Colorado River Update

This report provides information regarding the current conditions in the Colorado River
Basin and potential for upcoming declared shortages in Colorado River supplies
delivered through the Central Arizona Project.

THIS ITEM IS FOR INFORMATION AND DISCUSSION.

Summary
The entire Colorado River Basin, including Arizona and six other states, has been in a
state of drought for over 20 years. Hot and dry conditions, combined with a lack of
precipitation and effective snowpack runoff, have reduced the two main reservoirs in
the region, Lake Mead and Lake Powell, to near-historic low levels. In August 2021,
the United States Department of the Interior is expected to declare the first Tier 1
shortage in the Lower Basin of the Colorado River for 2022. In accordance with the
Drought Contingency Plan adopted by the state in 2019, this declaration will result in a
512,000 acre-foot reduction of Colorado River supplies delivered to Central Arizona
water users, or 18 percent of the total Arizona supply.

Tom Buschatzke, Director of the Arizona Department of Water Resources, and Cynthia
Campbell, Water Resources Management Advisor, will provide a briefing on the current
conditions of the Colorado River and the anticipated 2022 Tier 1 shortage. Director
Buschatzke will describe the impacts of the Drought Contingency Plan and shortage
declaration in Arizona and Ms. Campbell will describe the impacts of a declared
shortage on water resources available to the City of Phoenix.

Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services
Department.




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Report

American Rescue Plan Proposed Strategic Plan - June 8, 2021 Update

This report serves as a follow up to the May 18, 2021 report that provided City Council
with information about creating a framework for the use of federal American Rescue
Plan Act (ARPA) funds. Over the next two years the City will receive approximately
$396 million in State and Local Fiscal Recovery Funds in two separate allocations. The
first allocation of $198 million was received on May 19, 2021. On May 27, 2021, the
Department of Treasury revised "The State and Local Fiscal Recovery Fund
Frequently Asked Questions" (Attachment A). The changes to the "State and Local
Fiscal Recovery Fund FAQs" are highlighted within the attachment. This report
presents City Council with a revised strategic plan based on the discussion and follow-
up from the May 18, 2021 City Council meeting.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
Over the next two years, the City of Phoenix will receive approximately $396 million in
State and Local Fiscal Recovery Funds under the umbrella of the previously approved
American Rescue Plan Act which was signed by President Biden in March. Funding is
anticipated to be received in two equal distributions 12 months apart. The City
received the first allocation of approximately $198 million on May 19, 2021. The
second allocation of $198 million will be awarded approximately one year from now
and is not expected to be available to spend until FY 2022-23. Based on this and the
discussion with Council over the last two months, this report focuses primarily on the
first allocation of funds.

According to federal guidance, these funds may only be used to cover costs that are
necessary expenditures caused by COVID-19 incurred between March 3, 2021 and
Dec. 31, 2024. Per the revised guidance and language currently available, funds can
only be used to:

· Support public health expenditures, by funding COVID-19 mitigation efforts, medical
expenses, behavioral healthcare, and certain public health and safety staff;

· Address negative economic impacts caused by the public health emergency,


Page 6

including economic harms to workers, households, small businesses, impacted
industries, and the public sector;

· Replace lost public sector revenue, using this funding to provide government
services to the extent of the reduction in revenue experienced due to the pandemic;

· Provide premium pay for essential workers, offering additional support to those who
have borne and will bear the greatest health risks because of their service in critical
infrastructure sectors; and

· Invest in water, sewer, and broadband infrastructure, making necessary
investments to improve access to clean drinking water, support vital wastewater and
stormwater infrastructure, and to expand access to broadband internet.

The proposed strategic options included in this report are based on input from
councilmembers and designed to fit within the parameters set forth in the recently
released federal guidance. Some of the proposals are continuations of programs that
were successfully implemented under the $293 million Coronavirus Relief Fund (CRF)
Strategic Plan and others are new initiatives which will require additional time and
resources to fully develop and deploy.

Allocation 1 ($198 million)
Like the CRF strategic plan, this proposed strategic plan includes three areas of
emphasis: Community Investment ($143 million), City Operations ($50 million) and a
Contingency for Future Operational Needs ($5 million). Attachment B provides the
Council with a detailed summary of the programs that staff have identified to address
important community and operational initiatives. Guidance from the federal
government will likely continue to evolve and the City will need to be nimble to adjust
programs to ensure compliance with the ever-changing federal guidance. The
following is a high-level summary of the information contained in Attachment B.

Community Investment - $143 million
The Community Investment category, the largest proposed allocation in this plan, is
strategically focused on providing assistance to vulnerable populations, businesses
and those hardest hit by the COVID-19 pandemic. This portion of the plan includes six
distinct focus areas consisting of multiple programs. The proposed strategic plan
assumes Community Investment will receive approximately 72% of ARPA funding, or
$286 million, over two years. If the proposed Contingency is ultimately allocated to
further enhance the programs listed below it would result in 75% of funding, or $296
million, being allocated to Community Investment. The six Community Investment



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focus areas include the following:

Phoenix Arts, Business and Employee Assistance - $40,000,000
Small business is the heart and soul of the local economy. Many of our small
businesses are still struggling to stay open due to COVID-19. These funds will provide
resources that Phoenix businesses, including our vibrant arts community, need to stay
open, pay employees, and cover other operational costs due to the downturn in
business. Funds are also proposed to provide robust job training opportunities for
those that lost their jobs during the downturn. Additionally, as the local economy
recovers, staff is proposing a robust arts program that provides the arts community
with a lifeline that will ultimately provide working capital to the struggling arts industry.

Mitigation and Care of Vulnerable Populations - $31,500,000
Research shows that the pandemic has disproportionately impacted underserved
populations. This focus area proposes funding that provides resources to address
homelessness, mental and behavioral health, veterans issues, and funding for the
senior and refugee community. Some of the funding in this category also lends itself to
a larger regional approach to address the issues of homelessness and mental and
behavioral health.

Youth Sports, Recreation, Education, After-School and Wireless - $28,800,000
As parents return back to the workplace and families struggle to give recreational and
educational opportunities to their children, staff is proposing to use ARPA funds to
provide resources to restore after-school programs, provide financial assistance to
youth sports leagues and to enhance library programs. As well, funding will be used to
continue the development of the large wireless project that staff has been working on
with regional partners and to further enhance free wireless access for Phoenix
residents in public housing and for customers in City facilities.

Household and Residential Assistance - $28,000,000
Funding in this category is intended to provide families with the resources needed to
address rent, mortgage and utility shortages. More specifically, these funds are
intended to provide resources for residents who do not qualify for the Emergency
Rental Assistance Programs (ERA 1 or 2). Funding is also proposed to provide families
with financial assistance to cover childcare costs and other household necessities.
Staff will need Council discussion and direction on the scope of any such program.
Funds are also proposed to provide public transportation subsidies to those in need of
financial assistance due to loss of wages or employment because of COVID-19. Also
included is a plan to provide childcare options for impacted workers at Phoenix Sky
Harbor Airport.



Page 8

Phoenix Resilient Food System - $9,700,000
One of the City's most successful CRF-funded programs was the Feed Phoenix Food
Program. This allocation of funding builds off of that success and provides additional
resources to develop more sustainable food options for Phoenix residents. Based on
Council input, this program also includes funding to provide resources to local and
neighborhood food banks and food kitchens.

Better Health and Community Outcomes - $5,000,000
This funding would be used to expand the use of the mobile testing vans that the City
has deployed to assist underserved communities with COVID-19 testing. These funds
could also be used to offset any costs associated with the City taking on a more active
role in vaccine distribution.

City Operations - $50 million
The City Operations category, the second largest of the three plan areas, is
strategically focused on General Fund (GF) resiliency and capitalizing on the one-time
nature of this funding source to address issues that will free up future GF resources
and support transformational investments. The proposed strategic plan assumes City
Operations will receive approximately 25% of ARPA funding, or $100 million, over two
years. This area includes the following areas of focus:

Infrastructure, Technology and Capital Needs - $23,000,000
This funding will be used to provide resources needed to address key infrastructure,
technology and capital projects that have been deferred or exacerbated as a result of
the pandemic. One example is to provide resources to upgrade the 27th Avenue
Recycling Facility. The need to replace this facility has intensified due to the increase
in residential tonnage due to COVID-19. Funding can also be used for other capital
and technology projects that improve the efficacy of economic relief programs
designed to address negative impacts to targeted populations. An example of such a
project is the replacement of the Case Management System used by Human Services
staff to provide resident services. The system is antiquated and does not allow for
online applications. Replacing this aging system would enhance the delivery of
services to our residents. Staff also recommends critical stormwater, flood control and
energy conservation projects that comply with federal guidance.

