In addition, please explain how the jurisdiction's overall equity strategy
translates into focus areas for SLFRF projects and the speck 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 Repo Ring Guidance
36
1I.&DEPMMVENTeFTREIRF URY
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 tow 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
communi ies (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 and/or 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,T
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 project in 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 learning agendas, please see 01,113 M-19-23
As noted in Appendix 2, evidence -based refers to interventions with strong or moderate levels of evidence.
Coronavims State and Local Fiscal Recovery Funds
Compliance and Reportirg Guidance
37
us
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 theirjurisdiction; such evidence clearinghouses include the U.S. Department of Education's
What Works Clearinghouse, the U.S. Department of Labor's CLEAR, and the Childcare & Early
Education Research Connections and the H_emc 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 disaggregale 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 tracking 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" to identify their output and outcome measures.
For more information on the required standards for program evaluation, see OMB 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
11.S. 0EPA EHJT rx THE TREASURY
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 22)Long-TemT Housing Security (EC 215-216) 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
b. Assistance to Unemployed a Underemployed Workers (EC 2.10) and Community Violence
Interventions (EC 1.111):
• 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 programme
d. Healthy Childhood Environments (EC 2.11-2 141:
• Number of children served by childcare and early learning services (pre-school/pre-Wages 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, gender, 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.
" For more information on evidence -based tutoring programs, refer to the U.S. Department of Education's
2021 LD COVID-19 Handbook (VOltlme 2), which summarizes research on evidence -based tutoring programs
(see the bottom of page 20.).
Coronavirus stare and Local Fiscal Recovary Funds
Compliance and Reporting Guidance
39
U.S. MPAmMEMTof THE TR6ASUW
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 initiative", 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)
n See Executive Order 14008, On Tackling the Climate Crisis at Home and Abroad and the Interim
Implementation Guidance for the Justice40 Initiative, OMB M-21 _28.
Corenavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U S. CEPPRTLIENT OF THE TREASURY
• 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 date(s)
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 stale deemed
ineligible.
For each eligible NEU that declined funding and requested a transfer to the state under Section
603(c)(4) of the Social Security Act, the state or territory must also attach a form signed by the NEU,
as detailed in the Guidance on Distributions of Funds to Non -Entitlement Units of Local
Government
Coronavirus State and Laval Fiscal Recovery Funds
Compliance and Repoding Guidance
0 US.DEPARRAEWCFTHETRE URY
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 referred 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 EC11 Previous
1: Public Health
COVID-19 Mitigation 6 Prevention
COVID-19 VaccinationA
1.1
1.1
COVID-19 Testin A
1.2
1.2
COVID-19 Contact Tracin A
1.3
1.3
Prevention in Congregate Settings (Nursing Homes, Prisons/Jails,
Dense Work Sites, Schools, Child care facilities, etc. 'A
1.4
1.4
Personal Protective E ui mentA
1.5
1.5
Medical Expenses(Including Alternative Care Facili ies A
1.6
1.6
Other COVID-19 Public Health Expenses (including Communications,
Enforcement, Isolation/Quaramiine)A
1.7
1.8
COVID-19 Assistance to Small Businesses"
1.8
COVID 19 Assistance to Non -Profits-
1.9
COVID-19 Aid to Impacted IndustriesA
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 Services"
1.14
1.12
Capital Investments or Physical Plant Changes to Public Facilities that
respond to the COVID-19 public health emergency
1 7
2: Negative Economic Impacts
Assistance to Households
Household Assistance: Food Programs'^
¢ Under Me final rule tc be used starting with April 2022 reports
4 Under the interim final rule to be used in Interim Report and January 2022 Project and Expenditure Report
Coronavirus Sete and Local Fiscal Recovery Funds
compliance and Repoding Guidance
42
115. pFPARThIEMOF THE 1REASIIItY
Expenditure Category
Household Assistance: Rent Mortgage, and Utility Aid`"
EV
2.2
PreviOLIS
EV
2.2
Household Assistance: Cash Transfers`^
2.3
1 2.3
Household Assistance: Internet Access Prograppi
2.4
1 2.4
Household Assistance: Paid Sick and Medical Leave"
2.5
Household Assistance: Health Insurance•"
2.6
Household Assistance: Services for Un/Unbanked•A
2.7
Household Assistance: Survivors Benefits"
