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proposed funding agreement with Riverside County. Staff also requests a $75,000 budget transfer from the holding account to the project account in Fund 222 (Measure A) for the design of the Kirby Street improvements.
ALTERNATIVE(S):
1. Do not approve the proposed Funding Agreement
2. Provide alternative direction to the City Manager.
REVIEWED BY LEGAL:
☐ Staff report ☒ Resolution
☐ Ordinance ☒ Agreement
ATTACHMENT(S):
Attachment 1 - Resolution
Attachment 2 - Hemet_ARPAInfrastructureFundingAgreement_w-Attach_AATF_3-13-24
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CITY OF HEMET RESOLUTION NO. 2024-XXX 1
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CITY OF HEMET
HEMET, CALIFORNIA
RESOLUTION NO. 2024-xxx
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF HEMET, CALIFORNIA, APPROVING A FUNDING
AGREEMENT FOR CITY OF HEMET INFRASTRUCTURE
PROJECTS BY AND BETWEEN THE COUNTY OF
RIVERSIDE AND THE CITY OF HEMET FOR THE FIRE
STATION #1 IMPROVEMENTS PROJECT, EMERGENCY
OPERATIONS CENTER STANDBY GENERATOR
REPLACEMENT, AND KIRBY STREET PAVEMENT
IMPROVEMENTS AND AUTHORIZE THE
ADMINISTRATIVE SERVICES DIRECTOR TO RECORD A
SUPPLEMENTAL APPROPRIATION IN THE AMOUNT OF
$75,000 FROM FUND 222 FOR THE KIRBY STREET
DESIGN AND AUTHORIZE THE CITY MANAGER TO
EXECUTE ALL DOCUMENTS RELATED TO THE
FUNDING AGREEMENT
The City Council of the City of Hemet, California (hereafter referred to as the “City Council”) does resolve as follows:
WHEREAS, On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law, amending Section 9901 of Title VI of the Social Security Act which establishes the Coronavirus State and Local Fiscal Recovery Funds (Fiscal Recovery Funds) to provide state, local and Tribal governments with the resources needed to respond to the pandemic and its economic effects and to build a stronger, more equitable economy during the recovery; and
WHEREAS, to respond to the negative effects of the pandemic, which in turn affect our community as a whole, on October 4, 2022, by Minute Order 3.44, the Board of Supervisors of the County of Riverside approved the distribution framework of the second allocation of ARPA funds, to support eligible ARPA efforts within Riverside County including but not limited to: infrastructure (water, sewer, broadband), housing
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CITY OF HEMET RESOLUTION NO. 2024-XXX 2
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and homelessness, business revitalization, neighborhood revitalization, childcare facilities, and non-profits.; and
WHEREAS, on January 6, 2022, the U.S. Department of the Treasury (U.S.
Treasury) adopted a final rule implementing the Fiscal Recovery Funds which took effect on April 1, 2022 (Final Rule); and
WHEREAS, in December 2023, the City proposed two infrastructure projects and requested a funding allocation from Riverside County Supervisor Gutierrez's office; and WHEREAS, the Fire Facility improvements project includes repainting the interior and exterior of Fire Station 1, replacement of six bay doors and openers at Fire Station 1, modifying a downstairs restroom to be ADA compliant at Fire Station 1, replacement of some downstairs flooring in Fire Station 1, and replacement of a standby generator at the Fire Admin building and Emergency Operations Center; and WHEREAS, the Kirby Street improvements project includes maintenance and rehabilitation of Kirby Street from Florida Avenue to Esplanade Avenue; and WHEREAS, the County of Riverside has offered the proposed funding agreement to reimburse the City for the two infrastructure projects in response to the City’s request; and
WHEREAS, staff requests that the Administrative Services Director be authorized to transfer budget from the holding account to the project account in Fund 222 (Measure A) in the amount of $75,000 for the design of the Kirby Street project; and WHEREAS, staff recommends that the City Manager be authorized to execute all documents related to the proposed funding agreement; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HEMET FINDS, DETERMINES, ORDERS AND RESOLVES AS FOLLOWS:
SECTION 1. FINDINGS - The recitals set forth above are hereby adopted as findings in support of this Resolution.
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CITY OF HEMET RESOLUTION NO. 2024-XXX 3
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SECTION 2. APPROVE FUNDING AGREEMENT – The City Council approves the funding agreement between the City of Hemet and the County of Riverside for the two infrastructure projects identified herein.
SECTION 3. AUTHORIZE AGREEMENT EXECUTION – The City Council authorizes the City Manager to execute all documents related to the proposed funding agreement.
SECTION 4. AUTHORIZE SUPPLEMENTAL APPROPRIATION – The City Council authorize the Administrative Services Director to record a budget transfer in the amount of $75,000 from the holding account in Fund 222 (Measure A) to the Kirby Street Improvement Project for the design.
SECTION 5. EFFECTIVE DATE - This Resolution shall become effective upon adoption.
\
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CITY OF HEMET RESOLUTION NO. 2024-XXX 4
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PASSED, APPROVED AND ADOPTED this 26th day of March, 2024. ____________________________
Joe Males, Mayor
ATTEST:
_____________________________
John Paul Maier, City Clerk
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CITY OF HEMET RESOLUTION NO. 2024-XXX 5
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State of California )
County of Riverside )
City of Hemet )
I, John Paul Maier, City Clerk of the City of Hemet, do hereby certify that the foregoing resolution was adopted by the Hemet City Council on the 26th day of March, 2024, and was passed by the following vote:
AYES: Council Members:
NOES: Council Members:
ABSTAIN: Council Members:
ABSENT: Council Members:
_____________________________
John Paul Maier, City Clerk
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1 FUNDING AGREEMENT FOR
CITY OF HEMET INFRASTRUCTURE PROJECTS
This Funding Agreement (“Agreement”) is entered into by and b etween the County of Riverside, a political subdivision of the State of California, (“County”) and City of Hemet , (“Subrecipient”) .
County and Subrecipient are sometimes individually referred to as “Party” and collectively as “Parties.”
RECITALS
WHEREAS, on March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law, amending Section 9901 of Title VI of the Social Security Act which establishes the Coronavirus State and Local Fiscal Recovery Funds (Fiscal Recovery Funds) to provide state, local and Tri bal governments with the resources needed to respond to the pandemic and its economic effects and to build a stronger, more equitable economy during the recovery; and
WHEREAS, to respond to the negative effects of the pandemic, which in turn affect our community as a whole, on October 4 , 2022, by Minute Order 3.44, the Board of Supervisors of the County of Riverside approved the distribution framework of the second allocation of ARPA funds , to support eligible ARPA efforts within Riverside County including but not limited to: infrastructure (water, sewer, broadband), housing and homelessness, business revitalization, neighborhood revitalization, childcare facilities, and non-profits; and
WHEREAS, on January 6, 2022, the U.S. Department of the Treasury (U.S. Treasury) adopted a final rule implementing the Fiscal Recovery Funds which t ook effect on April 1, 2022 (Final Rule); and
WHEREAS, the County desires to reimburse and the Subrecipient desires to accept ARPA Fiscal Recovery Funds in a total amount not to exceed $2,421,407, for expenditures identified in Attachment A related to the Fire Station #1 Improvements Project, and Kirby Street Pavement Improvements (Florida Ave to Esplanade Ave) Project (“Infrastructure Projects”); and
NOW THEREFORE, in consideration of the mutual benefits , covenants, terms and conditions contained herein, the Parties agree as follows:
AGREEMENT
1. Incorporation of Recitals. The Recitals set forth above are incorporated herein and made an operative part of this Agreement.
2. Contract Documents . This Agreement consists of this Agreement and the following attachments, attached hereto and by this reference incorporated herein:
2.1 Attachment A – Infrastructure Projects Scope
2.2 Attachment B – U.S. Treasury ARPA Fiscal Recovery Funds Final Rule
2.3 Attachment C – Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards -2 CFR Part 200 et seq
2.4 Attachment D – Indemnification and Insurance Requirements
2.5 Attachment E – Project Monitoring Requirements
2.6 Attachment F – Construction Requirements
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2 3. Infrastructure Projects; Scope of Work. Subrecipient shall be responsible for completion of all activities associated with design, implementation, installation and construction of the Infrastructure Projects, as described in Attachment A, on or before December 31, 2026, by first using funds received from the County in the amount provided in Section 4 of this Agreement. The Subrecipient shall also furnish timely reporting and documentation assuring Subrecipient’s compliance with the U.S. Treasury ARPA Guidelines (as stated in the Final Rule of the U.S. Department of the Treasury published in the Federal Register on January 27, 2022) , and within the timelines and specifications provi ded in Attachment E. Under the provisions of the Agreement, the County shall bear no responsibility for the Infrastructure Project s, including without limitation any activities associated with implementation, installation and construction, or any future operation or maintenance of the Infrastructure Projects.
3.1 P
roject Signage. Subrecipient shall include appropriate acknowledgement of credit to the County for its support when promoting the Infrastructure Projects or using any data and/ or information developed under this Agreement. Signage shall be posted in a prominent location at Infrastructure Project site(s) and shall include the U.S. Department of Treasury’s, and the County’s color logos, along with the following disclosure statement: “Funding for this project has been provided in full or in part from the American Rescue Plan Act, and through an agreement with the County of Riverside.” The Subrecipient shall also include in each of its contracts for work under this Agreement a provision that incorporates the requirements stated within this Paragraph.
4. Funding.
4.1 County shall provide funding to Subrecipient in a total amount not to exceed $2,421,407 (“Award”), in quarterly payments in accordance with progress pay estimates submittals , and in compliance with ARPA Guidelines as set forth in Attachment B, attached hereto and by this reference incorporated herein, for the completion of the Infrastructure Projects. In the event that there is a conflict in the terms for payment in this Agreement and the terms in Attachments B and C, the terms in Attachments B and C shall take precedence. Subrecipient shall provide other non- federal funding at least equal to the amounts shown in Attachment A, attached hereto and by this reference incorporated herein, as a match to the funds provided by the County for the Infrastructure Projects.