Revenue Replacement - $22,400,000
Unlike CRF funds, ARPA funds are allowed to be used for revenue replacement.
Because of the pandemic, the Phoenix Convention Center has been severely
impacted due to the downturn in the travel, tourism and hospitality industry. As a result,
there are significant concerns about how long that industry will take to recover and
how deep of an impact that recovery will have on the Convention Center's fund


Page 9

balance. It is important to note that the Convention Center is ultimately backed by GF
revenues. If the tourism and convention downturn lags as long as some economists
suggest, this could impair Convention Center revenues enough that the GF would be
forced to make reductions to provide working capital. Allocating ARPA funds to replace
a portion of the revenue lost by the convention center over the last 15 months would
be a sound financial decision that would be viewed favorably by the City's rating
agencies. The proposed plan assumes the Convention Center would receive
approximately $31 million in relief over the two allocations. Additionally, ARPA allows
the City to offset costs for trust fund expenses that are directly tied to COVID-19
expenses. For example, the City has seen over $2.4 million in worker's compensation
related claims due to COVID-19. Staff recommends these claims are eligible to be
replaced with ARPA funds and would reduce the actuarial impact to future City
resources.

Administrative Oversight and Staff Augmentation to Support New ARPA Funded
Initiatives - $4,000,000
In order to successfully deploy the wide range of programs that the ARPA funds will
provide, service levels must be enhanced in key areas of the organization. These
staffing enhancements will also provide the oversight and compliance functions that
are critical to ensure a clean audit at the end of funding cycle.

PPE, Cleaning, Sanitizing/Testing and Vaccine Distribution - $600,000
One thing the City learned during the first few months of the pandemic was that the
City did not possess an adequate supply of PPE and sanitizing agents needed to
ensure that employees were adequately protected. We also realized like many other
cities across the country that the impact of not being fully prepared led to significant
supply chain disruption. This allocation of funds will be used to stockpile equipment
and supplies needed to ensure that our staff is adequately protected against the
spread of COVID-19 and to ensure that the City is not a victim to future disruptions in
the supply chain for these necessary items. Funding could also be used to address
additional employee testing and vaccination related costs as needed.

Contingency - $5 million
A $5 million contingency is proposed to preserve resources in case the federal
government changes guidance to allow the funds to be used in new areas of concern
for the Council or to supplement funding for an approved program that exhausts its
allocation of funds before more funding becomes available. The contingency would
also be available to cover other unexpected COVID-19 expenses that could occur later
in the year. The reserve is not a requirement and Council could allocate this funding
immediately or at any other point in the fiscal year as necessary. In an effort to
address more initiatives, the contingency allocation has been reduced by 50% since


Page 10

our last report.

Staff is seeking Council feedback, direction and possible action on the proposed
strategic plan. Based on the Council’s strategic direction and feedback, staff will return
(if necessary) to a future meeting with refined recommendations or start working on
deploying these programs for our community.

Responsible Department
This item is submitted by City Manager Ed Zuercher and Assistant City Manager Jeff
Barton.




Page 11
Attachment A
AS OF MAY 27, 2021


Coronavirus State and Local Fiscal Recovery Funds

Frequently Asked Questions

AS OF MAY 27, 2021

This document contains answers to frequently asked questions regarding the Coronavirus State
and Local Fiscal Recovery Funds (CSFRF / CLFRF, or Fiscal Recovery Funds). Treasury will
be updating this document periodically in response to questions received from stakeholders.
Recipients and stakeholders should consult the Interim Final Rule for additional information.

• For overall information about the program, including information on requesting funding,
please see https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-
and-tribal-governments

• For general questions about CSFRF / CLFRF, please email SLFRP@treasury.gov

• Treasury is seeking comment on all aspects of the Interim Final Rule. Stakeholders are
encouraged to submit comments electronically through the Federal eRulemaking Portal
(https://www.regulations.gov/document/TREAS-DO-2021-0008-0002) on or before July
16, 2021. Please be advised that comments received will be part of the public record and
subject to public disclosure. Do not disclose any information in your comment or
supporting materials that you consider confidential or inappropriate for public disclosure.

Questions added 5/27/21: 1.5, 1.6, 2.13, 2.14, 2.15, 3.9, 4.5, 4.6, 10.3, 10.4 (noted with “[5/27]”)


1. Eligibility and Allocations

1.1. Which governments are eligible for funds?

The following governments are eligible:
• States and the District of Columbia
• Territories
• Tribal governments
• Counties
• Metropolitan cities
• Non-entitlement units, or smaller local governments

1.2. Which governments receive funds directly from Treasury?

Treasury will distribute funds directly to each eligible state, territory, metropolitan city,
county, or Tribal government. Smaller local governments that are classified as non-
entitlement units will receive funds through their applicable state government.

1.3. Are special-purpose units of government eligible to receive funds?


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AS OF MAY 27, 2021



Special-purpose units of local government will not receive funding allocations; however,
a state, territory, local, or Tribal government may transfer funds to a special-purpose unit
of government. Special-purpose districts perform specific functions in the community,
such as fire, water, sewer or mosquito abatement districts.

1.4. How are funds being allocated to Tribal governments, and how will Tribal
governments find out their allocation amounts?

$20 billion of Fiscal Recovery Funds was reserved for Tribal governments. The
American Rescue Plan Act specifies that $1 billion will be allocated evenly to all eligible
Tribal governments. The remaining $19 billion will be distributed using an allocation
methodology based on enrollment and employment.

There will be two payments to Tribal governments. Each Tribal government’s first
payment will include (i) an amount in respect of the $1 billion allocation that is to be
divided equally among eligible Tribal governments and (ii) each Tribal government’s pro
rata share of the Enrollment Allocation. Tribal governments will be notified of their
allocation amount and delivery of payment 4-5 days after completing request for funds in
the Treasury Submission Portal. The deadline to make the initial request for funds is
June 7, 2021.

In late-May or shortly after completing the initial request for funds, Tribal governments
will receive an email notification to re-enter the Treasury Submission Portal to confirm or
amend their 2019 employment numbers that were submitted to the Department of the
Treasury for the CARES Act’s Coronavirus Relief Fund. The deadline to confirm
employment numbers is June 21, 2021. Treasury will calculate each Tribal government’s
pro rata share of the Employment Allocation for those Tribal governments that confirmed
or submitted amended employment numbers. In late-June, Treasury will communicate to
Tribal governments the amount of their portion of the Employment Allocation and the
anticipated date for the second payment.

1.5. My county is a unit of general local government with population under 50,000. Will
my county receive funds directly from Treasury? [5/27]

Yes. All counties that are units of general local government will receive funds directly
from Treasury and should apply via the online portal. The list of county allocations is
available here.

1.6. My local government expected to be classified as a nonentitlement unit. Instead, it
was classified as a metropolitan city. Why? [5/27]

The American Rescue Plan Act defines, for purposes of the Coronavirus Local Fiscal
Recovery Fund (CLFRF), metropolitan cities to include those that are currently
metropolitan cities under the Community Development Block Grant (CDBG) program
but also those cities that relinquish or defer their status as a metropolitan city for purposes


Page 13
AS OF MAY 27, 2021


of the CDBG program. This would include, by way of example, cities that are principal
cities of their metropolitan statistical area, even if their population is less than 50,000. In
other words, a city that is eligible to be a metropolitan city under the CDBG program is
eligible as a metropolitan city under the CLFRF, regardless of how that city has elected to
participate in the CDBG program.

Unofficial allocation estimates produced by other organizations may have classified
certain local governments as nonentitlement units of local government. However, based
on the statutory definitions, some of these local governments should have been classified
as metropolitan cities.


2. Eligible Uses – Responding to the Public Health Emergency / Negative
Economic Impacts

2.1. What types of COVID-19 response, mitigation, and prevention activities are
eligible?

A broad range of services are needed to contain COVID-19 and are eligible uses,
including vaccination programs; medical care; testing; contact tracing; support for
isolation or quarantine; supports for vulnerable populations to access medical or public
health services; public health surveillance (e.g., monitoring case trends, genomic
sequencing for variants); enforcement of public health orders; public communication
efforts; enhancement to health care capacity, including through alternative care facilities;
purchases of personal protective equipment; support for prevention, mitigation, or other
services in congregate living facilities (e.g., nursing homes, incarceration settings,
homeless shelters, group living facilities) and other key settings like schools; ventilation
improvements in congregate settings, health care settings, or other key locations;
enhancement of public health data systems; and other public health responses. Capital
investments in public facilities to meet pandemic operational needs are also eligible, such
as physical plant improvements to public hospitals and health clinics or adaptations to
public buildings to implement COVID-19 mitigation tactics.