2,g
Unemployment Benefits or Cash Assistance to Unem to ed Workers•A
Assistance to Unemployed or Underemployed Workers (e.g. job training,
subsidized employment, employment supports or incentives)*"
2.10
2.7
Healthy Childhood Environments. Child Care`^
2.11
3.6
Healthy Childhood Environments: Home Visitin •"
2.12
3.7
Healthy Childhood Environments: Services to Foster Youth or Families
Invohaed in Child Welfare S stem•"
2.13
3.8
Healthy Childhood Environments: Early Leamin '"
2.14
3.1
Lon -term Housing Security: Affordable Housing-
2.15
3.10
Long-term Housing Securil : Services for Unhoused Persons•^
2.16
3.11
Housing Support: Housing Vouchers and Relocation Assistance for
DisproportionatelyImpacted Communities•^
2.17
-
Housing Support Other Housing Assistance•^
2.18
-3.12
Social Determinants of Health: Community Health Workers or Benefits
Navi ators`^
2 19
3.1 4
Social Determinants of Health: Lead Remediatiorl
2.20
3A5
Medical Facilities for DisproportionatelyImpacted Communities"
2.21
Strong Healthy Communities: Neighborhood Features that Promote
Health and Saf A'
2.22
Strong Healthy Communities: Demolition and Rehabilitation of
Pro rties"-
2.23
Addressin Educational Disparities: Aid to High -Poverty Districts^
2.24
3.2
Addressing Educational Disparities: Academic, Social, and Emotional
Services`^
2 25
3.3
Addressing Educational Disparities: Mental Health Services-
2.26
3.4
Addressing Impacts of Lost Instructional TimeA
2.27
Contributions to UI Trust Funds^
2.28
28
Assistance to Small Businesses
Loans or Grants to Mitigate Financial Hardshi A
2.29
2.9
Technical Assistance, Counseling, or Business Plannin '"
2.30
Rehabilitation of Commercial properties or Other Improvements'
2.31
Business Incubators and Start-Upor Expansion Assistance`^
2.32
Enhanced Support to Microbusinesses•"
2.33
Assistance to: Non -Profits
Assistance to Impacted Nonprofit Organizations (Impacted or
Disproportionately Impacted)"
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`^
2.37
2.13
Household Assistance: Eviction Prevention•^
2.5
Education Assistance: Other *A
3.5
Corona ims State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
43
U 5.OEPPRIAIENTOF iNETRE0.5nRY
Expenditure Category ECII Previous
EV
Healthy Childhood Environments: Other'^ 3.9
Social Determinants of Health: Other'" 3.13
3: Public Health-Negativeg Economic Impact: Public Sector Capacity
General Provisions
Public Sector Workforce. Payroll and Benefits for Public Health, Public
Safety,or Human Services Workers
3A
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
T2
Public Sector Capacity: Administrative Needs
3.5
4: PlmmiumPa'
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
5.2
Clean Water: Decentralized Wastewater
5.3
5.3
Clean Water: Combined Sewer Overflows
5.4
5.4
Clean Water: Other Sewer Infrastructure
5.5
5.5
Clean Water: Stormwater
5.6
5.6
Clean Water: Energy Conservation
5.7
5.7
Clean Water: Water Conservation
5.8
5.8
Clean Water: Nonpoint Source
5.9
5.9
Drinking water. Treatment
5.10
6.10
Drinking water. Transmission S Distribution
5.11
5.11
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
5.16
Broadband: IIJA Match
5.20
Broadband: Other Projects
5.21
5.17
6: Revenue Replacement
Provision of Government Services
6.1
6.1
Non-federal Match for Other Federal Programs
6.2
7: Administrative
Administrative Expenses
7.1
7.1
Transfers to Other Units of Government
7.2
7.3
Transfers to Non -entitlement Units States and territories only)
7.4
Coronavims state and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
41
US. CERMTMENTOFTHEMEASURY
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 3.1
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
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
microbusineases), 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 A
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 Suats and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
45
U.S. DERARIMENT OF THE TREP RY
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'"
EC is 2.11
3.7
Healthy Childhood Environments: Home
EC is 2,12
Visiti
3.8
Healthy Childhood Environments: Services to
EC is 2,13
Foster Youth or Families Involved in Child
Welters S stem'A
3.9
Healthy Childhood Environments: Other'A
EC is 2.37, Collected under Other
Economic Impact
3.10
Housing Support: Affordable Housing'"
EC is 2.15
3.11
Housing Support: Services for Unhoused
EC is 2.16
Persons'A
3.12
Housing Support: Other Housing Assistance'"
EC is 2.18
3.13
Social Determinants of Health: Other *A
EC is 2.37, collected under Other
Economic Impact
3.14
Social Determinants of Health: Community
EC is 2.19
Health Workers or Benefits Navi atoi
3. 55
Social Determinants of Health: Lead
EC is 2.20
RemediationA
3. 66
Social Determinants of Health: Community
EC is 1.11
Violence Interventions'^
5: Infrastructure
5.16
Broadband: "Last Mile" projects
EC is 5.19
5. 77
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 Z2
7.4
Transfers to Non•entitlement Units (States and
To be separately reported as part of
terdtodes only)
NEUINon-UGLG module. Refer to Part 2
Section D.