4.2 Except as expressly provided in Attachment A of this Agreement, Subrecipient shall not be entitled to , nor receive from County any additional funding or other type of remuneration for services rendered under this Agreement. The Award amounts described in this Section are specifically for each Infrastructure Project and make up the entire amount which the County has approved to fund for each Infrastructure Project. Subrecipient shall not be entitled by virtue of this Agreement to consideration in excess of specified per-project Award amounts, and Subrecipient shall be responsible for any and all costs incur red above any Award amount for its implementation and completion of the specified Infrastructure Project. Any subsequent amendments to Infrastructure Project scope s or description are not covered by this Agreement, and the funding for any such amendment o r for any Infrastructure Project cost overruns shall be the sole responsibility of Subrecipient , unless otherwise approved in writing by the County.
4.3 Should it be determined at any time by the Subrecipient or the County that the Subrecipient cannot achieve Infrastructure Project schedule milestones within the timelines specified in Attachment A , or will not or is unable to complete an Infrastructure Project subject to this Agreement
in accordance with the applicable State and Federal requirements and the provisions of this Agreement on or before December 31, 2026, then the subrecipient shall return 100% of the Award amount reimbursed to Subrecipient for any uncompleted Infrastructure Project as of the date of notification to the County, within thirty (30) days of notification.
4.4 In the event the actual cost for any Infrastructure Project is less than Award, Subrecipient shall refund the difference to County within thirty (30) days of filing the Notice of Completion for the
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3 Infrastructure Project, or by June 30, 2026, whichever occurs first. S ubrecipient shall return any reimbursed Award Funds that have not been expended or are not adequately supported by invoices and documentation to the County, within thirty (30) days of completion of construction of the Infrastructure Project, or upon request by the County, whichever occurs first.
5. Invoicing and Billing
5.1 Invoices.
5.1.1 Invoices shall be submitted via e-mail to [email protected] . The
final invoice from the Subrecipient will be submitted with enough time for the County to reimburse the Subrecipient prior to December 31, 2026, per the final rule of ARPA.
5.1.2 Supporting documentation shall accompany each invoice: copies of paid receipts and invoices of all Subrecipient Infrastructure Project costs incurred by Subrecipient.
5.1.3 To ensure compliance with Federal and State regulations, County may require additional supporting documentation or clarification of claimed expenses as follows:
5.1.3.1 County Executive Office staff shall notify Subrecipient to obtain necessary additional documentation or clarification.
5.1.3.2 Subrecipient shall respond within three (3) business days with required additional documentation or clarification to avoid disallowances/partial payment of invoice.
5.1.3.3 All invoices containing expenses that need additional documentation or clarification not provided to County within three (3) business days of request shall have those expenses disallowed and only the allowed expenses shall be paid.
5.1.3.4 Subrecipient may resubmit disallowed expenses as a supplemental invoice only and must be accompanied by required documentation.
5.2 Payments
5.2.1 If the conditions set forth in this Agreement are met, County shall pay, on/or before the thirtieth (30th) day after receipt of a complete and accurate invoice, the sum of money claimed by the approved invoice, (less any credit due County for adjustments of prior invoices). If the conditions are not met, County shall pay when the necessary processing is completed and/or proper backup documentation is provided.
5.2.2 County shall not pay for unauthorized costs incurred by Subrecipient or for the claimed work which County monitoring shows have not been provided as authorized.
5.2.3 County retains the right to withhold payment on disputed claims.
6. Term. The Term of this Agreement shall be from the date of approval of this Agreement until filing of notice of completion for all Infrastructure Projects, or on December 31, 2026, whichever is sooner, unless sooner terminated as provided herein.
7. Subrecipient Compliance Obligations . The Subrecipient agrees to comply with the terms and conditions of this Agreement. The Subrecipient also agrees to apply the terms and conditions of this
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4 Agreement to all of its subcontractors (if applicable) and to require their strict compliance there with.
If it is determined that the Subrecipient is noncompliant, County may temporarily withhold or disallow reimbursement of costs, under 2 C.F.R. Part 200, as supplemented by 2 C.F.R. Part 910.
7.1 Federal Provisions. Subrecipient and all of its subcontractors shall comply with the Uniform Administrative Requirements, Cost Principles, Federal Provisions and Audit Requirements for Federal Awards Provisions contained in Attachment C
8. Contract Representatives.
8.1 County R epresentative. The County Executive Officer, or designee, shall be the designated representative who shall administer this Agreement on behalf of the County.
8.2 Subrecipient Representative. The City Manager, or designee, shall be the designated representative who shall administer this Agreement on behalf of the Subrecipient.
8.3 The Contract Representatives may be contacted as described in Section 11, below.
9. Records and Audit.
9.1 Subrecipient shall store and maintain all writings, documents and records prepared or compiled in connection with the performance of this Agreement for a minimum of five (5) years from the termination or completion of this Agreement. This includes any handwriting, typewriting, printing, photostatic, photographing and every other means of recording upon any tangible thing, any form of communication or representation including letters, words, pictures, sounds or symbols or any combination thereof. Any authorized representative of County shall have access to any writings as defined above for the purposes of making a report, audit, evaluation, or examination Further, County has the right at all reasonable times to audit, inspect or otherwise evaluate the work performed or being performed under this Agreement.
9.2 If it is determined pursuant to an audit that any funds provided pursuant to this Agreement have been improperly expended, Subrecipient shall, at the direction of the agency performing the audit, reimburse the County within thirty (30) days the full amount of such improperly expended funds. The funds shall be reimbursed in accordance with the recommendations in the audit.
10. Monitoring of Contract Compliance and Infrastructure Progress Reports.
10.1 Contract Compliance. The Subrecipient shall comply with the monitoring arrangements set forth in Project Monitoring Requirements, and Construction Requirements, attached as Attachments E and F, respectively.
10.2 Infrastructure Projects Progress Reports and Progress Pay Estimates. Subrecipient shall, as specified herein, provide quarterly reports detailing each Infrastructure Project’s progress, including a financial status report and milestone progress report as described in Attachment E.
11. Notices. As used in this Agreement, notice includes but is not limited to the communications of any notice, request, demand, approval, statement, report, acceptance, consent, waiver, and appointment. All notices must be in writing. All such notices from one party to another may be delivered in person, sent via reputable overnight courier, or served by first -class mail, certified or registered, postage prepaid, to each and all of the addresses set forth below.
If to County: If to Subrecipient:
Riverside County Executive Office City of Hemet
Attention: Stephanie Persi and Scott Bruckner Attention: Mark Prestwich 4080 Lemon Street, 4
th Floor, 445 E. Florida Ave
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5 Riverside, CA. 92501 Hemet, CA 92543
12. Conflicts of Interest. Subrecipient covenants that it presently has no interest, including but not limited to, other projects or independent contracts, and shall not acquire any such interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement. Subrecipient further covenants that in the performance of this Agreement, no person having any such interest shall be employed or retained by it under this Agreement. In the event federal funds are used, in whole or in part, for any Infrastructure Project, Subrecipient understands and agrees it must maintain a conflict of interest policy consistent with 2. C.F.R. section 200.318 (c) and that such conflict of interest policy is applicable to each activity funded under this award. Subrecipient must disclose in writing to the U.S. Treasury or through County, as appropriate, any potential conflict of interest affecting the awarded funds in accordance with 2. C.F.R. section 200.12.
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ondiscrimination . During any period in which Subrecipient is in receipt of funds from County, Subrecipient and its Board, officers, employees, agents, representatives or subcontractors shall not unlawfully discriminate in violation of any Federal, State or local law, rule or regulation against any employee, applicant for employment or person receiving services under this Agreement because of race, religious creed, color, national origin, ancestry, physical or mental disability including perception of disability, medical co ndition, genetic information, pregnancy related condition, marital status, gender/sex, sexual orientation, gender identity, gender expression, age (over 40), political affiliation or belief, or military and veteran status. Subrecipient and its officers, employees, agents, representatives or subcontractors shall comply with all applicable Federal, State and local laws and regulations related to non- discrimination and equal opportunity, including without limitation the County’s non- discrimination policy; Ti tle VI of the Civil Rights Act of 1964 (42 US.C. sections 2000d et seq.) and U.S. Treasury’s implementing regulations at 31 C.F.R. Part 22, which prohibit discrimination on the basis of race, color, or national origin under programs or activities receiving federal financial assistance; The Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. sections 3601 et seq.), which prohibits discrimination in housing on the basis of race, color, religion, national origin, sex, familial status, or disability; Section 504 of the Rehabilitation Act of 1973, as amended (42 U.S.C. sections 6101 et seq.), and the U.S. Treasury’s implementing regulations at 31 C.F.R. part 23, which prohibit discrimination on the basis of age in programs or activities receiv ing federal financial assistance; and Title II of the Americans with Disabilities Act of 1990, as amended (42 U.S.C. sections 12101 et seq.)which prohibits discrimination on the basis of disability under programs, activities, and services provided or made available by state and local governments or instrumentalities or agencies thereto; The Fair Employment and Housing Act (Government Code sections 12900 et seq.); California Labor Code sections 1101, and 1102; the Federal Civil Rights Act of 1964 (P.L. 88 -352), as amended; and all applicable regulations promulgated in the California Code of Regulations or the Code of Federal Regulations, and Riverside County’s non-discrimination policy.
Subrecipient shall include the non- discrimination and compliance provi sions of this Section in all subcontracts to perform work under or as a derivative of this Agreement.
14. Indemnification. The Subrecipient shall be bound by the indemnification, hold harmless and defend provisions contained in Attachment D.
15. I nsurance. Subr ecipient shall obtain, and maintain, or caused to be obtained and maintained, at all times during the Term of this Agreement, insurance coverage in the amounts and coverage specified in Attachment D.
