Experts and experienced local leaders breakdown the ARP, expected funding, allowable uses, key lessons, and ways to prepare.
The North Carolina League of Municipalities, with assistance from the National League of Cities and a panelist of local leaders, hosted on March 23 the webinar American Rescue Plan: A Primer for Municipal Officials. As cities and towns across the state prepare to receive direct funding from the federal government, our goal as a League is keep our membership as informed and prepared as possible.
As is customary with the N.C. League, the expertise of the membership was on full display. The event was hosted by Shallotte Mayor Walt Eccard, who has previously worked for the U.S. Treasury Department and who directly advocated for the passage of local relief with a presentation to Treasury Secretary Janet Yellen weeks before the ARP was signed into law.
Later, panelists shared their previous experiences of handling federal funds. This panel was comprised of Tasha Logan Ford from the City of Winston-Salem, Rusty Bost from the City of Gastonia, and Nate Halubka from the North Carolina Pandemic Recovery Office.
Experts from the NLC
The National League of Cities’ Legislative Manager for Finance, Administration and Intergovernmental Relations, Michael Gleeson, served as the featured presenter. “This is a historic intervention,” Gleeson said. “It’s a once in a generation opportunity.”
A summary of Gleeson’s presentation is below:
This is the first time all municipal governments are entitled to direct, non-competitive federal formula grants. Gleeson noted that this truly is direct funding—it is not in any way tied to aid obligated to state or county governments, and it includes penalties for states that in fail to carry out their distributive responsibilities.
Four key categories of eligible expenditures:
For restrictions and regulatory requirements on these expenditures, please view the full NLC presentation here.
Coronavirus response and relief. These funds are similar to and no more restrictive than previous appropriations provided through the CARES Act.
Higher wages for public employees. Up to $13 per hour above regular wage.
Replacement revenue. Cities and towns are allowed to make up for lost revenue due to the COVID-19 emergency.
Investments in water, sewer and broadband infrastructure. On this point, more guidance will need to be provided by the U.S. Treasury Department. Allowable uses are presently unclear. Guidance is expected within 60 days of passage of the ARP's passage.
Cities and towns should be prepared to provide periodic reports and detailed accounting of use of funds. This will be required.
Other key notes:
The “Capital Project Fund” in the bill is meant for broadband grants.
Grant calculations are based on a modified CDBG formula. Estimates for how much our N.C. cities and towns can expect can be found here.
Funding will be released in two tranches; half to be provided shortly after enactment of the law, and half to be provided 12 months following first payment.
Spending Deadline—money is available for governments to spend until Dec. 31, 2024. Note: It is unclear whether money has to be spent or simply obligated at that time, and updates will be provided.
Panel of Experienced Local Leaders
Following Gleeson’s presentation, NCLM hosted a panel discussion on the American Rescue Plan. Each panelists’ experiences and key lessons is listed below:
Rusty Bost, Director of Engineering/City Engineer, City of Gastonia
Lesson: The consequences of poor accounting are real.
Bost recalls an experience of receiving federal funds for the purpose of building a local greenway, and detailed how the money was received, what reporting was required, how was the money accounted for, and so on. However, it was not adequately communicated internally that this was different money, and needed different accounting and documentation. This created challenges.
Due to these issues, the audits on the funds were not satisfactory, and funds had to ultimately be returned to the federal government.
For the ARP, Bost plans to be exceptionally clear on the fact that this is federal money, that there are strings attached, and that detailed accounting is required. Expect audits. It is easier to proceed through this on the front end than retroactively.
“Communication with your entire team early on in this process is important,” Bost said. “Make sure everyone is aware that this is not general fund money.”
Tasha Logan Ford, Assistant City Manager, City of Winston-Salem
Lesson: Preparation is key, for both plans and for audits.
Ford recalled her experience with federal transportation funds through her work with Goldsboro and Winston-Salem. Additionally, Ford also oversaw a $30 million grant Winston-Salem received through a Choice Neighborhood Grant. By documenting everything on the front end, they were prepared for the inevitable audit.
Ford’s key suggestion is that you stay engaged. Communicate clearly with citizens, both on what you know and what you don’t know. This funding provides a great deal of hope. In Winston-Salem, understanding that this is one-time money, city leadership has set a priority on restoration and one-time needs: restoration of reduced revenues, small business restoration grants, and replacement of equipment deferred due to pandemic’s impact on city budget.
Perhaps most important will be the transparency of the process. Where the funds are coming from and where will they go—Winston-Salem plans to be extremely clear on this point with its citizens. Use multiple mediums to advertise this process, be proactive about reaching out to key stakeholder groups, and use citizens that represent different areas of the community when reviewing applications and ultimately making these decisions.
Nate Halubka, Policy Analyst, NCPRO
Lesson: Examine your plans, and examine your capacity.
Like with the CARES Act, until guidance is provided, we are in a holding pattern. For the CARES Act, this ended up being a blessing, as cities and towns were able to engage citizens and stakeholders and formulate plans on how to most efficiently provide relief. This holding period allows cities and towns the same opportunity to evaluate their plans. Make sure your expenditures are squarely within the allowable uses.
Mostly, examine your capacity to administer these funds. It is very likely that many cities and towns will need to scale up to properly handle this money.
NLC’s presentation can be viewed here.
The Q&A section of the webinar has been compiled, and will be provided in our Frequently Asked Questions section.