Coronavirus State and Local Fiscal Recovery Funs
Compliance and Reporting Guidance
46
U.S. CEPARRAENTOFTNETRE RY
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 -designed 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 track 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 6101(21) of the Elementary and Secondary Education Act of
1965, as amended (20 U.S.C. 6301 et seq.). Please see page 16 of this Fiecucntly 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.
Coronavlrus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
ch
IT DEPARTMENT OF THE TREASURY
Appendix 3: Expenditure Categories aligned with the Interim Final Rule
1A
lic Health
'COVID-19 Vaccination"
1.2
COVID-19 Testing^
1.3
COVID-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 emergency
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 Servicese
1.11
Substance Use Services'
1.12
Other Public Health Services
2: Negative
2.1
Economic Impacts
Household Assistance: Food Programs`"
2.2
Household Assistance: Rent Mortgage. and Utility Ail "
2.3
Household Assistance: Cash Transfers' A
2.4
Household Assistance: Internet Access Programs' "
2.5
Household Assistance: Eviction Prevention` A
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)* A
2.8
Contributions to UI Trust Funds
2.9
Small Business Economic Assistance (General)" A
2.10
Aid to Nonprofit Organizations•
2.11
Aid to Tourism, Travel, or Hospitality
2,12
Aid to Other Impacted Industries
2.13
Other Economic Support' A
2.14
Rehiring Public Sector Staff
3.1
.r
Education Assistance: Early Learning''^ ,
3.2
Education Assistance: Aid to High -Poverty Districts ^
3.3
Education Assistance: Academic Services' A
3.4
Education Assistance: Social, Emotional, and Mental Health Services' A
3.5
Education Assistance: Other* A
3.6
Healthy Childhood Environments: Child Care' "
3.7
Healthy Childhood Environments: Home Visiting' A
3.8
Healthy Childhood Environments: Services to Foster Youth or Families Involved in
Child Welfare System "
3.9
Healthy Childhood Environments: Other* A
3.10
Housing Support: Affordable Housing' A
3.11
Housing Support: Services for Unhoused Persons' A
Coronavirus state and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
48
US. ORRARTMENTOF THE TREASURY
3.12
Housing Support: Other Housing Assistance` ^
113
Social Determinants of Health: Other* ^
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 Health: Community Violence Interventions` "
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
54
Clean Water: Combined Sewer Overflows
5.5
Clean Water: Other Sewer Infrastructure
5.6
Clean Water: Stormwater
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
5.14
Drinking water: Storage
5.15
Drinking water: Other waterinfrastruclure
6.16
Broadband: 'Last Mile' projects
5.17
Broadband: Other projects
nue acement
1P
Administrative
fovisiono6Government Services
7.1
Administrative Expenses
7.2
Evaluation and Data Analysis
7.3
Transfers to Other Units of Government
17.4
Transfers to Non -entitlement Units (States and territories only)
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
49
F^ US
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, originally due on October 31,
2021.
2.0
November 5, 2021
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 fimelines 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 wncept 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
certification 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 forme Project and Expenditure report
. Updated Broadband data fields
4.1
June 17, 2022
. Updated clerical emers 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 Recovery Funds
Complianr and Reporting Guidance
50
0
113 West Mountain Street
Fayelle ik Aft 72701
(479)575-e323
Resolution: 270-22
File Number: 2022-1009
PEACE AT HOME FAMILY SHELTER SUBRECIPIENT AGREEMENT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF THE
EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF S686,500.00, AND TO
APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act
(ARPA) invited non-profit organizations to submit proposals for projects to fund with the available
ARPA funding; and
WHEREAS, the Peace in Home Family Shelter submitted an application requesting $686,500.00 in
American Rescue Plan Act funds for the expansion of the safety shelter for survivors of domestic
violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which will allow
Peace at Home to provide safe, emergency shelter in approximately 60 additional adults and children
Fleeing domestic violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of$696,500.00 for
the rehabilitation and construction costs.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section I: That the City Council of the City of Fayetteville, Arkansas hereby authorims Mayor Jordan
to sign a Subrecipient Agreement with Peace at Home Family Shelter to provide the amount of
rpr wwta�llnaox
ftsW .220-22
FIN N.m .. 2022-1008
$686,500.00 in American Rescue Plan Act funds to fund the expansion of the emergency shelter.
