Guide to Local Recovery Update: August 23

New guidance from the U.S. Department of the Treasury expands the use of American Rescue Plan Act dollars for some cities. Local governments can also apply for a slew of federal transportation, community revitalization, economic development, energy, and wildfire defense grants. Additionally, the U.S. Department of Energy released a waiver for Build America, Buy America Act equipment purchasing requirements.

Treasury Department issues Interim Final Rule on new ARPA flexibility

The U.S. Department of the Treasury released its long-awaited Interim Final Rule on ARPA Flex. Congress passed the provision late last year. The rule creates new expenditure categories for American Rescue Plan Act (ARPA) dollars but with some potentially burdensome requirements. 

Under the new rule cities can use ARPA funding to: 

• Provide emergency relief from natural disasters. 
• Fund certain transportation infrastructure projects or satisfy matching fund requirements. 
• Fund any program, project, or service that would also be eligible under the U.S. Department of Housing and Urban Development’s (HUD) Block Grant program. 

The natural disaster category outlines a two-part process for funding proportional responses to a variety of natural disasters. This includes things like temporary housing, childcare, search and rescue, flood and firefighting, emergency generators, infrastructure repair, cash assistance, and more. 

The infrastructure category has much longer processes, which may include consulting with the U.S. Department of Transportation or meeting certain grant program criteria. The HUD category also contains several requirements. However, eligible cities can use both those expenditure categories to fund a broad range of programs and projects.

According to the National League of Cities, non-entitlement units of local governments do not need to worry about this new rule. Expenditure category 6.1 is still the most flexible use of funds. 

The 60-day comment period is expected to start next week.

Community revitalization, transportation technologies, and transient-oriented development funding available

The U.S. Department of Transportation is accepting applications for several key programs.

The new Reconnecting Communities and Neighborhoods Program — due Sept. 28 — helps cities address harm from past infrastructure projects and speed up equitable community revitalization. The program combines two programs created by the Bipartisan Infrastructure Law and Inflation Reduction Act.

Although the grants are separate for the purposes of funding, they share many common characteristics, including a focus on equitable development, reconnection, and restoration. The Transportation Department will evaluate applications using common criteria and considerations. The department plans to provide technical assistance for the program.  

The Federal Transit Administration, an agency within the Transportation Department, opened the application period for the Transit-Oriented Development (TOD) Planning program. Funded by the Bipartisan Infrastructure law, the program supports planning and investment near transit hubs.

Comprehensive planning funded by the program must examine ways to improve economic development and ridership, foster multimodal connectivity and accessibility, improve transit access for pedestrian and bicycle traffic, engage the private sector, identify infrastructure needs, and enable mixed-use development near transit stations. This year, applications with a “substantial focus” on affordable housing may receive up to 100% federal support.

Recent changes now allow transit agencies to repurpose qualified properties for transit-oriented development and affordable housing projects. Additionally, the Transportation Department’s TIFIA 49 program expands loans for TOD and transit projects. Applications for the TOD program are due Oct. 10.

Applications for the Transportation Department’s SMART grants program are also due on Oct. 10. Funded by the Bipartisan Infrastructure Law, the program helps cities improve transportation efficiency and safety. Cities can use the funding for a wide range of technologies that improve transportation safety, equity, access, climate resiliency, and integration. Detailed information about the 2022 grant awards is available online.

$200 million in flexible funding for economic development in “persistently distressed communities”

The U.S. Economic Development Administration (EDA) is accepting applications for its Recompete Pilot Program. Authorized by the CHIPS and Science Act, the economic development program targets areas where prime-age (25-54 years) employment trails the national average.

The program will invest $200 million in flexible funding in organizations that have a clear understanding of local conditions and can create pathways to good jobs that are shared equitably throughout the community. Awards will support a wide range of implementation activities, including workforce development, business and entrepreneur development, and planning or predevelopment.

EDA separated the application process into two phases. The Phase 1 application deadline is Oct. 5.

New energy program supports scalable energy projects in disadvantaged communities

The federal government opened applications for Energy Future Grants. The program funds partnerships that advance clean energy programs in disadvantaged communities. The first-of-its-kind program will support at least 50 multijurisdictional teams — ideally 3-4 or more state, local, and tribal government partners.

Teams will partner with community organizations to turn novel ideas into scalable solutions that address barriers to clean energy deployment. At least 40% of those benefits must flow to disadvantaged communities. Applications are due Sept. 30.

U.S. Forest Service releases new round of wildfire defense grants

The U.S. Forest Service is accepting applications for its Community Wildfire Defense Grant program. Now in its second year, the program helps at-risk communities plan for and reduce the risk of wildfire. Cities can use the funding to develop community wildfire protection plans or implement projects in those plans that are less than 10 years old.

The program also helps communities in the wildland-urban interface meet the three goals of the National Cohesive Wildland Fire Management Strategy: maintain resilient landscapes, create fire-adapted communities, and improve wildfire response. The Forest Service will prioritize projects that:

• Are located in an area with a high or very high wildfire hazard potential.
• Benefit a low-income community.
• Are located in a community impacted by a severe disaster within the previous 10 years that increased wildfire risk and/or hazard.

Organizations within at-risk communities must apply by Oct. 31. 

Buy America waiver provides flexibility for certain energy programs

The U.S. Department of Energy released a public interest waiver for Build America, Buy America Act equipment purchasing requirements. The Buy America directive seeks to boost the domestic production of iron, steel, manufactured goods, and construction materials. The requirement applies to cities seeking federal funding for any infrastructure project.

Each federal agency has jurisdiction over waivers for their federal grants. Under this new waiver, eligible cities with EECBG program formula allocations totaling $250,000 or less are exempt from the requirement.