2.2. If a use of funds was allowable under the Coronavirus Relief Fund (CRF) to
respond to the public health emergency, may recipients presume it is also allowable
under CSFRF/CLFRF?

Generally, funding uses eligible under CRF as a response to the direct public health
impacts of COVID-19 will continue to be eligible under CSFRF/CLFRF, with the
following two exceptions: (1) the standard for eligibility of public health and safety
payrolls has been updated; and (2) expenses related to the issuance of tax-anticipation
notes are not an eligible funding use.

2.3. If a use of funds is not explicitly permitted in the Interim Final Rule as a response to
the public health emergency and its negative economic impacts, does that mean it is
prohibited?


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AS OF MAY 27, 2021



The Interim Final Rule contains a non-exclusive list of programs or services that may be
funded as responding to COVID-19 or the negative economic impacts of the COVID-19
public health emergency, along with considerations for evaluating other potential uses of
Fiscal Recovery Funds not explicitly listed. The Interim Final Rule also provides
flexibility for recipients to use Fiscal Recovery Funds for programs or services that are
not identified on these non-exclusive lists but which meet the objectives of section
602(c)(1)(A) or 603(c)(1)(A) by responding to the COVID-19 public health emergency
with respect to COVID-19 or its negative economic impacts.

2.4. May recipients use funds to respond to the public health emergency and its negative
economic impacts by replenishing state unemployment funds?

Consistent with the approach taken in the CRF, recipients may make deposits into the
state account of the Unemployment Trust Fund up to the level needed to restore the pre-
pandemic balances of such account as of January 27, 2020, or to pay back advances
received for the payment of benefits between January 27, 2020 and the date when the
Interim Final Rule is published in the Federal Register.

2.5. What types of services are eligible as responses to the negative economic impacts of
the pandemic?

Eligible uses in this category include assistance to households; small businesses and non-
profits; and aid to impacted industries.

Assistance to households includes, but is not limited to: food assistance; rent, mortgage,
or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash
assistance; emergency assistance for burials, home repairs, weatherization, or other
needs; internet access or digital literacy assistance; or job training to address negative
economic or public health impacts experienced due to a worker’s occupation or level of
training.

Assistance to small business and non-profits includes, but is not limited to:
• loans or grants to mitigate financial hardship such as declines in revenues or
impacts of periods of business closure, for example by supporting payroll and
benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and
other operating costs;
• Loans, grants, or in-kind assistance to implement COVID-19 prevention or
mitigation tactics, such as physical plant changes to enable social distancing,
enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination,
testing, or contact tracing programs; and
• Technical assistance, counseling, or other services to assist with business planning
needs

2.6. May recipients use funds to respond to the public health emergency and its negative
economic impacts by providing direct cash transfers to households?


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AS OF MAY 27, 2021



Yes, provided the recipient considers whether, and the extent to which, the household has
experienced a negative economic impact from the pandemic. Additionally, cash transfers
must be reasonably proportional to the negative economic impact they are intended to
address. Cash transfers grossly in excess of the amount needed to address the negative
economic impact identified by the recipient would not be considered to be a response to
the COVID-19 public health emergency or its negative impacts. In particular, when
considering appropriate size of permissible cash transfers made in response to the
COVID-19 public health emergency, state, local, territorial, and Tribal governments may
consider and take guidance from the per person amounts previously provided by the
federal government in response to the COVID crisis.

2.7. May funds be used to reimburse recipients for costs incurred by state and local
governments in responding to the public health emergency and its negative
economic impacts prior to passage of the American Rescue Plan?

Use of Fiscal Recovery Funds is generally forward looking. The Interim Final Rule
permits funds to be used to cover costs incurred beginning on March 3, 2021.

2.8. May recipients use funds for general economic development or workforce
development?

Generally, not. Recipients must demonstrate that funding uses directly address a negative
economic impact of the COVID-19 public health emergency, including funds used for
economic or workforce development. For example, job training for unemployed workers
may be used to address negative economic impacts of the public health emergency and be
eligible.

2.9. How can recipients use funds to assist the travel, tourism, and hospitality
industries?

Aid provided to tourism, travel, and hospitality industries should respond to the negative
economic impacts of the pandemic. For example, a recipient may provide aid to support
safe reopening of businesses in the tourism, travel and hospitality industries and to
districts that were closed during the COVID-19 public health emergency, as well as aid a
planned expansion or upgrade of tourism, travel and hospitality facilities delayed due to
the pandemic.

Tribal development districts are considered the commercial centers for tribal hospitality,
gaming, tourism and entertainment industries.

2.10. May recipients use funds to assist impacted industries other than travel, tourism,
and hospitality?

Yes, provided that recipients consider the extent of the impact in such industries as
compared to tourism, travel, and hospitality, the industries enumerated in the statute. For


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AS OF MAY 27, 2021


example, nationwide the leisure and hospitality industry has experienced an
approximately 17 percent decline in employment and 24 percent decline in revenue, on
net, due to the COVID-19 public health emergency. Recipients should also consider
whether impacts were due to the COVID-19 pandemic, as opposed to longer-term
economic or industrial trends unrelated to the pandemic.

Recipients should maintain records to support their assessment of how businesses or
business districts receiving assistance were affected by the negative economic impacts of
the pandemic and how the aid provided responds to these impacts.

2.11. How does the Interim Final Rule help address the disparate impact of COVID-19 on
certain populations and geographies?

In recognition of the disproportionate impacts of the COVID-19 virus on health and
economic outcomes in low-income and Native American communities, the Interim Final
Rule identifies a broader range of services and programs that are considered to be in
response to the public health emergency when provided in these communities.
Specifically, Treasury will presume that certain types of services are eligible uses when
provided in a Qualified Census Tract (QCT), to families living in QCTs, 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. In identifying these
disproportionately-impacted communities, recipients should be able to support their
determination for how the pandemic disproportionately impacted the populations,
households, or geographic areas to be served.

Eligible services include:

• Addressing health disparities and the social determinants of health, including:
community health workers, public benefits navigators, remediation of lead paint
or other lead hazards, and community violence intervention programs;

• Building stronger neighborhoods and communities, including: supportive housing
and other services for individuals experiencing homelessness, development of
affordable housing, and housing vouchers and assistance relocating to
neighborhoods with higher levels of economic opportunity;

• Addressing educational disparities exacerbated by COVID-19, including: early
learning services, increasing resources for high-poverty school districts,
educational services like tutoring or afterschool programs, and supports for
students’ social, emotional, and mental health needs; and

• Promoting healthy childhood environments, including: child care, home visiting
programs for families with young children, and enhanced services for child
welfare-involved families and foster youth.


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AS OF MAY 27, 2021



2.12. May recipients use funds to pay for vaccine incentive programs (e.g., cash or in-kind
transfers, lottery programs, or other incentives for individuals who get vaccinated)?

Yes. Under the Interim Final Rule, recipients may use Coronavirus State and Local
Fiscal Recovery Funds to respond to the COVID-19 public health emergency, including
expenses related to COVID-19 vaccination programs. See forthcoming 31 CFR
35.6(b)(1)(i). 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, are an allowable use of funds so long as such
costs are reasonably proportional to the expected public health benefit.

2.13. May recipients use funds to pay “back to work incentives” (e.g., cash payments for
newly employed workers after a certain period of time on the job)? [5/27]

Yes. Under the Interim Final Rule, recipients may use Coronavirus State and Local
Fiscal Recovery Funds to provide assistance to unemployed workers. See forthcoming
31 CFR 35.6(b)(4). This assistance can include job training or other efforts to accelerate
rehiring and thus reduce unemployment, such as childcare assistance, assistance with
transportation to and from a jobsite or interview, and incentives for newly employed
workers.

2.14. The Coronavirus Relief Fund (CRF) included as an eligible use: "Payroll expenses
for public safety, public health, health care, human services, and similar employees
whose services are substantially dedicated to mitigating or responding to the
COVID-19 public health emergency." What has changed in CSFRF/CLFRF, and
what type of documentation is required under CSFRF/CLFRF? [5/27]

Many of the expenses authorized under the Coronavirus Relief Fund are also eligible uses
under the CSFRF/CLFRF. However, in the case of payroll expenses for public safety,
public health, health care, human services, and similar employees (hereafter, public
health and safety staff), the CSFRF/CLFRF does differ from the CRF. This change
reflects the differences between the ARPA and CARES Act and recognizes that the
response to the COVID-19 public health emergency has changed and will continue to
change over time. In particular, funds may be used for payroll and covered benefits
expenses for public safety, public health, health care, human services, and similar
employees, including first responders, to the extent that the employee’s time that is
dedicated to responding to the COVID-19 public health emergency.