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6 16. Termination. The County may terminate this agreement upon making a determination that Subrecipient will not be able to achieve Infrastructure Project schedule milestones within the timelines specified in Attachment A , or is not complying with ARPA terms and conditions. The County may withhold additional planned distributions of funding to Subrecipient pending receipt of requisite reporting requirements by Subrecipient to the County as described herein.
17. C ompliance with Laws . The Subrecipient is required to comply with all applicable federal, state and local laws and regulations for all work performed or funded by and through this Agreement. The Subrecipient is required to obtain all necessary federal, state and local permits, authorizations and approvals for all work performed under this Agreement.
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isputes. The parties shall attempt to resolve any disputes amicably at the working level. If that is not successful, the dispute shall be referred to the senior management of the parties. The Subrecipient shall proceed diligently with the Infrastruc ture Project s described in this Agreement pending the resolution of a dispute. The Parties reserve the right to pursue any remedies at law or in equity should any dispute relating to this Agreement not by resolved by the Parties. Notwithstanding the fore going, prior to the filing of any legal action related to this Agreement, the Parties shall be obligated to attend a mediation session in Riverside County before a neutral third party mediator. A second mediation session shall be required if the first session is not successful. The parties shall share the cost of the mediations.
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tatus of Subrecipient . The Subrecipient is, for purposes relating to this Agreement, an independent contractor and shall not be deemed an employee of the County. It is expressly understood and agreed that the Subrecipient (including its employees, agents, and subcontractors) shall in no event be entitled to any benefits to which County employees are entitled, including but not limited to overtime, any retirement benefits, worker's compensation benefits, and injury leave or other leave benefits. There shall be no employer -employee relationship between the parties nor is there a joint venture ; and Subrecipient shall indemnify and hold County harmless from any and all claims that may be made against County based upon any contention by a third party that an employer -employee relationship exists by reason of this Agreement.
19.1 All acts of Subrecipient and its officers, employees, agents, representatives, subcontractors, and all others acting on behalf of Subrecipient relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of County. Subrecipient, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of County. No agent, officer or employee of the County is to be considered an employee of Subrecipient. At all times during the term of this Agreement, the Subrecipient and its officers, employees, agents, representatives, or subcontractors are, and shall represent and conduct themselves as, independent contractors and not employees of County.
19.2 Subrecipient shall determine the method, details, and means of performing the work and services to be provided by Subrecipient under this Agreement. Subrecipient shall be responsible to County only for the requirements and results specified in this Agreement and, except as expressly provided in this Agreement, shall not be subjected to County's control with respect to the physical action or activities of Subrecipient in fulfillment of this Agreement. Subrecipient has control over the manner and means for completion of the Infrastructure Project s described in this Agreement. If necessary, Subrecipient has the responsibility for employing or engaging other persons or firms to assist Subrecipient in fulfilling the terms and obligations under this Agreement.
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7 19.3 If in the performance of this Agreement any third persons are employed by Subrecipient, such persons shall be entirely and exclusively under the direction, supervision, and control of Subrecipient. All terms of employment including hours, wages, working conditions, discipline, hiring and discharging or any other term of employment or requirements of law shall be determined by the Subrecipient. It is further understood and agreed that Subrecipient must issue W-2 forms or other forms as required by law for income and employment tax purposes for all Subrecipient’s assigned personnel under the terms and conditions of this Agreement.
20. Entire Agreement. This Agreement is the result of negotiations between the Parties. This Agreement is intended by the Parties as a full and final expression of their understanding with respect to the matters contained in this Agreement and shall not be modified in any manner except by an instrument in writing executed by the Parties or their respective successors in interest.
21. A
mendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.
22. G overning Law and Venue . The interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County, California.
23. C onstruction/Interpretation. Headings or captions to the provisions of this Agreement are solely for the convenience of the P arties, are not part of this Agreement, and shall not be used to interpret or determine the validity of this Agreement. Any ambiguity in this Agreement shall not be construed against the drafter, but rather the terms and provisions hereof shall be given a reasonable interpretation as if both parties had in fact drafted this Agreement.
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o Waiver. Failure of the Parties to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any rights or powers hereunder at any one time or more times be deemed a waiver or relinquishment of such other right or power at any other time or times.
25. No
Third-Party Beneficiaries. There are no intended third -party beneficiaries of any right or obligation assumed by the Parties.
26. S everability. It is intended that each paragraph of this Agreement shall be treated as separate and divisible, and in the event that any paragraphs are deemed unenforceable, the remainder shall continue to be in full force and effect so long as the primary purpose of this Agreement is unaffected.
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ounterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
28. U
se of Electronic (Digital) Signatures . This Agreement may be executed in any number of counterparts, each of which will be an original, but all of which together will constitute one instrument.
Each party of this Agreement agrees to the use of electronic signatures, such as digital signatures that meet the requirements of the California Uniform Electronic Transactions Act ((“CUETA ”) Cal. Civ.
Code §§ 1633.1 to 1633.17), for executing this Agreement. The parties further agree that the electronic signatures of the parties included in this Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Electronic signature means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record pursuant to the CUETA as am ended from time to
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8 time. The CUETA authorizes use of an electronic signature for transactions and contracts among parties in California, including a government agency. Digital signature means an electronic identifier, created by computer, intended by the party using it to have the same force and effect as the use of a manual signature, and shall be reasonably relied upon by the parties. For purposes of this section, a digital signature is a type of "electronic signature" as defined in subdivision (i) of Sec tion 1633.2 of the Civil Code
[Signature Provisions on Following Page]
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9 28. Authority to Enter Agreement. Each Party to this Agreement warrants to the other that it is duly organized and existing and that it and the respective signatories have full right and authority to enter into and consummate this Agreement and all related documents and bind the parties thereto.
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N WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date as indicated beside each Party's signature.
COUNTY: SUBRECIPIENT:
COUNTY OF RIVERSIDE, a political subdivision CITY OF HEMET of the State of California
By: ______________________________ By: _______________________________
Chair, Board of Supervisors City Manager
ATTEST:
Clerk of the Board
Kimberly Rector
By: _____________________________
Deputy
(Seal)
APPROVED AS TO FORM
County Counsel
By: ________________________
Kristine Bell-Valdez
Deputy County Counsel
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10 Attachment A – Infrastructure Projects Scope
Fire Station #1 Improvements Project
Scope of Work
The Subrecipient will complete all planning, design and procurement necessary to complete the Project. The Subrecipient will replace an existing non-compliant standby generator at the Covell Fire Admin Emergency Operation Center, modify a first -floor restroom to be ADA compliant, repaint the facility interior and exterior, supply and install new downstairs flooring, and supply and install six new bay doors and openers. Equipment to be purchased for this project includes:
one 200 kW diesel standby generator with automated transfer switch; six high performance bay doors; six sets of bay door tracks and track hardware; six high performance bay door openers ; and six bay door controllers/operators.
Project Budget
ITEM DESCRIPTION
COUNTY OF
RIVERSIDE
ARPA PROJECT
FUNDING
AMOUNT
(Not to Exceed)
SUBRECIPIENT
NON-FEDERAL
FUNDING
AMOUNT
ESTIMATED
PROJECT COST
1 Facility Planning $0 $0 $0
2 Preliminary Design $0 $0 $0
3 Final Design $0 $0 $0
4 Spec Review,
Bid/Award
$0 $0 $0
5 Construction,
Equipment Purchase,
and Installation
$650,000 $0 $650,000
6 Admin Closeout $0 $0 $0
TOTAL: $650,000 $0 $650,000
Schedule
ITEM DESCRIPTION OF SUBMITTAL ESTIMATED DUE
DATE
1 Feasibility Report N/A
2 Preliminary Design Report N/A
3 Final Design June 28, 2024
4 Spec Review, Bid/Award July 31, 2024
5 Construction and Implementation March 28, 2025
6 Admin Closeout May 31, 2025
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11 Kirby Street Pavement Improvements (Florida Ave to Esplanade Ave) Project Scope of Work
The Subrecipient will complete all planning, design and procurement necessary to complete the Project. The Subrecipient will perform required reconstruction, rehabilitation and maintenance on Kirby Street from Florida Ave to Esplanad e Ave. The segment of Kirby Street from Devonshire Ave to Menlo Ave only requires maintenance treatment while the remainder requires a mixture of rehabilitation and reconstruction. The segment of Kirby between Fruitvale and Esplanade will have a grade adjustment as part of the project to fix a drainage issue that causes flooding during rain events.
Project Budget
ITEM DESCRIPTION
COUNTY OF
RIVERSIDE
ARPA
PROJECT
FUNDING
AMOUNT
(Not to Exceed)
SUBRECIPIENT
NON-FEDERAL
FUNDING
AMOUNT
ESTIMATED
PROJECT COST
1 Facility Planning $0 $0 $0
2 Preliminary Design $0 $35,000 $35,000
3 Final Design $0 $30,000 $30,000
4 Spec Review,
Bid/Award
$0 $0 $0
5 Construction $1,771,407 $0 $1,771,407
6 Admin Closeout $0 $0 $0
TOTAL: $1,771,407 $65,000 $1,836,407
Schedule
ITEM DESCRIPTION OF SUBMITTAL ESTIMATED DUE
DATE
1 Feasibility Report N/A
2 Preliminary Design Report May 17, 2024
3 Final Design July 19, 2024
4 Spec Review, Bid/Award September 30, 2024
5 Construction and Implementation March 31, 2025
6 Admin Closeout May 30, 2025
17.A
12 Attachment B – U.S. Treasury ARPA Fiscal Recovery Funds Final Rule
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4338 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 1 Public Law 117–2. https://www.congress.gov/
117/plaws/publ2/PLAW-117publ2.pdf.
2 Throughout this Supplementary Information,
Treasury uses ‘‘state, local, and Tribal
governments’’ or ‘‘recipients’’ to refer generally to
governments receiving SLFRF funds; this includes
states, territories, Tribal governments, counties,
metropolitan cities, and nonentitlement units of
local government.