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 11/152022
Approv d: Attest: O`JG�f'RK w",
FAME?-VILLE
ioneld Jord yor Kara Paxton, City Clerk Treasu&(%' : 'k4NSK`
''tilh4ii,;.; Wn
Pg 2 PN,Mm114"2
City of Fayetteville, Arkansas 113 West Nsstusn street
Fayeaevllle. AR 72701
(479) 5r58323
Text File
File Number: 2022-1009
Agenda Date: 11115/2022 Version: 1 Status: Passed
In Control: City Council Meeting File Type: Resolution
Agenda Number: G5
PEACE AT HOME FAMILY SHELTER SUBRECIPIENT AGREEMENT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT
WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF THE EMERGENCY
SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING AMERICAN RESCUE PLAN
ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) invited
non-profit organizations to submit proposals for projects to fund with the available ARPA funding; and
WHEREAS, the Peace at Home Family Shelter submitted an application requesting $686,500.00 in American
Rescue Plan Act funds for the expansion of the safety shelter for survivors of domestic violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which will allow Peace
at Home to provide safe, emergency shelter to approximately 60 additional adults and children fleeing domestic
violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of $686,500.00 for the
rehabilitation and construction costs.
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 w sign a
Subrecipient Agreement with Peace at Home Family Shelter to provide the amount of $686,500.00 in
American Rescue Plan Act funds to fund the expansion of the emergency shelter.
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.
Lny W HyetNrtlM, Arxmeae Pape 1 IsHnied—
Legistar ID No.: 2022-1009
AGENDA REQUEST FORM
FOR: Council Meeting of November 15, 2022
FROM: Council Member Sarah Bunch
ORDINANCE OR RESOLUTION TITLE AND SUBJECT:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION
OF THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE
UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF
$686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT
APPROVED FOR AGENDA:
Ciq Council Meinber
Sarah Bunch
City Attorney it Williams
Approved as to form
Date
Batker, Jodi
From: Bunch, Sarah
Sent: Tuesday, November 01, 2022 11:21 AM
To- Batker, Jodi; Williams, Kit; Blake Pennington; Paxton, Kara
Subject: Re: Resolution
Jodi,
Sorry, I am just now getting back to you on this. Please consider this email my approval of the Resolution as
attached, and see that it gets added to our agenda. Call me if you need anything else.
Sarah Bunch
From: Batker, Jodi <jbatker@fayetteville-ar.gov>
Sent: Thursday, October 27, 2022 4:03 PM
To: Bunch, Sarah <sarah.bunch@fayeneville-ar.gov>
Cc: Williams, Kit<kwilliams@fayetteville-ar.gov>
Subject: Resolution
Sarah,
Attached the requested Resolution for the Peace at Home Shelter for your review. If there are no changes needed, I've
attached the Agenda Request for your signature.
Thank you.
Jodi Batker
Paralegal
113 W. Mountain St., Suite 302
Fayetteville, Arkansas 72701
Telephone: (479) 57SM13
ibatker@fayetteville-ar.gov
SIB
Facebook I Twitter I Instagram I YouTube
RESOLUTION NO.
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT
AGREEMENT WITH PEACE AT HOME FAMILY SHELTER FOR THE EXPANSION OF
THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO
APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act
(ARPA) invited non-profit organizations to submit proposals for projects to fund with the
available ARPA funding; and
WHEREAS, the Peace at Home Family Shelter submitted an application requesting $686,500.00
in American Rescue Plan Act funds for the expansion of the safety shelter for survivors of
domestic violence; and
WHEREAS, the expansion will include 3 additional shelter bedrooms with bathrooms which
will allow Peace at Home to provide safe, emergency shelter to approximately 60 additional
adults and children fleeing domestic violence each year; and
WHEREAS, the Subrecipient Agreement would provide funding in the amount of $686,500.00
for the rehabilitation and construction costs.
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 Peace at Home Family Shelter to provide the
amount of $686,500.00 in American Rescue Plan Act funds to fund the expansion of the
emergency shelter.
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 this 15' day of November, 2022.
APPROVED: ATTEST:
By: By:
LIONELD JORDAN, Mayor KARA PAXTON, City Clerk/Treasurer
City of Fayetteville, Arkansas - Budget Adjustment Form (Legistar) I Errors
Budget Year Division Adjustment Number
/Org2 Non -Departmental (800)
2022
Requestor: Council Member Sarah Bunch
UDGET ADJUSTMENT DESCRIPTION / JUSTIFICATION:
A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH PEACE AT HOME FAMILY
SHELTER FOR THE EXPANSION OF THE EMERGENCY SHELTER FOR SURVIVORS OF DOMESTIC VIOLENCE UTILIZING
AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $686,500.00, AND TO APPROVE A BUDGET ADJUSTMENT.
