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Background

The American Rescue Plan Act (ARPA) was passed in March of 2021 to provide relief to the ongoing effects of the COVID-19 pandemic. One significant component of this law was the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, which allocated relief funds to state, local, and tribal governments.

In the words of the Treasury Department -

The SLFRF program provides governments across the country with the resources needed to:

  • Fight the pandemic and support families and businesses struggling with its public health and economic impacts
  • Maintain vital public services, even amid declines in revenue resulting from the crisis
  • Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity

As a result of this program, the City of Urbana has been allocated $12.97 million to address the impacts of the pandemic. The city has contracted with Champaign County Regional Planning Commission (RPC) to perform the planning and administration of these funds. This process is expected to have three primary steps—performing background research and developing a list of priorities, developing a concept plan for distributing this money, and implementing the plan. More information on this process can be found on the Process page.

Federal ARPA Regulations

The Final Rule released by the Treasury Department in January 2022 provides four broad categories for ARPA SLFRF spending:

  • Replacing Lost Public Sector Revenue
  • Responding to Public Health and Economic Impacts of COVID-19
  • Premium Pay for Essential Workers
  • Water, Sewer, and Broadband Infrastructure

This leaves broad discresssion for spending the funds (for example, up to $10 million can be used on public sector revenue replacement, and this revenue replacement category allows money to be spent on any “services traditionally provided by recipient governments”). However, the following categories are explicitly excluded:

  • Paying off pension obligations, debt service, or legal obligations from settlements or judgments
  • Depositing into rainy day funds, reserves, etc
  • Offsetting tax cuts
  • Uses that violate or work against ARPA or other federal, state, and local laws

For further information on the federal program, the US Treasury Department’s Coronavirus State and Local Fiscal Recovery Funds webpage provides a useful resource to anyone hoping to learn more about the ARPA SLFRF program, including its legislative history, regulations, and eligible projects.

Local Response

Because this is a uniquely large amount of funding, and the federal government has given broad discression on how it is spent, the city of Urbana wants to ensure the money is spent wisely and with the greatest positive impact on Urbana’s residents.

With that goal, The mayor has compiled the following list of important considerations for the city council to remember when deciding where the money should go:

  1. ARPA/Coronavirus State and Local Fiscal Recovery Funds are temporary and nonrecurring.

  2. Recovery Funds are particularly well-suited for one-time investment in critical public infrastructure projects and long-term assets that will provide measurable benefits over many years. Future operation and maintenance costs associated with new projects must be taken into account, if applicable.

  3. It is important to identify service and recovery gaps where funding is most needed and to prioritize historically underserved, marginalized, or disproportionately-impacted groups and sectors of the economy.

  4. Allocation of Recovery Funds should reflect community input, along with priorities identified in the City Council Strategic Goals 2022-23, current City of Urbana projects and initiatives, the ongoing Imagine Urbana Comprehensive Plan process, and other plans developed by the City of Urbana.

  5. Programs, services, and interventions (internal or community-based) supported by Recovery Funds should be evidence-based or be structured in such a way that they can build evidence through program evaluation.

  6. New or expanded programs, services, and interventions (internal or community-based) supported by Recovery Funds that will require an ongoing financial commitment after the initial investment should include a proposed sustainability plan and funding source(s).

  7. The City should strive to leverage Recovery Funds by collaborating with other local city, county, and community partners. The City should identify other potential sources of state and federal funding to help achieve goals. These “ARPA scanning and partnering efforts” can be used to enhance and broaden the impact of Recovery Funds across the community.