3 86 FR 26786 (May 17, 2021).
4 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID–19 Vaccinations in the
United States, https://covid.cdc.gov/covid-data-
tracker/#vaccinations (last visited December 31,
2021).
5 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
December 7, 2021).
6 U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.
stlouisfed.org/series/UNRATE (last visited
December 7, 2021).
7 Id.
8 U.S. Bureau of Economic Analysis, Real Gross
Domestic Product [GDPC1], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://fred.
stlouisfed.org/series/GDPC1 (last visited December
7, 2021).
9 U.S. Bureau of Labor Statistics, supra note 6.
10 U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited December 7,
2021).
11 The ARPA adds section 602 of the Social
Security Act, which creates the State Fiscal
Recovery Fund, and section 603 of the Social
Security Act, which creates the Local Fiscal
Recovery Fund (together, SLFRF). Sections 602 and
603 contain substantially similar eligible uses; the
primary difference between the two sections is that
section 602 establishes a fund for states, territories, and Tribal governments and section 603 establishes
a fund for metropolitan cities, nonentitlement units
of local government, and counties.
DEPARTMENT OF THE TREASURY
31 CFR Part 35
RIN 1505–AC77
Coronavirus State and Local Fiscal
Recovery Funds
AGENCY: Department of the Treasury.
ACTION: Final rule.
SUMMARY: The Secretary of the Treasury
(Treasury) is adopting as final the
interim final rule published on May 17,
2021, with amendments. This rule
implements the Coronavirus State Fiscal
Recovery Fund and the Coronavirus
Local Fiscal Recovery Fund established
under the American Rescue Plan Act.
DATES: The provisions in this final rule
are effective April 1, 2022.
FOR FURTHER INFORMATION CONTACT :
Katharine Richards, Director,
Coronavirus State and Local Fiscal
Recovery Funds, Office of Recovery
Programs, Department of the Treasury,
(844) 529–9527.
SUPPLEMENTARY INFORMATION:
I. Introduction
Overview
Since the first case of coronavirus
disease 2019 (COVID–19) was
discovered in the United States in
January 2020, the pandemic has caused
severe, intertwined public health and
economic crises. In March 2021, as
these crises continued, the American
Rescue Plan Act of 2021 (ARPA)
1 established the Coronavirus State and
Local Fiscal Recovery Funds (SLFRF) to
provide state, local, and Tribal
governments
2 with the resources
needed to respond to the pandemic and
its economic effects and to build a
stronger, more equitable economy
during the recovery. The U.S.
Department of the Treasury (Treasury)
issued an interim final rule
implementing the SLFRF program on
May 10, 2021
3 and has since disbursed
over $240 billion to state, local, and
Tribal governments and received over
1,500 public comments on the interim
final rule. Treasury is now issuing this
final rule which responds to public
comments, implements the ARPA
statutory provisions on eligible and
ineligible uses of SLFRF funds, and
makes several changes to the provisions
of the interim final rule, summarized
below in the section Executive
Summary of Major Changes.
Since Treasury issued the interim
final rule in May 2021, both the public
health and economic situations facing
the country have evolved. On the public
health front, the United States has made
tremendous progress in the fight against
COVID–19, including a historic
vaccination campaign that has reached
over 80 percent of adults with at least
one dose and is reaching millions of
children as well.
4 However, the disease
continues to present an imminent threat
to public health, especially among
unvaccinated individuals. As the Delta
variant spread across the country this
summer and fall, the United States faced
another severe wave of cases, deaths,
and strain on the healthcare system,
with the risk of hospitalization and
mortality exponentially greater to
unvaccinated Americans. COVID–19 has
now infected over 50 million and killed
over 800,000 Americans since January
2020; tens of thousands of Americans
continue to be infected each day.
5 Even
as the nation recovers, new and
emerging COVID–19 variants may
continue to pose threats to both public
health and the economy. Moving
forward, state, local, and Tribal
governments will continue to play a
major role in responding through
vaccination campaigns, testing, and
other services.
The economic recovery similarly has
made tremendous progress but faces
continued risks from the disease and the
disruptions it has caused. In the early
months of the pandemic, the United
States experienced the sharpest
economic downturn on record, with
unemployment spiking to 14.8 percent
in April 2020.
6 The economy has
gradually added back jobs, with growth
accelerating in the first half of 2021.
7 However, as the Delta variant spread,
the intensified health risks and renewed
disruptions slowed growth,
demonstrating the continued risks from
the virus. By fall 2021, the economy had
exceeded its pre-pandemic size
8 and
unemployment had fallen below 5
percent,9 but despite this progress, too
many Americans remain unemployed,
out of the labor force, or unable to pay
their bills, with this pain particularly
acute among lower-income Americans
and communities of color. Again,
moving forward, state, local, and Tribal
governments will remain on the
frontlines of the economic response and
rebuilding a stronger economy in the
aftermath of the pandemic.
However, as state, local, and Tribal
governments continue to face
substantial needs to respond to public
health and economic conditions, they
have also experienced severe impacts
from the pandemic and resulting
recession. State, local, and Tribal
governments cut over 1.5 million jobs in
the early months of the pandemic amid
sharp declines in revenue and remain
over 950,000 jobs below their pre-
pandemic levels.
10 As the Great
Recession demonstrated, austerity
among state, local, and Tribal
governments can hamper overall
economic growth and severely curtail
the ability of governments to serve their
constituents.
Recognizing these imperatives, the
SLFRF program provides vital resources
for state, local, and Tribal governments
to respond to the pandemic and its
economic effects and to replace revenue
lost due to the public health emergency,
preventing cuts to government services.
Specifically, the ARPA provides that
SLFRF funds
11 may be used:
(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
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4339 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 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.
In addition, Congress specified two
types of ineligible uses of funds: funds
may not be used for deposit into any
pension fund or, for states and
territories only, to directly or indirectly
offset a reduction in net tax revenue
resulting from a change in law,
regulation, or administrative
interpretation.
Issued May 10, 2021, Treasury’s
interim final rule provided further detail
on eligible uses of funds within the four
statutory categories, ineligible uses of
funds, and administration of the
program. The interim final rule
provided state, local, and Tribal
governments substantial flexibility to
determine how best to use payments
from the SLFRF program to meet the
needs of their communities. The interim
final rule aimed to facilitate swift and
effective implementation by establishing
a framework for determining the types
of programs and services that are
eligible under the ARPA along with
examples of eligible uses of funds that
state, local, and Tribal governments may
consider.
State, local, and Tribal governments
are already deploying SLFRF funds to
make an impact in their communities.
The SLFRF program ensures that state,
local, and Tribal governments have the
resources needed to fight the pandemic,
sustain and strengthen the economic
recovery, maintain vital public services,
and make investments that support
long-term growth, opportunity, and
equity. Treasury looks forward to
supporting and engaging with state,
local, and Tribal governments as they
use these funds to make transformative
investments in their communities.
Finally, with so many pressing and
effective ways to use SLFRF funds, there
is no excuse for waste, fraud, or abuse
of these funds.
Treasury received over 1,500
comments spanning nearly all aspects of
the interim final rule. The final rule
considers and responds to comments,
provides clarification to many aspects of
the interim final rule, and makes several
changes to eligible uses under the
program, summarized immediately
below.
Executive Summary of Major Changes
and Clarifications
The final rule provides broader
flexibility and greater simplicity in the
program, in response to public
comments. Among other clarifications
and changes, the final rule provides for
the following:
• Public Health and Negative
Economic Impacts: In addition to
programs and services, the final rule
clarifies that recipients may use funds
for capital expenditures that support an
eligible COVID–19 public health or
economic response. For example,
recipients may build certain affordable
housing, childcare facilities, schools,
hospitals, and other projects consistent
with the requirements in this final rule
and the Supplementary Information.
In addition, the final rule presumes
that an expanded set of households and
communities are ‘‘impacted’’ or
‘‘disproportionately impacted’’ by the
pandemic, thereby allowing recipients
to provide responses to a broad set of
households and entities without
requiring additional analysis. Further,
the final rule provides a broader set of
enumerated eligible uses available for
these communities as part of COVID–19
public health and economic response,
including making affordable housing,
childcare, and early learning services
eligible in all impacted communities
and making certain community
development and neighborhood
revitalization activities eligible for
disproportionately impacted
communities.
Further, the final rule allows for a
broader set of uses to restore and
support government employment,
including hiring above a recipient’s pre-
pandemic baseline, providing funds to
employees that experienced pay cuts or
furloughs, avoiding layoffs, and
providing retention incentives.
• Premium Pay: The final rule offers
more streamlined options to provide
premium pay, by broadening the share
of essential workers who can receive
premium pay without a written
justification while maintaining a focus
on lower-income and frontline essential
workers.
• Revenue Loss: The final rule offers
a standard allowance for revenue loss of
up to $10 million, not to exceed a
recipient’s SLFRF award amount,
allowing recipients to select between a
standard amount of revenue loss or
complete a full revenue loss calculation.
Recipients that select the standard
allowance may use that amount for
government services.
• Water, Sewer, and Broadband
Infrastructure: The final rule
significantly broadens eligible
broadband infrastructure investments to
address challenges with broadband
access, affordability, and reliability, and
adds additional eligible water and sewer
infrastructure investments, including a
broad range of lead remediation and
stormwater management projects.
Structure of the Supplementary
Information
In addition to this Introduction, this
Supplementary Information is organized
into four sections: (1) Eligible Uses, (2)
Restrictions on Use, (3) Program
Administration Provisions, and (4)
Regulatory Analyses.
The Eligible Uses section describes
the standards to determine eligible uses
of funds in each of the four eligible use
categories:
(1) Responding to the public health
and negative economic impacts of the
pandemic (which includes several sub-
categories)
(2) Providing premium pay to
essential workers
(3) Providing government services to
the extent of revenue loss due to the
pandemic, and
(4) Making necessary investments in
water, sewer, and broadband
infrastructure.