For administrative convenience, the recipient may consider a public health and safety
employee to be entirely devoted to mitigating or responding to the COVID-19 public
health emergency, and therefore fully covered, if the employee, or his or her operating
unit or division, is primarily dedicated (e.g., more than half of the employee’s time is
dedicated) to responding to the COVID-19 public health emergency.





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AS OF MAY 27, 2021


Recipients may use presumptions for assessing whether an employee, division, or
operating unit is primarily dedicated to COVID-19 response. The recipient should
maintain records to support its assessment, such as payroll records, attestations from
supervisors or staff, or regular work product or correspondence demonstrating work on
the COVID-19 response. Recipients need not routinely track staff hours. Recipients
should periodically reassess their determinations.

2.15. What staff are included in “public safety, public health, health care, human
services, and similar employees”? Would this include, for example, 911 operators,
morgue staff, medical examiner staff, or EMS staff? [5/27]

As discussed in the Interim Final Rule, funds may be used for payroll and covered
benefits expenses for public safety, public health, health care, human services, and
similar employees, for the portion of the employee’s time that is dedicated to responding
to the COVID-19 public health emergency.

Public safety employees would include police officers (including state police officers),
sheriffs and deputy sheriffs, firefighters, emergency medical responders, correctional and
detention officers, and those who directly support such employees such as dispatchers
and supervisory personnel. Public health employees would include employees involved
in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned 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 benefits; child
welfare services; and child, elder, or family care, as well as others.


3. Eligible Uses – Revenue Loss

3.1. How is revenue defined for the purpose of this provision?

The Interim Final Rule adopts a definition of “General Revenue” that is based on, but not
identical, to the Census Bureau’s concept of “General Revenue from Own Sources” in the
Annual Survey of State and Local Government Finances.

General Revenue includes revenue from taxes, current charges, and miscellaneous
general revenue. It excludes refunds and other correcting transactions, proceeds from
issuance of debt or the sale of investments, agency or private trust transactions, and
revenue generated by utilities and insurance trusts. General revenue also includes
intergovernmental transfers between state and local governments, but excludes
intergovernmental transfers from the Federal government, including Federal transfers
made via a state to a locality pursuant to the CRF or the Fiscal Recovery Funds.





Page 19
AS OF MAY 27, 2021


Tribal governments may include all revenue from Tribal enterprises and gaming
operations in the definition of General Revenue.

3.2. Will revenue be calculated on an entity-wide basis or on a source-by-source basis
(e.g. property tax, income tax, sales tax, etc.)?

Recipients should calculate revenue on an entity-wide basis. This approach minimizes
the administrative burden for recipients, provides for greater consistency across
recipients, and presents a more accurate representation of the net impact of the
COVID- 19 public health emergency on a recipient’s revenue, rather than relying on
financial reporting prepared by each recipient, which vary in methodology used and
which generally aggregates revenue by purpose rather than by source.

3.3. Does the definition of revenue include outside concessions that contract with a state
or local government?

Recipients should classify revenue sources as they would if responding to the U.S.
Census Bureau’s Annual Survey of State and Local Government Finances. According to
the Census Bureau’s Government Finance and Employment Classification manual, the
following is an example of current charges that would be included in a state or local
government’s general revenue from own sources: “Gross revenue of facilities operated by
a government (swimming pools, recreational marinas and piers, golf courses, skating
rinks, museums, zoos, etc.); auxiliary facilities in public recreation areas (camping areas,
refreshment stands, gift shops, etc.); lease or use fees from stadiums, auditoriums, and
community and convention centers; and rentals from concessions at such facilities.”

3.4. What is the time period for estimating revenue loss? Will revenue losses experienced
prior to the passage of the Act be considered?

Recipients are permitted to calculate the extent of reduction in revenue as of four points
in time: December 31, 2020; December 31, 2021; December 31, 2022; and December 31,
2023. This approach recognizes that some recipients may experience lagged effects of the
pandemic on revenues.

Upon receiving Fiscal Recovery Fund payments, recipients may immediately calculate
revenue loss for the period ending December 31, 2020.

3.5. What is the formula for calculating the reduction in revenue?

A reduction in a recipient’s General Revenue equals:
nt
Max {[Base Year Revenue* (1+Growth Adjustment)(12) ] - Actual General Revenuet ; 0}

Where:




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AS OF MAY 27, 2021


Base Year Revenue is General Revenue collected in the most recent full fiscal year prior
to the COVD-19 public health emergency.

Growth Adjustment is equal to the greater of 4.1 percent (or 0.041) and the recipient’s
average annual revenue growth over the three full fiscal years prior to the COVID-19
public health emergency.

n equals the number of months elapsed from the end of the base year to the calculation
date.

Actual General Revenue is a recipient’s actual general revenue collected during 12-month
period ending on each calculation date.

Subscript t denotes the calculation date.

3.6. Are recipients expected to demonstrate that reduction in revenue is due to the
COVID-19 public health emergency?

In the Interim Final Rule, any diminution in actual revenue calculated using the formula
above would be presumed to have been “due to” the COVID-19 public health emergency.
This presumption is made for administrative ease and in recognition of the broad-based
economic damage that the pandemic has wrought.

3.7. May recipients use pre-pandemic projections as a basis to estimate the reduction in
revenue?

No. Treasury is disallowing the use of projections to ensure consistency and
comparability across recipients and to streamline verification. However, in estimating
the revenue shortfall using the formula above, recipients may incorporate their average
annual revenue growth rate in the three full fiscal years prior to the public health
emergency.

3.8. Once a recipient has identified a reduction in revenue, are there any restrictions on
how recipients use funds up to the amount of the reduction?

The Interim Final Rule gives recipients broad latitude to use funds for the provision of
government services to the extent of reduction in revenue. Government services can
include, but are not limited to, maintenance of infrastructure or pay-go spending for
building new infrastructure, including roads; modernization of cybersecurity, including
hardware, software, and protection of critical infrastructure; health services;
environmental remediation; school or educational services; and the provision of police,
fire, and other public safety services.

However, paying interest or principal on outstanding debt, replenishing rainy day or other
reserve funds, or paying settlements or judgments would not be considered provision of a
government service, since these uses of funds do not entail direct provision of services to


Page 21
AS OF MAY 27, 2021


citizens. This restriction on paying interest or principal on any outstanding debt
instrument, includes, for example, short-term revenue or tax anticipation notes, or paying
fees or issuance costs associated with the issuance of new debt. In addition, the
overarching restrictions on all program funds (e.g., restriction on pension deposits,
restriction on using funds for non-federal match where barred by regulation or statute)
would apply.

3.9. How do I know if a certain type of revenue should be counted for the purpose of
computing revenue loss? [5/27]

As discussed in FAQ #3.1, the Interim Final Rule adopts a definition of “General
Revenue” that is based on, but not identical, to the Census Bureau’s concept of “General
Revenue from Own Sources” in the Annual Survey of State and Local Government
Finances.

Recipients should refer to the definition of “General Revenue” included in the Interim
Final Rule. See forthcoming 31 CFR 35.3. If a recipient is unsure whether a particular
revenue source is included in the Interim Final Rule’s definition of “General Revenue,”
the recipient may consider the classification and instructions used to complete the Census
Bureau’s Annual Survey.

For example, parking fees would be classified as a Current Charge for the purpose of the
Census Bureau’s Annual Survey, and the Interim Final Rule’s concept of “General
Revenue” includes all Current Charges. Therefore, parking fees would be included in the
Interim Final Rule’s concept of “General Revenue.”

The Census Bureau’s Government Finance and Employment Classification manual is
available here.


4. Eligible Uses – General

4.1. May recipients use funds to replenish a budget stabilization fund, rainy day fund, or
similar reserve account?

No. Funds made available to respond to the public health emergency and its negative
economic impacts are intended to help meet pandemic response needs and provide
immediate stabilization for households and businesses. Contributions to rainy day funds
and similar reserves funds would not address these needs or respond to the COVID-19
public health emergency, but would rather be savings for future spending needs.
Similarly, funds made available for the provision of governmental services (to the extent
of reduction in revenue) are intended to support direct provision of services to citizens.
Contributions to rainy day funds are not considered provision of government services,
since such expenses do not directly relate to the provision of government services.





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AS OF MAY 27, 2021


4.2. May recipients use funds to invest in infrastructure other than water, sewer, and
broadband projects (e.g. roads, public facilities)?

