October 12, 2023
This blog provides an update on a new Interim Final Rule for the American Rescue Plan Act State and Local Fiscal Recovery Fund (ARPA SLFRF). For background on ARPA SLFRF, please visit the U.S. Department of the Treasury’s Resource Portal.
In December 2022, Congress passed an appropriations package that included statutory provisions allowing for additional eligible uses for the American Rescue Plan Act State and Local Fiscal Recovery Fund (ARPA SLFRF).
On September 20, 2023, the Federal Register published Treasury’s new Interim Final Rule to flesh out these expanded uses. Treasury also released an abbreviated Overview of the Interim Final Rule document for easier reference.
This Interim Final Rule is in effect immediately, and Treasury will issue a new Final Rule following the public comment period.
No. To quote Treasury directly, “(T)he existing eligible uses, as discussed in the 2022 final rule, remain unchanged. Recipients may continue to use SLFRF funds in alignment with the 2022 final rule.”1
The Interim Final Rule amends the existing ARPA SLFRF program to provide additional flexibility for recipients to use their allocated funds to:
The expanded eligible uses allow the funds to be deployed to help address vacant, abandoned, and deteriorated properties in a variety of new ways. These include:
The Interim Final Rule calls out a range of natural disasters, including water, flooding, and tornados. If communities have experienced or are likely to experience these conditions in the future, they can use ARPA SLFRF for certain activities to help reduce and prevent vacant and deteriorated properties. These activities include but are not limited to:
Communities looking to use ARPA SLFRF for these purposes will need to:
The Interim Rule provides other guidance for communities to follow, including requiring a Written Justification for mitigation activities that exceed $1 million3 and prohibiting the duplication of benefits.4
Recipients may now use ARPA SLFRF for any projects that are currently eligible activities, programs, and projects under CDBG and ICDBG. With this usage expansion, communities can use ARPA SLFRF for activities that could help reduce and prevent vacant properties. Some of these activities include:5[5]
Many of these activities were already eligible uses under the 2022 Final Rule. It will likely be more efficient for communities to pursue these activities under that Rule’s “public health and negative economic impacts” eligible use category, rather than trying to pursue them under the CDBG-eligible projects category.6
The CDBG program is complex and there are many additional requirements that communities must adhere to if they pursue these activities under the CDBG-eligible use category.7 We encourage communities to consider Treasury’s advice to categorize any projects eligible under the pre-existing ARPA SLFRF public health and negative economic impacts eligible use category as such.
If your community plans to engage in activities under the expanded CDBG-eligible use category, work closely with your local CDBG compliance officer.
Natural Disaster Response and Mitigation: No expenditure limits. Capital expenditures exceeding $1 million are required to submit a Written Justification.
Surface Transportation and CDBG: Combined expenditure limits. Activities under these categories cannot exceed the greater of 30 percent of a recipient’s total ARPA SLFRF allocation, or $10 million.
Additionally, ARPA SLFRF used for Surface Transportation and Title I projects must supplement, not supplant, other federal, state, territorial, Tribal, and local government funds that are otherwise available for these projects.8
Obligation: All ARPA SLFRF allocations, including for activities under these new eligible uses, must be obligated by December 31, 2024.
Expenditure: For funds obligated to provide emergency relief from natural disasters, the expenditure deadline is December 31, 2026. For funds obligated for Surface Transportation projects and CDBG-eligible projects, the expenditure deadline is September 30, 2026.
To learn more about the Interim Final Rule and the ARPA SLFRF, we recommend the following documents and resources:
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