Each eligible use category has
separate and distinct standards for
assessing whether a use of funds is
eligible. Standards, restrictions, or other
provisions in one eligible use category
do not apply to the others. Therefore,
recipients should first determine which
eligible use category a potential use of
funds fits within, then assess whether
the potential use of funds meets the
eligibility standard or criteria for that
category. In the case of uses to respond
to the public health and negative
economic impacts of the pandemic,
recipients should also determine which
sub-category the eligible use fits within
(i.e., public health, assistance to
households, assistance to small
businesses, assistance to nonprofits, aid
to impacted industries, or public sector
capacity and workforce), then assess
whether the potential use of funds
meets the eligibility standard for that
sub-category. Treasury does not pre-
approve uses of funds; recipients are
advised to review the final rule and may
pursue eligible projects under it.
In some sections of the rule, Treasury
identifies specific uses of funds that are
eligible, called ‘‘enumerated eligible
uses’’; for example, Treasury provides
many enumerated eligible uses of funds
to respond to the public health and
negative economic impacts of the
pandemic. Uses of funds that are not
specifically named as eligible in this
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4340 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 12 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
December 31, 2021).
13 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS] https://fred.
stlouisfed.org/series/PAYEMS (last visited
December 7, 2021).
final rule may still be eligible in two
ways. First, under the revenue loss
eligible use category, recipients have
broad latitude to use funds for
government services up to their amount
of revenue loss due to the pandemic. A
potential use of funds that does not fit
within the other three eligible use
categories may be permissible as a
government service, which recipients
can fund up to their amount of revenue
loss. For example, transportation
infrastructure projects are generally
ineligible as a response to the public
health and negative economic impacts
of the pandemic; however, a recipient
could fund these projects as a
government service up to its amount of
revenue loss, provided that other
restrictions on use do not apply. See
sections Revenue Loss and Restrictions
on Use for further information. Second,
the eligible use category for responding
to the public health and negative
economic impacts of the pandemic
provides a non-exhaustive list of
enumerated eligible uses, which means
that the listed eligible uses include
some, but not all, of the uses of funds
that could be eligible. The Eligible Uses
section provides a standard for
determining if other uses of funds,
beyond those specifically enumerated,
are eligible. If a recipient would like to
pursue a use of funds that is not
specifically enumerated, the recipient
should use the standard and other
guidance provided in the section Public
Health and Negative Economic Impacts
to assess whether the use of funds is
eligible.
Next, the Restrictions on Use section
describes limitations on how funds may
be used. Treasury has divided the
Restriction on Use section into (A)
statutory restrictions under the ARPA,
which include (1) offsetting a reduction
in net tax revenue, and (2) deposits into
pension funds, and (B) other restrictions
on use, which include (1) debt service
and replenishing reserves, (2)
settlements and judgments, and (3)
general restrictions. These restrictions
apply to all eligible use categories;
however, some restrictions apply only
to certain types of recipient
governments, and recipients are advised
to review the final rule to determine
which restrictions apply to their type of
government (e.g., state, territory, Tribal
government, county, metropolitan city,
or nonentitlement unit of government).
To reiterate, for recipient governments
covered by a specific restriction, that
restriction applies to all eligible use
categories and any use of funds under
the SLFRF program. Specifically:
• For states and territories only, funds
may not be used to offset directly or
indirectly a reduction in net tax revenue
resulting from a change in state or
territory law.
• For all recipients except Tribal
governments, funds may not be used for
deposits into a pension fund.
• For all recipients, funds may not be
used for debt service or replenishing
financial reserves.
• All recipients must also comply
with three general restrictions. First, a
recipient may not use SLFRF funds for
a program, service, or capital
expenditure that conflicts with or
contravenes the statutory purpose of
ARPA, including a program, service, or
capital expenditure that includes a term
or condition that undermines efforts to
stop the spread of COVID–19. Second,
recipients may not use SLFRF funds in
violation of the conflict-of-interest
requirements contained in the Award
Terms and Conditions, including any
self-dealing or violation of ethics rules.
Lastly, recipients should be aware that
federal, state, and local laws and
regulations, outside of SLFRF program
requirements, also apply, including for
example, environmental laws and
federal civil rights and
nondiscrimination requirements, which
include prohibitions on discrimination
on the basis of race, color, national
origin, sex (including sexual orientation
and gender identity), religion, disability,
age, or familial status (having children
under the age of 18).
The Program Administration
Provisions section describes the
processes and requirements for
administering the program on an
ongoing basis, specifically as relates to
the following: Distribution of funds,
timeline for using funds, transfer of
funds from a recipient to different
organizations, use of funds for program
administration, reporting on use of
funds, and remediation and recoupment
of funds used for ineligible purposes. Of
note, SLFRF funds may only be used for
costs incurred within a specific time
period, beginning March 3, 2021, with
all funds obligated by December 31,
2024 and all funds spent by December
31, 2026. Recipients are advised to also
consult Treasury’s Reporting and
Compliance Guidance for additional
information on program administration
processes and requirements, including
applicability of the Uniform Guidance.
Finally, the section Regulatory
Analyses provides Treasury’s analysis of
the impacts of this rulemaking, as
required by several laws, regulations,
and Executive Orders.
Throughout this Supplementary
Information, statements using the terms
‘‘should’’ or ‘‘must’’ refer to
requirements, except when used in
summarizing opinions expressed in
public comments. Statements using the
term ‘‘encourage’’ refer to
recommendations, not requirements.
II. Eligible Uses
A. Public Health and Negative
Economic Impacts
Background
Since the first case of COVID–19 was
discovered in the United States in
January 2020, the disease has infected
over 50 million and killed over 800,000
Americans.
12 The disease—and
necessary measures to respond—have
had an immense public health and
economic impact on millions of
Americans across many areas of life, as
detailed below in the respective sections
on Public Health and Negative
Economic Impacts. Since the release of
the interim final rule in May 2021, the
country has made major progress in
fighting the disease and rebuilding the
economy but faces continued risks, as
illustrated by the spread of the Delta
variant and the resulting slowdown in
the economic recovery. The SLFRF
program, and Treasury’s interim final
rule, provide substantial flexibility to
recipients to respond to pandemic
impacts in their local community; this
flexibility is designed to help state,
local, and Tribal governments adapt to
the evolving public health emergency
and tailor their response as needs evolve
and to the particular local needs of their
communities.
Indeed, state, local, and Tribal
governments face continued needs to
respond at scale to the public health
emergency. This includes continued
public health efforts to slow the spread
of the disease, to increase vaccination
rates and provide vaccinations to new
populations as they become eligible, to
protect individuals living in congregate
facilities, and to address the broader
impacts of the pandemic on public
health. Similarly, while a strong
economic recovery is underway, the
economy remains 3.9 million jobs below
its pre-pandemic level, pointing to the
continued need for response efforts,
with low-income workers and
communities of color facing elevated
rates of unemployment and economic
hardship.
13 Long-standing disparities in
health and economic outcomes in
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4341 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 14 Treasury uses ‘‘underserved’’ to refer to
populations sharing a particular characteristic, as
well as geographic communities, that have been
systematically denied a full opportunity to
participate in aspects of economic, social, and civic
life. In the interim final rule, Treasury generally
used the term ‘‘disadvantaged’’ to refer to these
same populations and communities.
15 U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited December 7,
2021).
16 Tracy Gordon, State and Local Budgets and the
Great Recession, Brookings Institution (Dec. 31,
2012), http://www.brookings.edu/articles/state-and-
local-budgets-and-the-great-recession.
17 In some cases, a use may be permissible under
another eligible use category even if it falls outside
the scope of section (c)(1)(A) of section 602 and 603
of the Social Security Act.
underserved 14 communities, that
amplified and exacerbated the impacts
of the pandemic, also present continued
barriers to full and equitable recovery.
As state, local, and Tribal
governments work to meet the public
health and economic needs of their
communities, these governments are
also confronting the need to rebuild
their own capacity. Facing severe
budget challenges during the pandemic,
many state, local, and Tribal
governments have been forced to make
cuts to services or their workforces,
including cutting over 1.5 million jobs
from February to May 2020, or delay
critical investments. As of fall 2021,
state, local, and Tribal government
employment remained over 950,000 jobs
below pre-pandemic levels.
15 In the
recovery from the Great Recession, cuts
to state, local, and Tribal governments
became a meaningful drag on economic
growth for several years, and the SLFRF
program provides the resources needed
to re-invest in vital public services and
workers to avoid this outcome.
16 1. General Provisions: Structure and
Standards
Background: Sections 602(c)(1)(A)
and 603(c)(1)(A) of the Social Security
Act establish that recipients may use
funds ‘‘to respond to the public health
emergency with respect to COVID–19 or
its negative economic impacts,
including assistance to households,
small businesses, and nonprofits, or aid
to impacted industries such as tourism,
travel, and hospitality.’’ The interim
final rule established three categories
within this eligible use: (1) Public
health responses for those impacted by
the pandemic, including the general
public; (2) responses to the negative
economic impacts that were
experienced by those impacted as a
result of the pandemic; and (3)
additional services, either as a public
health response or a response to the
negative economic impacts of the
pandemic, for disproportionately
impacted communities.
The interim final rule established the
method to determine which specific
programs or services may be eligible to
respond to the public health emergency
or to respond to the negative economic
impacts of the public health emergency
within this framework. The interim final
rule included multiple enumerated uses
that are eligible within each of these
categories when provided to eligible
populations, including populations that
the interim final rule presumed to have
been impacted (in the case of public
health responses and responses to
negative economic impacts) or
disproportionately impacted (in the case
of disproportionately impacted
communities). Finally, the interim final
rule also allowed recipients to designate
additional individuals or classes as
impacted or disproportionately
impacted. The standards for each of
these criteria under the interim final
rule are discussed below.