COUNCIL DATE: 11/15/2022
LEGISTAR FILE ID#: 2022-1009
KenrGwsprt#tger
1012712022 4:31 PM
Budget Director Dote
TYPE:
JOURNAL#:
D - (City Council)
GLOATE:
RESOLUTION/ORDINANCE
CHKD/POSTED:
/
TOTAL
686,500
686,500
v.2D221019
Increase / (Decrease)
Project Sub#
Account Number
Expense
Revenue
Project Sub.Detl AT
Account Name
2246.800.9729-5315.00
686,500
-
20023 2021 EX
"Contract Services
2246.800.9246-4309.01
-
686,500
20023 2021 RE
Federal Grants -Operational
HAButlget AOWitme MM22_13utlget\CITY COUNCIL\f 1-0I-M\M22-10D9 - BA ARPA PEACE AT HOME Expandng Safe Shelter. sm I off
CIT OF FAYETTEVILLE 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.
PART 1 APPLICANT IDENTIFICATION
Total Amount of Funding
Requested (whole dollar)
[Minimum $50,000]
$686,500
Applicant/Organization
Name
Peace at Home Family Shelter
Mailing Address street, i, zip)
c
PO Box 10946, Fayetteville, AR 72703
Organization Website
www.peaceathomeshetter.org
DUNS Number
029494593
Organization FEIN/SSN
71-0552563
PART 2 APPLICANT CONTACT INFORMATION
Contact for Project
(name & title)
Teresa Mills, CEO
Contact Phone Number
479-444.8310
Contact Email
tmills@peaceathomeshelter.com
Signature Authority
(name, title & email address)
Teresa Mills, CEO
tmills@peaceathomeshelter.com
PART 3 PROJECT INFORMATION
Project Name
Expanding Safe Shelter for Survivors of Domestic Violence
Project Address
(street, city, zip)
3045 E Ivey Ln, Fayetteville, AR 72764
American Rescue Plan Act
PART PROJECT INFORMATION continued
Is anyone with control over
the Organization (i.e. owner,
manager, director, board
member, or other) or any
Q 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
Blake Pennington, Assistant City Attorney
person and position with the
(Peace at Home board member)
(
City
The ongoing COVID-19 pandemic has made it more difficult and
dangerous for victims of domestic violence seeking to flee
Project Summary
abusive homes. Peace at Home Family Shelter proposes a
(brief synopsis of proposed
renovation project to create 3 additional shelter bedrooms with
project)
bathrooms. This will allow Peace at Home to provide safe,
emergency shelter to approximately 60 additional adults and
children fleeing domestic violence each year.
As the first domestic violence shelter in the state of Arkansas,
Peace at Home Family Shelter has been providing safe,
Describe previous
emergency shelter to survivors of domestic violence and their
experience in providing
children since 1979. In addition to safe shelter, Peace at Home
similar services
also provides housing assistance, counseling, legal services
exclusively to survivors of domestic violence and their children. In
total, we serve over 1,000 individuals each year.
cally be
Programs will typThe
funded for a timea period not n
period
requested project will be for rehabilitation and construction
to exceed 12 months from
costs in order to increase the physical capacity of our emergency
the signed date of the
shelter for survivors of domestic violence. We are already
subrecipient agreement.
working with an architect for this and other projects and would be
Please describe your
able to quickly begin construction to meet the limited time frame
organization's ability to plan
required.and
utilized requested funds
within that timeframe.
American Rescue Plan Act
PART 4 PROJECT BENEFICIARIES
Projected number of
Fayetteville beneficiaries 60 per year
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 ONo
Fayetteville
Will ALL beneficiaries meet
US Treasury Low to
O Yes ONo
Moderate Income (LMI)
Guidelines (please see
Application Guide, Exhibit
A.
Will ALL beneficiaries have
been negatively impacted by
O Yes ONo
COVID-19
Does this request respond
to a negative COVID-19
O Yes ONo
Impact?
If answering Yes to the
COVID-19 has made it more dangerous for victims of domestic
question above, please
violence to flee abusive homes and avoid homelessness. The
describe the COVID-19
Final Rule lists victims of domestic violence as a population
impact and how this
proposal will aid in
disproportionately negatively impacted by COVID-19 (page 19).
responding to the impact
This proposal will increase our community's capacity to provide
safe emergency housing for a vulnerable population.