Under 602(c)(1)(C) or 603(c)(1)(C), recipients may use funds for maintenance of
infrastructure or pay-go spending for building of new infrastructure as part of the general
provision of government services, to the extent of the estimated reduction in revenue due
to the public health emergency.

Under 602(c)(1)(A) or 603(c)(1)(A), a general infrastructure project typically would not
be considered a response to the public health emergency and its negative economic
impacts unless the project responds to a specific pandemic-related public health need
(e.g., investments in facilities for the delivery of vaccines) or a specific negative
economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract).

4.3. May recipients use funds to pay interest or principal on outstanding debt?

No. Expenses related to financing, including servicing or redeeming notes, would not
address the needs of pandemic response or its negative economic impacts. Such expenses
would also not be considered provision of government services, as these financing
expenses do not directly provide services or aid to citizens.

This applies to paying interest or principal on any outstanding debt instrument, including,
for example, short-term revenue or tax anticipation notes, or paying fees or issuance costs
associated with the issuance of new debt.

4.4. May recipients use funds to satisfy nonfederal matching requirements under the
Stafford Act? May recipients use funds to satisfy nonfederal matching requirements
generally?

Fiscal Recovery Funds are subject to pre-existing limitations in other federal statutes and
regulations and may not be used as non-federal match for other Federal programs whose
statute or regulations bar the use of Federal funds to meet matching requirements. For
example, expenses for the state share of Medicaid are not an eligible use. For information
on FEMA programs, please see here.

4.5. Are governments required to submit proposed expenditures to Treasury for
approval? [5/27]

No. Recipients are not required to submit planned expenditures for prior approval by
Treasury. Recipients are subject to the requirements and guidelines for eligible uses
contained in the Interim Final Rule.

4.6. How do I know if a specific use is eligible? [5/27]

Fiscal Recovery Funds must be used in one of the four eligible use categories specified in
the American Rescue Plan Act and implemented in the Interim Final Rule:


Page 23
AS OF MAY 27, 2021



a) To respond to the public health emergency or its negative economic impacts,
including assistance to households, small businesses, and nonprofits, or aid to
impacted industries such as tourism, travel, and hospitality;

b) To respond to workers performing essential work during the COVID-19 public
health emergency by providing premium pay to eligible workers;

c) For the provision of government services to the extent of the reduction in revenue
due to the COVID–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.

Recipients should consult Section II of the Interim Final Rule for additional information
on eligible uses. For recipients evaluating potential uses under (a), the Interim Final Rule
contains a non-exclusive list of programs or services that may be funded as responding to
COVID-19 or the negative economic impacts of the COVID-19 public health emergency,
along with considerations for evaluating other potential uses of Fiscal Recovery Funds
not explicitly listed. See Section 2 for additional discussion.

For recipients evaluating potential uses under (c), the Interim Final Rule gives recipients
broad latitude to use funds for the provision of government services to the extent of
reduction in revenue. See FAQ #3.8 for additional discussion.

For recipients evaluating potential uses under (b) and (d), see Sections 5 and 6.


5. Eligible Uses – Premium Pay

5.1. What criteria should recipients use in identifying essential workers to receive
premium pay?

Essential workers are those in critical infrastructure sectors who regularly perform in-
person work, interact with others at work, or physically handle items handled by others.

Critical infrastructure sectors include healthcare, education and childcare, transportation,
sanitation, grocery and food production, and public health and safety, among others, as
provided in the Interim Final Rule. Governments receiving Fiscal Recovery Funds have
the discretion to add additional sectors to this list, so long as the sectors are considered
critical to protect the health and well-being of residents.

The Interim Final Rule emphasizes the need for recipients to prioritize premium pay for
lower income workers. Premium pay that would increase a worker’s total pay above
150% of the greater of the state or county average annual wage requires specific
justification for how it responds to the needs of these workers.


Page 24
AS OF MAY 27, 2021



5.2. What criteria should recipients use in identifying third-party employers to receive
grants for the purpose of providing premium pay to essential workers?

Any third-party employers of essential workers are eligible. Third-party contractors who
employ essential workers in eligible sectors are also eligible for grants to provide
premium pay. Selection of third-party employers and contractors who receive grants is at
the discretion of recipients.

To ensure any grants respond to the needs of essential workers and are made in a fair and
transparent manner, the rule imposes some additional reporting requirements for grants to
third-party employers, including the public disclosure of grants provided.

5.3. May recipients provide premium pay retroactively for work already performed?

Yes. Treasury encourages recipients to consider providing premium pay retroactively for
work performed during the pandemic, recognizing that many essential workers have not
yet received additional compensation for their service during the pandemic.


6. Eligible Uses – Water, Sewer, and Broadband Infrastructure

6.1. What types of water and sewer projects are eligible uses of funds?

The Interim Final Rule generally aligns eligible uses of the Funds with the wide range of
types or categories of projects that would be eligible to receive financial assistance
through the Environmental Protection Agency’s Clean Water State Revolving Fund
(CWSRF) or Drinking Water State Revolving Fund (DWSRF).

Under the DWSRF, categories of eligible projects include: treatment, transmission and
distribution (including lead service line replacement), source rehabilitation and
decontamination, storage, consolidation, and new systems development.

Under the CWSRF, categories of eligible projects include: construction of publicly-
owned treatment works, nonpoint source pollution management, national estuary
program projects, decentralized wastewater treatment systems, stormwater systems, water
conservation, efficiency, and reuse measures, watershed pilot projects, energy efficiency
measures for publicly-owned treatment works, water reuse projects, security measures at
publicly-owned treatment works, and technical assistance to ensure compliance with the
Clean Water Act.

As mentioned in the Interim Final Rule, eligible projects under the DWSRF and CWSRF
support efforts to address climate change, as well as to meet cybersecurity needs to
protect water and sewer infrastructure. Given the lifelong impacts of lead exposure for
children, and the widespread nature of lead service lines, Treasury also encourages
recipients to consider projects to replace lead service lines.


Page 25
AS OF MAY 27, 2021



6.2. May construction on eligible water, sewer, or broadband infrastructure projects
continue past December 31, 2024, assuming funds have been obligated prior to that
date?

Yes. Treasury is interpreting the requirement that costs be incurred by December 31,
2024 to only require that recipients have obligated the funds by such date. The period of
performance will run until December 31, 2026, which will provide recipients a
reasonable amount of time to complete projects funded with Fiscal Recovery Funds.

6.3. May recipients use funds as a non-federal match for the Clean Water State
Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF)?

Recipients may not use funds as a state match for the CWSRF and DWSRF due to
prohibitions in utilizing federal funds as a state match in the authorizing statutes and
regulations of the CWSRF and DWSRF.

6.4. Does the National Environmental Policy Act (NEPA) apply to eligible infrastructure
projects?

NEPA does not apply to Treasury’s administration of the Funds. Projects supported with
payments from the Funds may still be subject to NEPA review if they are also funded by
other federal financial assistance programs.

6.5. What types of broadband projects are eligible?

The Interim Final Rule requires eligible projects to reliably deliver minimum speeds of
100 Mbps download and 100 Mbps upload. In cases where it is impracticable due to
geography, topography, or financial cost to meet those standards, projects must reliably
deliver at least 100 Mbps download speed, at least 20 Mbps upload speed, and be
scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed.

Projects must also be designed to serve unserved or underserved households and
businesses, defined as those that are not currently served by a wireline connection that
reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed.

6.6. For broadband investments, may recipients use funds for related programs such as
cybersecurity or digital literacy training?

Yes. Recipients may use funds to provide assistance to households facing negative
economic impacts due to Covid-19, including digital literacy training and other programs
that promote access to the Internet. Recipients may also use funds for modernization of
cybersecurity, including hardware, software, and protection of critical infrastructure, as
part of provision of government services up to the amount of revenue lost due to the
public health emergency.




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AS OF MAY 27, 2021



7. Non-Entitlement Units (NEUs)

7.1. Can states impose requirements or conditions on the transfer of funds to NEUs?

As the statute requires states to make distributions based on population, states may not
place additional conditions or requirements on distributions to NEUs, beyond those
required by the ARPA and Treasury’s implementing regulations and guidance.

For example, states may not impose stricter limitations than permitted by statute or
Treasury regulations or guidance on an NEU’s use of Fiscal Recovery Funds based on the
NEU’s proposed spending plan or other policies, nor permitted to offset any debt owed
by the NEU against its payment. Further, states may not provide funding on a
reimbursement basis (e.g., requiring NEUs to pay for project costs up front before being
reimbursed with Fiscal Recovery Fund payments), because this approach would not
comport with the statutory requirement that states make distributions to NEUs within the
statutory timeframe.