To assess whether a program or
service would be eligible to respond to
the public health emergency or its
negative economic impacts, the interim
final rule stated that, ‘‘the recipient [is
required] to, first, identify a need or
negative impact of the COVID–19 public
health emergency and, second, identify
how the program, service, or other
intervention addresses the identified
need or impact [. . . .] [E]ligible uses
under this category must be in response
to the disease itself or the harmful
consequences of the economic
disruptions resulting from or
exacerbated by the COVID–19 public
health emergency.’’ The enumerated
eligible uses were presumed to meet this
criterion.
With respect to uses not specifically
enumerated in the interim final rule as
eligible public health responses, the
interim final rule stated that, ‘‘[t]o assess
whether additional uses would be
eligible under this category, recipients
should identify an effect of COVID–19
on public health, including either or
both of immediate effects or effects that
may manifest over months or years, and
assess how the use would respond to or
address the identified need.’’
With respect to uses not specifically
enumerated in the interim final rule as
eligible responses to a negative
economic impact of the public health
emergency, the interim final rule stated
that ‘‘[e]ligible uses that respond to the
negative economic impacts of the public
health emergency must be designed to
address an economic harm resulting
from or exacerbated by the public health
emergency. In considering whether a
program or service would be eligible
under this category, the recipient should
assess whether, and the extent to which,
there has been an economic harm, such
as loss of earnings or revenue, that
resulted from the COVID–19 public
health emergency and whether, and the
extent to which, the use would respond
to or address this harm.
17 A recipient
should first consider whether an
economic harm exists and whether this
harm was caused or made worse by the
COVID–19 public health emergency.’’
The interim final rule went on to say
that: ‘‘In addition, the eligible use must
‘respond to’ the identified negative
economic impact. Responses must be
related and reasonably proportional to
the extent and type of harm
experienced; uses that bear no relation
or are grossly disproportionate to the
type or extent of harm experienced
would not be eligible uses.’’
Throughout this final rule, Treasury
refers to households, communities,
small businesses, nonprofits, and
industries that experienced public
health or negative economic impacts of
the pandemic as ‘‘impacted.’’ The first
section in the interim final rule under
this eligible use category included
public health responses for these
impacted classes. The second category
in the interim final rule under this
eligible use category included responses
to the negative economic impacts that
were experienced by these impacted
classes as a result of the pandemic.
The interim final rule further
recognized that certain populations
have experienced disproportionate
health or negative economic impacts
during the pandemic, as pre-existing
disparities in these communities
amplified the impacts of the pandemic.
For example, the interim final rule
recognized that the negative economic
effects of the pandemic were
particularly pronounced among lower-
income families, who were more likely
to experience income loss and more
likely to have a job that required in-
person work. The interim final rule
recognized the role of pre-existing social
vulnerabilities and disparities in driving
the disparate health and economic
outcomes and presumed that programs
designed to address these health or
economic disparities are responsive to
the public health or negative economic
impacts of the COVID–19 public health
emergency, when provided in
disproportionately impacted
communities. In addition to identifying
certain populations and communities
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4342 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 18 Note that small businesses, nonprofits, and
industries may also function as subrecipients. For
additional information on these distinctions see
section Distinguishing Subrecipients versus
Beneficiaries.
presumed to be disproportionately
impacted, it also empowered recipients
to identify other disproportionately
impacted households, populations,
communities, or small businesses. The
interim final rule provided that, in
identifying these disproportionately
impacted communities, recipients
should be able to support their
determination that the pandemic
resulted in disproportionate public
health or economic outcomes to the
specific populations, households, or
geographic areas to be served.
Throughout this final rule, Treasury
refers to those households,
communities, small businesses, and
nonprofits that experienced
disproportionate public health or
negative economic impacts of the
pandemic as ‘‘disproportionately
impacted.’’ The third category in the
interim final rule under this eligible use
included public health responses and
responses to the negative economic
impacts for these disproportionately
impacted classes.
The interim final rule provided
significant flexibility for recipients to
determine which households,
populations, communities, or small
businesses have been impacted and/or
disproportionately impacted by the
pandemic and to identify appropriate
responses. The interim final rule
included several provisions to provide
simple methods for recipients to
identify impacts and design programs to
address those impacts. First, the interim
final rule allowed recipients to
demonstrate a negative economic
impact on a population or class and
provide assistance to households or
small businesses that fall within that
population or class. In such cases, the
recipient need only demonstrate that an
individual household or business is
within the class that experienced a
negative economic impact, rather than
requiring a recipient to demonstrate that
each individual household or small
business experienced a negative
economic impact, because the impact
was already identified for the class.
Second, in the interim final rule,
Treasury presumed that certain
populations have been impacted or
disproportionately impacted and are
thus eligible for services that respond to
these impacts or disproportionate
impacts. Specifically, the interim final
rule permitted recipients to presume
that households that experienced
unemployment, increased food or
housing insecurity, or are low- or
moderate-income experienced a
negative economic impact from the
pandemic. The interim final rule also
permitted recipients to presume that
certain services provided in Qualified
Census Tracts (QCTs), to individuals
living in QCTs, or by Tribal
governments are responsive to
disproportionate impacts of the
pandemic. In addition to the
populations presumed to be impacted or
disproportionately impacted, under the
interim final rule, recipients could
identify other impacted households or
classes, as described above, as well as
other populations, households, or
geographic areas that are
disproportionately impacted by the
pandemic.
Third, as mentioned previously, the
interim final rule included a non-
exhaustive list of uses of funds that
Treasury identified as responsive to the
impacts or disproportionate impacts of
the pandemic. Treasury refers to these
as ‘‘enumerated eligible uses.’’
To summarize, the interim final rule
identified certain populations that are
presumed to be impacted by the
pandemic (and specific enumerated
uses of funds that are responsive to that
impact) and populations that are
presumed to be disproportionately
impacted by the pandemic (and specific
enumerated uses of funds that are
responsive to those disproportionate
impacts). In addition, the interim final
rule provided standards for recipients to
assess whether additional uses of funds,
beyond the enumerated eligible uses,
are eligible for impacted and
disproportionately impacted
populations and permitted recipients to
identify other households or classes that
experienced impacts of the pandemic or
disproportionate impacts of the
pandemic.
Rule Structure
Public Comment: Many commenters
expressed concern regarding the
structure of the eligible uses, indicating
they found the structure of the public
health and negative economic impacts
section of the interim final rule to be
confusing or difficult to navigate. Other
commenters indicated that they
understood the enumerated uses to be
the only eligible uses and/or the
presumed eligible populations to be the
only eligible populations. Several
commenters expressed frustration about
the number of eligible uses specifically
enumerated in the interim final rule,
which they considered too few, and
commenters proposed a wide range of
additional enumerated eligible uses (for
further discussion, see the section
Public Health and section Negative
Economic Impacts). Commenters
expressed concern with pursuing uses
of funds not explicitly enumerated in
the eligible use section or uncertainty
regarding the broad flexibility provided
under the interim final rule to pursue
additional programs that respond to the
public health or negative economic
impacts of the pandemic or the process
for doing so.
Treasury Response: Treasury
recognizes that many commenters felt
the structure of the interim final rule
could be clarified. These comments are
consistent with many of the questions
that Treasury has received from
recipients, which requested clarification
regarding the category their desired
response fits into. Treasury observes
that these comments and questions
generally fall into four categories: (1)
How to identify the correct public
health or negative economic impact
category for a particular response, (2)
how to identify whether a particular use
is eligible, (3) how to identify an
impacted or disproportionately
impacted class, and (4) whether an
enumerated use can be provided to a
class other than those presumed
impacted or disproportionately
impacted. In response to comments,
Treasury is adjusting the structure of the
public health and negative economic
impacts eligible use section of the final
rule to improve clarity and make it
easier for recipients to interpret and
apply the final rule.
Specifically, Treasury is restructuring
the rule to aid recipients in determining
whether a particular response is eligible
and how the particular response might
be eligible under a particular category.
This restructuring reinforces the
fundamental criteria that a use of funds
is eligible based on its responsiveness to
a public health or negative economic
impact experienced by individuals,
households, small businesses,
nonprofits, or impacted industries
(together ‘‘beneficiaries’’).
18 This
restructuring is intended to make the
rule easier to navigate and to
implement, including any criteria or
conditions on particular uses of funds.
The reorganization of the public
health and negative economic impacts
section of the final rule is also intended
to clarify the enumerated eligible uses
described in the interim final rule. The
reorganization itself is not intended to
change the scope of the enumerated
uses that were included in the interim
final rule or that were allowable under
the interim final rule. In some cases,
specific enumerated uses are being
altered, and those changes are discussed
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4343 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 19 In designing an intervention to mitigate
COVID–19, the recipient should consider guidance
from public health authorities, particularly the
Centers for Disease Control and Prevention (CDC),
in assessing appropriate COVID–19 mitigation and
prevention strategies (see Centers for Disease
Control and Prevention, COVID–19, https://
www.cdc.gov/coronavirus/2019-ncov/index.html).
A program or service that imposes conditions on
participation in or acceptance of the service that
would undermine efforts to stop the spread of
COVID–19 or discourage compliance with practices
in line with CDC guidance for stopping the spread
of COVID–19 is not a permissible use of funds.
as changes within the section on that
enumerated use.