Please indicate how the
As a project providing emergency housing assistance, this
proposed project meets
project is enumerated in the Final Rule as eligible to respond to
eligibility standards and
requirements described in
the impacts of the pandemic on households and communities.
the Department of
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 C( WSRF),
Drinking Water State
Revolving Fund (DWSRF),
or eligible projects as
described in Department of
Treasury's Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds. See
Subrecipient Application
Guide for more information.
PART 4C ECONOMIC APPLICATIONS ONLY
Please describe the
residents or industry sector
This project will exclusively serve survivors of domestic violence
this grant request is intended
and their children in our community. As a project providing
to serve or benefit. Please
emergency housing assistance, this project is enumerated in the
indicate how the proposed
Final Rule as eligible to respond to the impacts of the pandemic
project meets eligibility
standards and requirements
on households and communities.
described in the Department
of Treasurys Final Rule for
Coronavirus State and Local
Fiscal Recovery Funds.
Does this request respond to
O Yes O No
a negative COVID-19 impact
COVID-19 has made it more dangerous for victims of domestic
violence to flee abusive homes and avoid homelessness. The
Final Rule lists victims of domestic violence as a population
If yes, please describe the
disproportionately negatively impacted by COVID-19 (page 19).
COVID-19 impact and how
This proposal will aid in the City's economic recovery by meeting
this proposal will aid in the
City's economic recovery
temporary housing needs for a vulnerable
p ry 9 population so they
have the stability to find or maintain employment and permanent
housing in our community and achieve self-sufficiency.
American Rescue Plan Act
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.
PARTS 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 Stale government agencies
for accounting and auditing purposes.
6 r -✓,— Teresa A. Mills CEO 3/29/2022
Naame/iitle/Date
American Rescue Plan Act
PART 7 ORGANIZATION DESCRIPTION Provide a brief description of your organization
and the services offered.
Year of Incorporation � 1977
The mission of Peace at Home Family Shelter is to empower
victims of domestic violence to survive and thrive by nurturing
their self-determination and courage and to promote healthy
relationships and compassionate communities through
Philosophy, Purpose and/or education, outreach, and advocacy.
Mission Statement
Peace at Home Family Shelter believes that everyone deserves
to feel safe in their own homes. We operate with an
empowerment philosophy centered on the rights of survivors of
domestic violence to be the decision makers of their own lives.
Provide a brief description of your organization including information about programs and/or
services other than the proposed project.
Peace at Home Family Shelter helps survivors of domestic violence and their children safely
escape abusive homes and rebuild their lives. In addition to providing immediate safe shelter, our
program connects survivors with the resources they need to transition out of shelter and into
long-term safe housing. Our programs have five components working together to help survivors
transition from homes of violence to homes of safety.
24 Hour Hotline — First, Peace at Home operates a 2417 crisis hotline and email inbox. Our crisis
hotline is available in Spanish and English and serves as the entry point for clients. Hotline
advocates assist callers with community referrals, safety planning, coming into shelter, and our
additional programs. In 2021, we received 1,205 calls from members of our community seeking
help.
Emergency Shelter -- The emergency shelter has 14 rooms available for women, men, children,
and any person escaping violence. Bilingual staff are available to provide onsite assistance to
clients. On average, families stay 45 days in shelter as they work on their individualized goals
(90 day maximum stay). Peace at Home was able to provide emergency shelter to 151
individuals in the community in 2021, a reduced capacity due to COVID-19 and renovations to
make the shelter safer for families during the on -going pandemic.
Advocacy -- While staying in shelter, clients are offered advocacy services to help them reach
their goals. Advocates meet daily with clients to develop and implement self-sufficiency plans.
American Rescue Plan Act
PART 7 ORGANIZATION DESCRIPTION continued
These plans are built around the current strengths of a survivor and provide steps to achieving
long-term goals such as employment or affordable housing.
The purpose is to empower survivors to overcome their unique barriers such as education skill
gaps, scarce work histories, unreliable transportation, career planning, affordable child-care, and
self-confidence. Peace at Home maintains partnerships with life -skill agencies such as the Credit
Counseling of Arkansas and Dress for Success. These agencies provide critical support for the
clients to meet the variety of employment and financial goals that they have towards achieving a
safe life. The Institute for Women's Policy Research indicates that 73% of respondents said that
they had stayed with an abusive partner longer than they wanted or returned to them for
economic reasons.
Working together, advocates eliminate barriers that might keep survivors economically or
emotionally dependent on a violent partner. These advocacy services are also open to
individuals in the community who are not currently living at our shelter but are survivors of
domestic violence in need of assistance.
Housing Assistance — Survivors of domestic violence in our emergency shelter and in our
community also have access to support from our Home Restored and SHE housing assistance
programs. These program provides direct financial support, landlord advocacy, budgeting skills,
and case management to help families find permanent housing in the community that meets their
long-term needs. In 2021, Peace at Home was able to provide housing -related assistance to 160
families.