7.2. Can states transfer additional funds to local governments beyond amount allocated
to NEUs?

Yes. The Interim Final Rule permits states, territories, and Tribal governments to transfer
Fiscal Recovery Funds to other constituent units of government or private entities beyond
those specified in the statute, as long as the transferee abides by the transferor's eligible
use and other requirements. Similarly, local governments are authorized to transfer
Fiscal Recovery Funds to other constituent units of government (e.g., a county is able to
transfer Fiscal Recovery Funds to a city, town or school district within it).

7.3. What is the definition of “budget” for the purpose of the 75 percent cap on NEU
payments, and who is responsible for enforcing this cap?

States are responsible for enforcing the “75 percent cap” on NEU payments, which is a
statutory requirement that distributions to NEUs not exceed 75 percent of the NEU’s
most recent budget. Treasury interprets the most recent budget as the NEU’s most recent
annual total operating budget, including its general fund and other funds, as of January
27, 2020. States may rely for this determination on a certified top-line budget total from
the NEU. Funding amounts in excess of such cap must be returned to Treasury.

7.4. May states use funds to pay for the administrative costs of allocating and
distributing money to the NEUs?

Yes. If necessary, states may use Fiscal Recovery Funds to support the administrative
costs of allocating and distributing money to NEUs, as disbursing these funds itself is a
response to the public health emergency and its negative economic impacts.





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AS OF MAY 27, 2021


8. Ineligible Uses

8.1. What is meant by a pension “deposit”? Can governments use funds for routine
pension contributions for employees whose payroll and covered benefits are eligible
expenses?

Treasury interprets “deposit” in this context to refer to an extraordinary payment into a
pension fund for the purpose of reducing an accrued, unfunded liability. More
specifically, the interim final rule does not permit this assistance to be used to make a
payment into a pension fund if both: (1) the payment reduces a liability incurred prior to
the start of the COVID-19 public health emergency, and (2) the payment occurs outside
the recipient’s regular timing for making such payments.

Under this interpretation, a “deposit” is distinct from a “payroll contribution,” which
occurs when employers make payments into pension funds on regular intervals, with
contribution amounts based on a pre-determined percentage of employees’ wages and
salaries. In general, if an employee’s wages and salaries are an eligible use of Fiscal
Recovery Funds, recipients may treat the employee’s covered benefits as an eligible use
of Fiscal Recovery Funds.


9. Reporting

9.1. What records must be kept by governments receiving funds?

Financial records and supporting documents related to the award must be retained for a
period of five years after all funds have been expended or returned to Treasury,
whichever is later. This includes those which demonstrate the award funds were used for
eligible purposes in accordance with the ARPA, Treasury’s regulations implementing
those sections, and Treasury’s guidance on eligible uses of funds.

9.2. What reporting will be required, and when will the first report be due?

Recipients will be required to submit an interim report, quarterly project and expenditure
reports, and annual recovery plan performance reports as specified below, regarding their
utilization of Coronavirus State and Local Fiscal Recovery Funds.

Interim reports: States (defined to include the District of Columbia), territories,
metropolitan cities, counties, and Tribal governments will be required to submit one
interim report. The interim report will include a recipient’s expenditures by category at
the summary level and for states, information related to distributions to nonentitlement
units of local government must also be included in the interim report. The interim report
will cover activity from the date of award to July 31, 2021 and must be submitted to
Treasury by August 31, 2021. Nonentitlement units of local government are not required
to submit an interim report.



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AS OF MAY 27, 2021


Quarterly Project and Expenditure reports: State (defined to include the District of
Columbia), territorial, metropolitan city, county, and Tribal governments will be required
to submit quarterly project and expenditure reports. This report will include financial
data, information on contracts and subawards over $50,000, types of projects funded, and
other information regarding a recipient’s utilization of award funds. Reports will be
required quarterly with the exception of nonentitlement units, which will report annually.
An interim report is due on August 31, 2021. The reports will include the same general
data as those submitted by recipients of the Coronavirus Relief Fund, with some
modifications to expenditure categories and the addition of data elements related to
specific eligible uses. The initial quarterly Project and Expenditure report will cover two
calendar quarters from the date of award to September 30, 2021 and must be submitted to
Treasury by October 31, 2021. The subsequent quarterly reports will cover one calendar
quarter and must be submitted to Treasury within 30 days after the end of each calendar
quarter.

Nonentitlement units of local government will be required to submit the project and
expenditure report annually. The initial annual Project and Expenditure report for
nonentitlement units of local government will cover activity from the date of award to
September 30, 2021 and must be submitted to Treasury by October 31, 2021. The
subsequent annual reports must be submitted to Treasury by October 31 each year.

Recovery Plan Performance reports: States (defined to include the District of Columbia),
territories, metropolitan cities, and counties with a population that exceeds 250,000
residents will also be required to submit an annual recovery plan performance report to
Treasury. This report will include descriptions of the projects funded and information on
the performance indicators and objectives of each award, helping local residents
understand how their governments are using the substantial resources provided by
Coronavirus State and Local Fiscal Recovery Funds program. The initial recovery plan
performance report will cover activity from date of award to July 31, 2021 and must be
submitted to Treasury by August 31, 2021. Thereafter, the recovery plan performance
reports will cover a 12-month period and recipients will be required to submit the report
to Treasury within 30 days after the end of the 12-month period. The second Recovery
Plan Performance report will cover the period from July 1, 2021 to June 30, 2022 and
must be submitted to Treasury by July 31, 2022. Each annual recovery plan performance
report must be posted on the public-facing website of the recipient. Local governments
with fewer than 250,000 residents, Tribal governments, and nonentitlement units of local
government are not required to develop a Recovery Plan Performance report.

Treasury will provide further guidance and instructions on the reporting requirements for
program at a later date.

9.3. What provisions of the Uniform Guidance for grants apply to these funds? Will the
Single Audit requirements apply?

Most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program,
including the Cost Principles and Single Audit Act requirements. Recipients should refer


Page 29
AS OF MAY 27, 2021


to the Assistance Listing for detail on the specific provisions of the Uniform Guidance
that do not apply to this program. The Assistance Listing will be available on
beta.SAM.gov.


10. Miscellaneous

10.1. May governments retain assets purchased with Fiscal Recovery Funds? If so, what
rules apply to the proceeds of disposition or sale of such assets?

Yes, if the purchase of the asset was consistent with the limitations on the eligible use of
funds. If such assets are disposed of prior to December 31, 2024, the proceeds would be
subject to the restrictions on the eligible use of payments.

10.2. Can recipients use funds for administrative purposes?

Recipients may use funds to cover the portion of payroll and benefits of employees
corresponding to time spent on administrative work necessary due to the COVID–19
public health emergency and its negative economic impacts. This includes, but is not
limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing
new grant programs established using Fiscal Recovery Funds.

10.3. Are recipients required to remit interest earned on CSFRF/CLFRF payments made
by Treasury? [5/27]

No. CSFRF/CLFRF payments made by Treasury to states, territories, and the District of
Columbia are not subject to the requirement of the Cash Management Improvement Act
and Treasury’s implementing regulations at 31 CFR part 205 to remit interest to
Treasury. CSFRF/CLFRF payments made by Treasury to local governments and Tribes
are not subject to the requirement of 2 CFR 200.305(b)(8)–(9) to maintain balances in an
interest-bearing account and remit payments to Treasury.

10.4. Is there a deadline to apply for funds? [5/27]

The Interim Final Rule requires that costs be incurred by December 31, 2024. Eligible
recipients are encouraged to apply as soon as possible. For recipients other than Tribal
governments, there is not a specific application deadline.

Tribal governments do have deadlines to complete the application process and should
visit www.treasury.gov/SLFRPTribal for guidance on applicable deadlines.





Page 30
ATTACHMENT B
Potential Program Summaries
Allocation 1: $198,000,000

A. Community Investment - $143,000,000
B. City Operations - $50,000,000
C. Contingency for Future Needs - $5,000,000

Community Investment $143,000,000

Phoenix Arts, Business, and Employee Assistance Programs $40,000,000

Workforce Training Facility and Training Program - $15,000,000
Program would seek to leverage funding from IDA, PCDIC, Maricopa County and the Arizona
Community Foundation to purchase and rehabilitate the old Kmart Building. Arizona State
University, Maricopa Community Colleges and WestMec would take over all ongoing operations
and maintenance. Facility would be used to create workforce training programs.

Workforce Wraparound Tuition/Apprentice Program - $10,000,000
Utilization of existing and customized training programs, including apprenticeship programs, that
will leverage the Phoenix Work4orce partnership. These programs will provide tuition
assistance and wraparound services to Phoenix residents to promote training and job
placement in high-growth, in-demand industries and occupations while addressing barriers to
accessing training and employment.