The final rule streamlines and aligns
services and standards that are generally
applicable or are provided for public
health purposes. Under this approach,
eligible uses to respond to the public
health emergency are organized based
on the type of public health problem: (1)
COVID–19 mitigation and prevention,
(2) medical expenses, (3) behavioral
health care, and (4) preventing and
responding to violence. Under this
approach, eligible uses to respond to the
negative economic impacts of the public
health emergency are organized based
on the type of beneficiary: (1) Assistance
to households, (2) assistance to small
businesses, and (3) assistance to
nonprofits, alongside a fourth
standalone eligibility category for aid to
travel, tourism, hospitality, and other
impacted industries. The first three
categories, assistance to households,
small businesses, and nonprofits,
include enumerated eligible uses for
impacted and disproportionately
impacted beneficiaries. This change in
structure is intended to provide a
framework that clearly identifies the
intended beneficiaries of uses of funds
and provides clarity about what types of
assistance are ‘‘responsive to the
pandemic or its negative economic
impacts’’ for these beneficiaries.
a. Standards for Identifying a Public
Health or Negative Economic Impact
Standards: Designating a Public Health
Impact
Public Comment: Many commenters
expressed uncertainty about how to
determine whether a use of funds,
beyond those specifically enumerated as
eligible, might be an eligible public
health response. For example, many
commenters submitted questions asking
whether specific uses of funds would be
eligible. Others described what they
considered to be impacts of the
pandemic and argued that uses of funds
to respond to these issues should be
eligible. Some commenters requested
that Treasury provide additional detail
to guide their assessments of eligible
uses of funds. For example, a
commenter requested more clarification
around exactly what and whose medical
expenses can be covered. These
comments ranged in their specificity
and covered the full range of the
enumerated eligible uses.
Treasury Response: Treasury is
clarifying that when assessing whether
a program or service is an eligible use
to respond to the public health impacts
of the COVID–19 public health
emergency, the Department will
consider the two eligibility
requirements discussed below. These
standards apply to all proposed public
health uses.
First, there must be a negative public
health impact or harm experienced by
an individual or a class. For ease of
administration, the interim final rule
allowed, and the final rule maintains
the ability for, recipients to identify a
public health impact on a population or
group of individuals, referred to as a
‘‘class,’’ and to provide assistance to
that class. In determining whether an
individual is eligible for a program
designed to address a harm experienced
by a class, the recipient need only
document that the individual is within
the class that experienced a public
health impact, see section Standards:
Designating Other Impacted Classes. In
the case of some impacts, for example
impacts of COVID–19 itself that are
addressed by providing prevention and
mitigation services, such a class could
reasonably include the general public.
Second, the program, service, or other
intervention must address or respond to
the identified impact or harm. The final
rule maintains the interim final rule
requirement that eligible uses under this
category must be in response to the
disease itself or other public health
harms that it caused.
19 Responses must be reasonably
designed to benefit the individual or
class that experienced the public health
impact or harm. Uses of funds should be
assessed based on their responsiveness
to their intended beneficiaries and the
ability of the response to address the
impact or harm experienced by those
beneficiaries.
Responses must also be related and
reasonably proportional to the extent
and type of public health impact or
harm experienced. Uses that bear no
relation or are grossly disproportionate
to the type or extent of harm
experienced would not be eligible uses.
Reasonably proportional refers to the
scale of the response compared to the
scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced. In evaluating whether a
use is reasonably proportional,
recipients should consider relevant
factors about the harm identified and
the response. For example, recipients
may consider the size of the population
impacted and the severity, type, and
duration of the impact. Recipients may
also consider the efficacy, cost, cost-
effectiveness, and time to delivery of the
response.
If a recipient intends to fund capital
expenditures in response to the public
health impacts of the pandemic,
recipients should refer to the section
Capital Expenditures for details about
the eligibility of capital expenditures.
Standards: Designating a Negative
Economic Impact
Public Comment: Many commenters
expressed uncertainty about how to
determine whether uses of funds,
beyond those specifically enumerated as
eligible, might be eligible responses to
negative economic impacts. For
example, many commenters submitted
questions asking whether specific uses
of funds would be eligible. Others
described what they considered to be
impacts of the pandemic and argued
that uses of funds to respond to these
issues should be eligible. Some
commenters requested that Treasury
provide additional detail to guide their
assessments of eligible uses of funds.
These comments ranged in their
specificity and covered the full range of
eligible uses to respond to negative
economic impacts. Several commenters
asked for clarification about what types
of food assistance would be considered
eligible. Another commenter requested
that the establishment of outdoor dining
be eligible. Many commenters inquired
about homeless shelters as an eligible
use of SLFRF funds.
Commenters also expressed
uncertainty about the ability to establish
classes, including geographic areas, that
experienced a negative economic impact
or disagreed with the requirement that
an individual entity be impacted by the
pandemic in order to receive assistance.
For example, a commenter argued that
interventions should not be limited to
individuals or businesses that
experienced an economic impact and
should instead be used broadly to
support economic growth. These
commenters argued that an expenditure
that supports a more robust economy
may help combat the pandemic’s
negative economic impacts, and it can
do so even if funding is provided to
individuals or entities that did not
themselves experience a negative
economic impact during the pandemic.
Treasury Response: The final rule
maintains the standard articulated in
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4344 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 20 For example, expenses such as excessive
compensation to employees or expenses which
have already been reimbursed through another
federal program, are not reasonably designed to
address a negative economic impact to a
beneficiary.
21 For example, a program or service that imposes
conditions on participation in or acceptance of the
service that would undermine efforts to stop the
spread of COVID–19 or discourage compliance with
practices in line with CDC guidance for stopping
the spread of COVID–19 is not a permissible use of
funds.
the interim final rule. For clarity, the
final rule re-articulates that when
assessing whether a program or service
is an eligible use to respond to the
negative economic impacts of the
COVID–19 public health emergency,
Treasury will consider the two
eligibility requirements discussed
below.
First, there must be a negative
economic impact, or an economic harm,
experienced by an individual or a class.
The recipient should assess whether,
and the extent to which, there has been
an economic harm, such as loss of
earnings or revenue, that resulted from
the COVID–19 public health emergency.
A recipient should first consider
whether an economic harm exists and
then whether this harm was caused or
made worse by the COVID–19 public
health emergency. This approach is
consistent with the text of the statute,
which provides that funds in this
category must be used to ‘‘respond to
the public health emergency with
respect to . . . its negative economic
impacts.’’
While economic impacts may either
be immediate or delayed, individuals or
classes that did not experience a
negative economic impact from the
public health emergency would not be
eligible beneficiaries under this
category. As noted above, the interim
final rule permitted recipients to
presume that households that
experienced unemployment, increased
food or housing insecurity, or are low-
or moderate-income experienced a
negative economic impact from the
pandemic. For discussion of the final
rule’s approach to this presumption, see
section Populations Presumed Eligible.
The final rule also maintains several
provisions included in the interim final
rule and subsequent guidance that are
intended to ease administration of
identifying that the beneficiary
experienced a negative economic impact
or harm. For example, the interim final
rule allowed, and the final rule
maintains the ability for, recipients to
demonstrate a negative economic
impact on a population or group,
referred to as a ‘‘class,’’ and to provide
assistance to households, small
businesses, or nonprofits that fall within
that class. In such cases, the recipient
need only demonstrate that the
household, small business, or nonprofit
is within the class that experienced a
negative economic impact, see section
Standards: Designating Other Impacted
Classes. This would allow, for example,
an internet access assistance program
for all households with children to
support those households’ ability to
participate in healthcare, work, and
educational activities like extending
learning opportunities, among other
critical activities. In that case, the
recipient would only need to identify a
negative economic impact to the class of
‘‘households with children’’ and would
not need to document or otherwise
demonstrate that each individual
household served experienced a
negative economic impact.
Second, the response must be
designed to address the identified
economic harm or impact resulting from
or exacerbated by the public health
emergency. In selecting responses, the
recipient must assess whether, and the
extent to which, the use would respond
to or address this harm or impact. This
approach is consistent with the text of
the statute, which provides that funds
may be used to ‘‘respond to’’ the
‘‘negative economic impacts’’ of the
public health emergency ‘‘including
assistance to households, small
businesses, and nonprofits, or aid to
impacted industries such as tourism,
travel, and hospitality.’’ The list of
potential responses (‘‘assistance’’ or
‘‘aid’’) suggests that responses should
address the ‘‘negative economic
impacts’’ of particular types of
beneficiaries (e.g., households or small
businesses).
Responses must be reasonably
designed to benefit the individual or
class that experienced the negative
economic impact or harm. Uses of funds
should be assessed based on their
responsiveness to their intended
beneficiary and the ability of the
response to address the impact or harm
experienced by that beneficiary.
20 Responses must also be related and
reasonably proportional to the extent
and type of harm experienced; uses that
bear no relation or are grossly
disproportionate to the type or extent of
harm experienced would not be eligible
uses.
21 Reasonably proportional refers
to the scale of the response compared to
the scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced; for example, it may not be
reasonably proportional for a cash
assistance program to provide assistance
in a very small amount to a group that
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm. In
evaluating whether a use is reasonably
proportional, recipients should consider
relevant factors about the harm
identified and the response. For
example, recipients may consider the
size of the population impacted and the
severity, type, and duration of the
impact. Recipients may also consider
the efficacy, cost, cost-effectiveness, and
time to delivery of the response.
Finally, recipients should be aware of
the distinction between beneficiaries of
funds and subrecipients; a recipient
may provide services to beneficiaries
through subrecipients that did not
experience a negative economic impact,
see section Distinguishing Subrecipients
versus Beneficiaries. That is, a recipient
may award SLFRF funds to an entity
that did not experience a negative
economic impact in order to implement
a program or provide a service to
beneficiaries on its behalf. Such
transfers, when implementing a public
health or negative economic impact
response, should be responsive to and
designed to benefit individuals,
households, small businesses,
nonprofits, or impacted industries that
did experience a public health or
negative economic impact.
Determining the Appropriate Eligible
Use Category
Public Comment: Some commenters
expressed uncertainty about how to
analyze negative economic impacts to
different entities (e.g., households, small
businesses, nonprofits). For example,
commenters asked whether a nonprofit,
which did not experience a negative
economic impact itself, could be granted
funds to provide services to individuals
experiencing homelessness, who did
experience negative economic impacts.
Other commenters proposed providing
assistance to support the expansion of
small businesses, under the theory that
this would create more job
opportunities for unemployed workers
who experienced negative economic
impacts.