Legal Services — Peace at Home has an onsite staff attorney and a bilingual advocate to assist
shelter residents and outreach clients with legal needs. Our legal services department enables
Peace at Home to provide survivors of domestic violence with legal representation for divorce
cases, child custody issues, and orders of protection as well as legal advocacy and financial
assistance for legal fees. In 2021, Peace at Home provided legal services to 537 clients.
Mental Health/Emotional Support Services - Peace at Home employs a full-time bilingual
counselor and partners with the University of Arkansas Doctorate Program in Psychology as a
site for doctoral candidates in clinical psychology. These mental health professionals provide
one-on-one and parent/child counseling to clients of Peace at Home free of charge. In 2021,
Peace at Home provided direct counseling services to 94 individuals in our community.
All of our services are free of charge, personalized to meet individual survivor needs, and
voluntary.
American Rescue Plan Act
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.
Peace at Home Family Shelter - Rehabilitation Project to Add Capacity
Budget (based on estimates received from WER Architects)
Construction:
1000 sf ($235 per sf renovation costs) - $235,000
1250 sf ($300 per sf building addition costs) - $375,000
Escalation - $18,000
FF&E - $35,000
Design/Engineering/Suweys/Geotech - $23,500
TOTAL PROJECT BUDGET: $686,500
Spending by Project Date - The requested funds will be for a building rehabilitation project and will
be expensed within the project timeline on the above line items.
Other ARPAR Requests - Peace at Home Family Shelter has requested $25,000 in ARPAR
funding from the Emergency Food and Shelter Program to support emergency shelter operations.
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 project.
What Project Will Do
This project will increase the capacity of the emergency shelter for survivors of domestic violence
by renovating and expanding a section of the existing shelter building to add three additional
client rooms and bathrooms. This project will involve converting an existing storage space into
client rooms while expanding out to replace the lost storage. Currently, Peace at Home Family
Shelter has capacity for up to 14 households (survivors and their children) at the emergency
shelter (40-55 people). This project would permanently increase that capacity to 17 households.
Allowing approximately 60 additional individuals to access emergency shelter every year.
COVID-19 has negatively impacted victims of domestic violence, as many individuals have lost
employment and social supports to help them successfully leave abusive relationships. In 2022,
Peace at Home received 1,205 calls from individuals seeking support in our community, an
increase from pre -pandemic 2019 numbers of 24%.
As more individuals are requesting shelter services, Peace at Home Family Shelter also had to
change shelter operations due to COVID-19. Now, clients no longer share rooms or bathrooms to
help prevent the spread of illness. While this change was necessary to protect the health of
families in shelter, it reduced capacity for emergency shelter. The completion of this project will
recover lost capacity and allow Peace at Home to safely shelter more families. Peace at Home
operates with a waiting list for emergency shelter due to insufficient capacity and high community
need.
This project is in alignment with the City of Fayetteville's Master Plan goals #1 and #6 as it
involves the rehabilitation of an existing building and increasing access to housing.
Execution of Project
This is a building rehabilitation project that will involve the addition of three additional family rooms
to Peace at Home's emergency shelter. If approved for funding, the construction would take place
within the 12-month timeframe and services would continue for families residing in the newly
expanded shelter. Peace at Home Family Shelter is already working with WER Architects on this
project and, if approved for funding, would be able to complete the rehabilitation within the
required time frame.
How Beneficiaries are Selected
Peace at Home Family Shelter advertises and operates a 24-hour crisis hotline, email help
address, and limited online chat for individuals in the community to reach out to us for assistance.
American Rescue Plan Act
PART 9 PROJECT DESCRIPTION continued
When a person contacts us for services, our only requirement is that they are a survivor of
domestic violence and have a need for services. For the emergency shelter, someone must be
either fleeing intimate partner violence or homeless as a result of recent intimate partner violence.
Our emergency shelter program defiines'recent' as within the past three months. Per best
practices laid out by the National Network to End Domestic Violence, no additional verifications
are required. When a new client arrives at the shelter, they complete intake paperwork with an
advocate.
Services Provided
In addition to meeting immediate needs for shelter, each emergency shelter client is assigned to
a primary advocate who works with them to identify and work towards individualized goals for
self-sufficiency and recovery from domestic violence. These goals can include: acquiring
permanent housing, increasing income, rebuilding social support networks, legal needs, and
mental wellbeing. Many of these needs can be addressed through Peace at Home's in-house
programs, but advocates also offer robust community referrals to help clients connect with the
community at large.