Micro and Small Business Assistance Programs - $8,000,000
Based on lessons learned from the CRF program, CED recommends combining the micro and
small business programs into one program. This would allow for a more efficient and less
bureaucratic process. Awards would be either $3K, $5k or $10k and would be based on the
number of employees. Funding will also be used to provide assistance to business that have
been impacted by COVID-19 and light rail development. For these businesses award amounts
would be 50% higher due to the double impact of COVID and light rail construction.

Nonprofit Arts and Culture Stabilization Grants - $2,750,000
The Nonprofit Arts and Culture Stabilization Grants would provide two-years of funding to help
Phoenix’s nonprofit arts and culture organizations manage their operations, personnel, and
programming as they welcome back audiences, guests, and patrons to their services. This two-
year program awards recovery grants to eligible Phoenix-based arts and cultural nonprofit
organizations of all sizes who demonstrate intent, commitment, and strategies to sustain well
beyond the COVID-19 pandemic. Organizations must have been in operation prior to March 1,
2020.

Small Business Workforce Program - $2,000,000
Program would provide assistance to small businesses (less than 100 employees) in Phoenix.
Staff would market workforce connections to small businesses through special visits, marketing,
social media, chambers and others. Funds would be used to assist business owners with
training and hiring a new workforce and retraining their existing workforce.


Page 31
Artists to Work - $1,000,000
The Artists to Work program would enable the city to contract artists to develop temporary
projects, installations, and performances. These commissions would reactivate a wide range of
public spaces, including parks, trails, community centers, and neighborhood areas not usually
defined or programmed as cultural spaces. The events could range from outdoor community
performances of music, opera, theater, poetry, etc., to temporary outdoor
installations/exhibitions of sculptures, paintings, and other forms throughout the city.

Arts Career Advancement Grants - $500,000
Grants will support working artists or arts workers who have experienced job loss, indefinitely
postponed or canceled events and residencies, or terminated contracts due to the pandemic.
Funding will cover lost income, support services to grow artistic skills, equipment or business
operations recovery costs, and participation in an exhibit, festival, vendor showcase, or artist
residency.

Arts and Culture Internship Program - $500,000
The Arts and Culture Internship Program is a two-year program that would allow nonprofit arts
and culture organizations and for-profit creative industries the opportunity to hire full-time interns
for twenty weeks. The internships provide undergraduate students with meaningful on-the-job
training and experience working in the cultural sector. The program ultimately strengthens
Phoenix’s workforce by providing access to high-quality opportunities for college students of all
backgrounds to gain experience, understanding, and transferable skills relevant to careers in
and out of the arts, the creative economy, and engagement in public life.

Personnel/Technical Assistance/Professional Development Programs - $250,000
This funding would allow the Office of Arts and Culture to reallocate a current vacant position or
hire a new position to coordinate and spread the word about the work. It also includes funds for
continued technical assistance and professional development in financial sustainability,
business practices, and reopening strategies.

Mitigation and Care for Vulnerable Populations $31,500,000

*Denotes programs related to the City’s Homelessness Strategy

Funds are intended to be used to provide resources needed to properly address the needs of
persons experiencing or facing homelessness during the public health emergency, persons
suffering from mental and/or behavioral health conditions, veterans, seniors and our refugee
communities. A few examples of how funds may be used are listed below:

*Homelessness and Mental Health- $10,500,000
This funding provides City Council with the resources needed to address a variety of
opportunities including but not limited to mental and behavioral health, rehabilitation centers,
and homelessness. These funds could also be leveraged with funds from other units of local
government and the non-profit community to provide regional solutions to these issues.

Edison Impact Hub - $5,000,000
Funding to retrofit the historic children’s hospital from a vacant, dilapidated building to a
community services center that will provide medical offices and other services to the community.

*US Vets and Veteran Relief - $4,500,000
Funds would provide relief for Veterans experiencing or at risk of homelessness during the
pandemic. Many of our vets are more vulnerable to COVID-19 due to living conditions, age, and
chronic health complications. Funding could also provide additional operational support needed
by the US Vets Organization to transition into the property purchased earlier this year with
COVID Relief Funds.



Page 32
*Summer Heat Respite - $3,000,000
Create a heat respite/cooling center to provide a place of respite during the summer for
individuals experiencing homelessness. The center would be operated May through September
for 7 days a week, during the warmest times of the day (9am-7pm) and provide guests with a
place to socially distance due to COVID-19 and include meals, outreach and other supports.
Funding would be used for a temporary shelter, insurance, utilities, tables and chairs, security,
janitorial services, bio-waste removal services, IT services, meals, water, and staffing.

Financial Assistance for Phoenix Refugee and Asylee Community - $3,000,000
Funds would be used to support nonprofit agencies serving the refugee and asylee community,
as well as to create full-time staff support to provide services to this community. These positions
would act as navigators that would help this community navigate government services and
programs.

Memory Café Program - $2,000,000
This funding will expand the City’s Memory Café program for senior center members and their
caregivers. Memory Cafes stimulate participants through music therapy, art and memory
exercises, and are a key contributor to the Dementia Friendly City initiative.

Area Agency on Aging’s Goods2HOME - $2,000,000
Funding will continue to support the Area of Agency on Aging’s Goods2HOME program which
the City support with CARES Act funding in 2020. This program provides delivery services to
low-income, disabled, and homebound seniors who need medication and sanitation supplies.

Justa Center - $1,000,000
This funding will support the restoration of the Justa Center, a building currently owned by the
Area Agency on Aging (AAA). The Justa Center serves vulnerable seniors experiencing
homelessness and would seek to leverage funds with Maricopa County and the State to build a
transitional or bridge housing complex next to the Justa Center.

Bus Stop Shelters - $500,000
As part of the T2050 plan, the Public Transit Department has a goal of installing 80 new bus
shelters per year. This additional funding will increase this goal to 100 shelters per year over the
next two years. Bus shelters will be placed in locations currently without shade and provide heat
relief to transit users.

Households and Residential Assistance $28,000,000

*Denotes programs related to the City’s Homelessness Strategy

*Financial Assistance for Phoenix Families - $12,000,000
Funds would be used to provide financial assistance to help low-to-moderate income families in
Phoenix. The intent of this funding would be to ensure that families have resources needed to
provide quality childcare and to cover other household expenses. Resources could also be used
to provide mini-grants to Phoenix childcare facilities in low-to-moderate census tracks for
technology upgrades that could include classroom screens, web-cam access, digital sign in/out
software, childcare management software, and/or general WiFi upgrades.

*Utility & Rent/Mortgage Assistance - $10,000,000
A portion of these funds will be used to provide residents with City water, sewer and trash,
electric, internet/broadband, natural gas utility and rent/mortgage assistance. Funds are
intended to be used on residents who don’t qualify for the City’s more restrictive $91M
Emergency Rent Assistance Programs (ERA 1 and ERA 2). A portion of funds will also be used
to provide landlord incentives as part of the Emergency Housing Vouchers program.




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Airport Childcare Facility - $5,000,000
Funds would be used to provide childcare options for workers at the airport. A survey was sent
to companies that do business at Sky Harbor International Airport and of the companies that
responded, an overwhelming majority were in favor of offering childcare services to workers at
the airport.

Bus Card Subsidy Program - $1,000,000
Funds would be used to provide subsidies and fare assistance to residents that rely on public
transportation.

Youth Sports, Recreation, Education and After-School $28,800,000

Citywide Wireless Network Project and Partnership with Phoenix Union - $10,000,000
Funds would be used to continue building the community wireless network project that was
initially approved by City Council using the Coronavirus Relief Fund. The project is a partnership
between the City, Phoenix Union High School District, and others.

Early Childhood Education Expansion - $6,000,000
Funding will be used to create a program to increase access to early childhood education for
500 preschool children, ages four to five. The proposed program would mirror performance
standards, quality control, and curriculum of the Head Start Program while allowing eligible
families to be at 200% of poverty level rather than the Head Start mandated 100% of poverty
level. Additionally, approximately half of this funding will be used to provide First Things First
scholarships for early childhood services (childcare and preschool) for children birth to five.

After-School Grant for Phoenix Schools - $2,500,000
Funds will be available for school districts and charter schools who commit to providing free or
affordable after-school programs in-line with the Phoenix After-School Center (PAC) program.

Wi-Fi Connectivity for Community Centers and Public Housing Properties - $2,300,000
Funding to provide access to internet connectivity in community centers and public housing
properties in an attempt to bridge the digital divide that impacted communities during pandemic.

StartupPHX @ Burton Barr - $1,400,000
Funds will be used to provide a broader range of services to the community by expanding the
Hive @ Central. The expansion would include the addition of two meeting rooms, a graphics
station, and technical assistance for small business owners. For programming, funds would be
used to contract with a vendor to provide the Business Roadmap and MAPA Para Us Negocio
series for teens and adults. The contracted vendor would be responsible for curriculum
development and facilitating all sessions in English and Spanish.

College Depot Assistance for Students - $1,000,000
Funds will be used to purchase laptops and hotspots to loan out to students who have struggled
with staying connected to school during the pandemic. The program would loan selected
students a laptop and hotspot for the summer to help level the playing field in education. High
school students with a district issued device need to turn in their laptops at the end of the school
year and will not regain access to them until the school year resumes in August. This program
will allow students to continue skill building, summer job hunting, and virtual programs
throughout the summer.

Library Bookmobile for Underserved Areas - $700,000
The library department has several pieces of land for future library branches located in fast
growing areas. Since a bond program is a few years away, we propose purchasing a large
bookmobile that could be used to provide service from library property at 67tth Avenue and
Lower Buckeye.



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PHXWorks at Burton Barr and Ocotillo - $600,000
Funds will be used to purchase laptops and hotspots to leverage resources and provide extra
services for the community. The library will partner with CED to establish a Job Services Center
in Burton Barr Central Library and at Ocotillo Library. Workforce laptops and hotspots will be
available for customers to check out for a 3-week check out period.

Parks After-School Programs - $500,000
Funds will be used to expand PAC programming to 10 additional sites. This affordable after-
school recreation and enrichment program provides youth ages six to 13 a fun, supportive, and
educational atmosphere during crucial afterschool hours.

Youth Sports League Grants - $500,000
Funds could be used to offer financial assistance or stipends to at-risk, underserved and low-
income youth to participate in youth sports and recreational leagues.

Early Literacy Tutoring Support - $300,000
The library would use funds to partner with ASU’s America Reads tutoring program to provide
1:1 reading tutoring to emerging readers in 1st through 4th grade who lost ground due to the
pandemic. Tutoring would be provided by ASU students and the library will provide Wi-Fi
provisioned tablet computers to facilitate virtual tutoring as needed.

Library Technology, Capital and Staff Support - $3,000,000
Funds would be used to cover the costs of various technological and capital enhancements
identified by library staff including but not limited to online catalog enhancements, tablets and
hotspots for lending and onsite use, outdoor signage upgrades and automated materials
handler replacement at Mesquite Library.

Phoenix Resilient Food System $9,700,000
Economic Development and Innovation - $3,400,000
This portion of the Phoenix Food Initiative includes the following programs:
• Feed Phoenix Program – This program is a continuation of the CRF funded Feed
Phoenix Program. Under this program, the Local First Arizona Foundation
delivered over 80,000 meals.
• Worker Cooperative Sustainable Food System Business Incubator – This
program will focus on developing worker cooperatives for sustainable food
business enterprises through a collaboration with the private sector.
• Agri-Food Technology Grants – This program will provide funding and incentives
to encourage food system entrepreneurs and innovative food businesses to
expand or locate in Phoenix.

Equity and Inclusion - $2,400,000
This portion of the Phoenix Food Initiative includes the following programs:
• LISC Phoenix Funds to Feed Phoenix – This program is a continuation of the
CRF funded program that provides funding for community and grassroots
organizations.
• Urban Agriculture Fellowship – Provide funding for a one-year fellowship for high
school and college age students with local food producers with 60% for Black,
Indigenous, and persons of color participants.
• Council District Food Action Plans or Initiatives – The program would focus on
districts with food deserts, high food insecurity and hunger rates to identify
whether a council specific food plan would be feasible and desired or whether
more specific projects or initiatives would be preferred.




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Local Food Consumption/Production - $1,500,000
This portion of the Phoenix Food Initiative includes the following programs:
• Farmland Preservation – In partnership with nonprofits and land trusts, assist in
the purchase and preservation of up 100 acres of land for agriculture in Phoenix.
• Backyard Food Production Pilot – Provide grant funding to 100 residents located
in food deserts for backyard gardens and community gardens using aquaponics,
raised beds, and other water conservative growing methods.

Food Banks and Pantries Support - $1,300,000
This funding would be used to provide resources for local food banks and food pantries to
provide food and other resources for struggling families. Staff will ensure broad engagement
with small, medium and large foodbanks and pantries ensuring outreach and emphasis with
smaller community-based food banks and food pantries.

Meals That Work - $700,000
This program will prepare and deliver 1,000 meals for 26 weeks to social service organizations,
such as St. Vincent de Paul, schools, and more. Fourteen food service employees at the
Convention Center will be utilized to prepare the meals.

Resilient Food System - $200,000
This portion of the Phoenix Food Initiative includes the following program:
• Resilient and Sustainable Agriculture Projects – Provide grant funding to farms
for advancing technologies and methods that address growing food in our
changing climate.

Outreach and Support Staff - $200,000
This funding would be used provide advertising and outreach efforts to ensure funding allocated
under this program is fully maximized. Funding would be used to sponsor community events,
stakeholder meetings, and to produce digital and print advertisements. Funding would also be
used to hire two full-time positions for the next two fiscal years. These positions will manage and
monitor all of the activities in the Phoenix Sustainable Food Initiative.

Better Health Outcomes and Community Testing and Vaccines - $5,000,000
Funds will be used to provide resources needed to ensure resident COVID-19 testing and
vaccination efforts remain available through the duration of the public health emergency. This
includes education, outreach, and incentives, with a focus in communities of color. Funds could
also be used to purchase PPE and other public health related materials for the community as
needed. The funds could be used to convert the City’s testing vans to vaccination vans,
dependent on clinical partners with access to vaccines.




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City Operations $50,000,000

Infrastructure, Technology and Capital Needs - $23,000,000
Funds are intended to be used to provide resources needed to address capital needs.
Examples include purchasing spare ambulance units so that Fire has enough units in service
while units are being decontaminated after a service call. During the Great Recession the City
was forced to close its central stores warehouse and as a result during the height of the
pandemic staff used the empty convention center to warehouse materials. As that space is no
longer available, funds may be used to lease, buy or construct a warehouse to store PPE and
critical inventory. Funds may also be used to address other technology and capital projects
within the federal guidelines which include the rehabilitation of the 27th Avenue Recycling
Facility. Staff also recommend allocating a portion of this funding to address green energy and
green streets, flood control and stormwater projects. Due to the large-scale nature of many of
these projects, it is assumed that funding would be allocated in both ARPA allocations.

Revenue Replacement - $22,400,000
Funds will be used to replace lost revenue at the Convention Center and to offset COVID-19
worker’s compensation claims. COVID-19 has had a severe impact on the Convention Center
bookings. It is likely that large conventions and the associated hospitality industry will be among
the slowest to recover and revenue will continue to be weak. Using the prescribed Treasury
formula, staff has determined that up to $31 million of the revenue lost by the Convention
Center is eligible for revenue replacement. Staff recommends replacing this revenue over two
years rather than all at once. It is important to note that the General Fund serves as the financial
backstop for the Convention Center so replacing lost revenue with ARPA funds significantly
reduces risk to the General Fund. ARPA also allows the City to offset costs for COVID-related
worker’s compensation trust fund expenses that can be tied to COVID-19 employee claims. The
City anticipates over $2.4 million in worker’s compensation claims that can be replaced with
ARPA funds. This action would reduce the actuarial impact to future City resources.

Administrative Oversight, Compliance and Outreach Efforts - $4,000,000
Funds are intended to be used to provide staffing necessary to support federal compliance
efforts. Staffing additions will also assist with enhancing community outreach to improve service
delivery and to increase transparency on city progress for all approved programs via an
enhanced website.

PPE/Cleanings/Sanitizing/Testing and Vaccine Distribution - $600,000
Funds will be used to ensure staff have access to necessary PPE, cleaning and sanitizing
materials. Funds will also be used to ensure that workstations and common areas are
appropriately cleaned. Additionally, funds will be used to offset any additional expense incurred
to ensure that all city staff, family members and contractors have access to both vaccines and
COVID testing.




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Contingency $5,000,000

Contingency for Future Needs
A contingency is proposed to preserve resources in case the federal government changes
guidance to allow the funds to be used in new areas of concern for the council or to supplement
funding for an approved program that exhausts its allocation of funds before more funding
becomes available. The contingency would also be available to cover other unexpected COVID-
19 expenses that could occur later in the year.



Revised On:
6/3/2021 5:49 PM




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