Verification of Final Rule Qualification
As a project providing emergency housing, this project is an enumerated in the Final Rule as a
qualifying project. While there is no income requirement for emergency shelter services for
victims of domestic violence, anyone seeking shelter at a domestic violence organization is
considered homeless under Housing and Urban Development (HUD) Category 4 definition and is
a presumed benefit clientele population assumed to be Low to Moderate Income according to
Community Development Block Grant HUD regulations.
Benefit of Project— Limited Assistance and Creating Self -Sufficiency
This project will enhance Peace at Home Family Sheller's capacity to provide immediate,
life-saving emergency shelter to survivors of domestic violence and their children at a time when
survivors are more in need of shelter and our capacity has been reduced (both because of the
ongoing COVID-19 pandemic). In addition to this immediate assistance, the individualized
advocacy provided to all residents of Peace at Home's emergency shelter allows individuals to
work towards and obtain self-sufficiency and thrive in our community.
How Project will Further Philosophy and Purpose
This project will further Peace at Home Family Shelter's philosophy and purpose by increasing
our capacity to provide clientcentered safe shelter and supportive services to survivors of
domestic violence and their children in our community. With increased capacity, our emergency
shelter can serve more families in need every day and help make our community a safe and
thriving place for all of our neighbors.
American Rescue Plan Act
10
PART 10 PROJECT TIMELINE Provide a complete and specific timeline for all activities
related to proposed project.
Project Timeline
Upon Award Notification (0-3 months) - Finalize design details with WER Architects, receive bids
from construction contractors and select a contractor for the project.
3 Months-9 Months into Project - Complete construction and renovation of shelter space to add 3
additional client rooms with bathrooms and replace storage area.
9 Months - 12 Months (if not completed sooner) - Ensure all construction is completed and
payments are processed. Acquire and install all necessary furniture, fixtures, and equipment.
Complete inspection. Open rooms up to survivors of domestic violence seeking safe shelter.
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.
Data Collection and Maintenance
Peace at Home Family Sheller utilizes a database system built for victim service organizations by
Osnium called WomensShelter for all client and program tracking information, including program
activities and client eligibility. This database is used to generate reports for any grant
requirements and to assess program effectiveness. Data is collected by advocate staff members
of Peace at Home at intake and on an ongoing basis throughout the client's stay.
Organizational Capacity
Peace at Home has extensive experience managing federal grants, including grants as a
recipient and sub -recipient from the Department of Justice, Department of Health and Human
Services, and the Department of Housing and Urban Development.
Peace at Home employs a full-time Chief Financial Officer (CFO) to oversee all finances,
including financial reporting for grants. The CFO is a certified public accountant and successfully
manages all necessary reporting for grants and ensure appropriate accounting for all restricted
funding.
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:
Objective: More survivors of domestic violence and their children have access to safe,
emergency housing in order to flee abusive homes.
Outcome: 60 more individuals will receive safe shelter in the 12 months following completion of
the rehabilitation than in the 12 months previous, increasing the shelter's capacity by 25%.
Method of Measurement: Shelter stays are logged in our database system and the previous 12
months before the rooms were added can be compared to a period of time after the additional
rooms are opened to measure an increase in capacity for safe shelter.
Objective: More survivors of domestic violence will have access to individualized advocacy and
support to help them overcome barriers to independence.
Outcome: Peace at Home advocates will provide an average of 14 hours of individualized
advocacy services to each household staying in the shelter, providing support in commonly
identified needs, including: safety planning, emotional support, resource referrals, legal support,
budgeting, and transportation.
Method of Measurement: Hours of advocacy services are logged in the database system and
can be pulled in aggregate for all shelter clients.
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
Yes, the project could proceed with partial funding. Given the limited 12-month time frame, the
project would need to be funded at a minimum of 75% in order to move forward. The impact of
partial funding could potentially be redirecting needed funds away from important programs
serving survivors of domestic violence in our community in order to fill the budget gap and move
forward.
Line Item Breakdown - All line items are equally necessary for funding as all are necessary
aspects of the rehabilitation project.
American Rescue Plan Act
14
PART 14 ADDITIONAL DOCUMENTATION CHECKLIST
Please provide these items with your application. See page 10 of the 2022 American
Plan Act Subrecipient Application Guide for more information
l
zAccessibility Narrative
✓Board of Directors
Bylaws
❑✓ Certificate of Good Standing
Financial Audit (see Application Guide for more information)
ZIntake Fortes
ZNon-Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-F2, etc.]
QResumes
✓❑System Award Management (SAM) registration
In/ Status of Funding (if applicable)
Z Additional Documentation Checklist (this page)
❑ Additional Information
American Rescue Plan Act
15