Treasury Response: In the final rule,
Treasury is clarifying that recipients
should assess a potential use of funds
based on which beneficiary experienced
the negative economic impact, in other
words, the households, small
businesses, nonprofits, or impacted
industries that experienced the negative
economic impact.
Treasury notes that recipients may
award SLFRF funds to many different
types of organizations to carry out
eligible uses of funds and serve
beneficiaries on behalf of a recipient.
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4345 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 22 AMI is also often referred to as median family
income for the area. Since AMI is synonymous with
this term and used more generally, the final rule
refers to AMI.
23 For the six New England states of Connecticut,
Maine, Massachusetts, New Hampshire, Rhode
Island, and Vermont, HUD provides AMI for towns
rather than counties. Recipients in these states
should use the AMI corresponding to their town
when determining thresholds for both low and
moderate income.
When a recipient provides funds to
another entity to carry out eligible uses
of funds and serve beneficiaries the
entity becomes a subrecipient (see
section Distinguishing a Subrecipient
versus a Beneficiary). For example, a
recipient may grant funds to a nonprofit
organization to provide food assistance
(an eligible use) to low-income
households (the beneficiaries).
Recipients only need to assess whether
the beneficiaries experienced a negative
economic impact and whether the
eligible use responds to that impact,
consistent with the two-part framework
described above; the organization
carrying out the eligible use does not
need to have experienced a negative
economic impact if it is serving as the
vehicle for reaching the beneficiaries.
When making determinations about
how to implement a program, recipients
should consider whether that method of
program implementation is an effective
and efficient method to implement the
program and do so in accordance with
the Uniform Guidance provisions that
govern procurements and sub-granting
of federal funds, as applicable.
As noted above, recipients should
analyze eligible uses based on the
beneficiary of the assistance or the
entity that experienced a negative
economic impact. Assistance to a small
business or to an impacted industry
must respond to a negative economic
impact experienced by that small
business or industry. Recipients may
not provide assistance to small
businesses or impacted industries that
did not experience a negative economic
impact, although recipients can identify
negative economic impacts for classes,
rather than individual businesses, and
may also presume that small businesses
in certain areas experienced impacts;
see section General Provisions:
Structure and Standards and section
Assistance to Small Businesses for
details.
Several examples illustrate the
application of these concepts. For
example, a recipient could provide
assistance to households via a contract
with a business to create subsidized jobs
for the long-term unemployed; in this
case the business is a subrecipient and
need not have experienced a negative
economic impact, but the recipient
would need to identify a specific
connection between the assistance
provided and addressing the negative
economic impact experienced by the
unemployed households. The recipient
could, for instance, document the
subsidized jobs created under the
contract and their reservation for long-
term unemployed individuals.
Similarly, a recipient might provide
assistance to a small business that
experienced a pandemic-related loss of
revenue. This small business is a
beneficiary and may use those funds in
many ways, potentially including hiring
or retaining staff. However, general
assistance to a business that did not
experience a negative economic impact
under the theory that this assistance
generally grows the economy and
therefore enhances opportunities for
unemployed workers would not be an
eligible use, because such assistance is
not reasonably designed to impact the
individuals or classes that experienced
a negative economic impact. In other
words, there is not a reasonable
connection between the assistance
provided and an impact on the
beneficiaries. Such an activity would be
attenuated from and thus not reasonably
designed to benefit the households that
experienced the negative economic
impact.
b. Populations Presumed Eligible
Presumed Eligibility: Impacted and
Disproportionately Impacted
Households and Communities
Background: As noted above, the
interim final rule allowed recipients to
presume that certain households were
impacted or disproportionately
impacted by the pandemic and thus
eligible for responsive programs or
services. Specifically, under the interim
final rule, recipients could presume that
a household or population that
experienced unemployment,
experienced increased food or housing
insecurity, or is low- or moderate-
income experienced negative economic
impacts resulting from the pandemic,
and recipients may provide services that
respond to these impacts.
The interim final rule also recognized
that pre-existing health, economic, and
social disparities contributed to
disproportionate pandemic impacts in
certain communities and allowed for a
broader list of enumerated eligible uses
to respond to the pandemic in
disproportionately impacted
communities. Under the interim final
rule, recipients were allowed to
presume that families residing in QCTs
or receiving services provided by Tribal
governments were disproportionately
impacted by the pandemic.
Definition of Low- and Moderate-
Income
Public Comment: As noted earlier,
many commenters sought a definition
for ‘‘low- and moderate-income’’ to
provide recipients greater clarity on
which specific households could be
presumed to be impacted by the
pandemic.
Treasury Response: The final rule
maintains the presumptions identified
in the interim final rule and defines
low- and moderate-income for the
purposes of determining which
households and populations recipients
may presume to have been impacted. To
simplify the administration of this
presumption, the final rule adopts a
definition of low- and moderate-income
based on thresholds established and
used in other federal programs.
Definitions. The final rule defines a
household as low income if it has (i)
income at or below 185 percent of the
Federal Poverty Guidelines (FPG) for the
size of its household based on the most
recently published poverty guidelines
by the Department of Health and Human
Services (HHS) or (ii) income at or
below 40 percent of the Area Median
Income (AMI) for its county and size of
household based on the most recently
published data by the Department of
Housing and Urban Development
(HUD).
22 The final rule defines a household as
moderate income if it has (i) income at
or below 300 percent of the FPG for the
size of its household based on the most
recently published poverty guidelines
by HHS or (ii) income at or below 65
percent of the AMI for its county and
size of household based on the most
recently published data by HUD.
23 Recipients may determine whether to
measure income levels for specific
households or for a geographic area
based on the type of service to be
provided. For example, recipients
developing a program that serves
specific households (e.g., a subsidy for
internet access, a childcare program)
may measure income at the household
level. Recipients providing a service
that reaches a general geographic area
(e.g., a park) may measure median
income of that area.
Further, recipients should generally
use the income threshold for the size of
the household to be served (e.g., when
providing childcare to a household of
five, recipients should reference the
income threshold for a household of
five); however, recipients may use the
income threshold for a default
household size of three if providing
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4346 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 24 U.S. Department of Health and Human Service,
HHS Poverty Guidelines for 2021, available at
https://aspe.hhs.gov/topics/poverty-economic-
mobility/poverty-guidelines.
25 U.S. Department of Housing and Urban
Development, FY 2021 Section 8 Income Limits,
available at https://www.huduser.gov/portal/
datasets/il/il21/Section8-FY21.xlsx. Recipients may
refer to the list of counties (and New England
towns) identified by state and metropolitan area for
identifying the appropriate area. U.S. Department of
Housing and Urban Development, FY 2021 List of
Counties (and New England Towns) Identified by
State and Metropolitan Area, available at https://
www.huduser.gov/portal/datasets/il/il21/area-
definitions-FY21.pdf.
26 The U.S. Census Bureau provides an interactive
map: U.S. Census Bureau, Median Household
Income State Selection Map, available at https://
data.census.gov/cedsci/map?q=Median
%20Household%20Income&g=0100000US
%2404000%24001&tid=ACSST5Y2019.S1901&cid=
S1901_C01_012E&vintage=2019. The U.S. Census
Bureau also provides an interactive table: U.S.
Census Bureau, Median Household Income In The
Past 12 Months (In 2019 Inflation-Adjusted Dollars),
available at https://data.census.gov/cedsci/table?q=
b19013&tid=ACSDT5Y2019.B19013&hidePreview=
true.
27 See U.S. Bureau of Labor Statistics,
Occupational Employment and Wage Estimates,
https://www.bls.gov/oes/current/oes_nat.htm (last
visited December 7, 2021).
28 U.S. Census Bureau, Poverty Status by State,
https://www.census.gov/data/tables/time-series/
demo/income-poverty/cps-pov/pov-46.html (last
visited December 7, 2021).
services that reach a general geographic
area or if doing so would simplify
administration of the program to be
provided (e.g., when developing a park,
recipients should use the income
threshold for a household size of three
and compare it to median income of the
geographic area to be served).
Note that recipients can also identify
and serve other classes of households
that experienced negative economic
impacts or disproportionate impacts
from the pandemic; recipients can
identify these classes based on their
income levels, including above the
levels defined as low- and moderate-
income in the final rule. For example,
a recipient may identify that households
in their community with incomes above
the final rule threshold for low-income
nevertheless experienced
disproportionate impacts from the
pandemic and provide responsive
services. See section General Provisions:
Standards for Identifying Other Eligible
Populations for details on applicable
standards.
Applicable levels. For reference, the
FPG is commonly referred to as the
federal poverty level (FPL) and is
related to—although distinct from—the
U.S. Census Bureau’s poverty threshold.
The final rule uses the FPG when
referring specifically to the HHS
guidelines, as these are the quantitative
metrics used for determining low- and
moderate-income households.
The FPG by household size for 2021
is included in the table below.
Recipients should refer to HHS Poverty
Guidelines for this information, which
is updated annually and available on
the HHS website.
24 For calculating the
thresholds of 40 percent and 65 percent
of AMI, recipients should refer to the
annual HUD Section 8 50 percent
income limits by county and household
size published by HUD and available on
the HUD website; in particular,
recipients should calculate the 40
percent threshold as 0.8 times the 50
percent income limit, and recipients
should calculate the 65 percent
threshold as 1.3 times the 50 percent
income limit.
25 Finally, for median
income of Census Tracts and other
geographic areas, recipients should refer
to the most recent American
Community Survey 5-year estimates
available through the Census website.
26 2021 FEDERAL POVERTY GUIDELINES
Household size
48 contiguous
states and the
District of
Columbia
Alaska Hawaii
1 .............................................................................................................................. ..................... $12,880 $16,090 $14,820 2 .............................................................................................................................. ..................... 17,420 21,770 20,040 3 .............................................................................................................................. ..................... 21,960 27,450 25,260 4 .............................................................................................................................. ..................... 26,500 33,130 30,480 5 .............................................................................................................................. ..................... 31,040 38,810 35,700 6 .............................................................................................................................. ..................... 35,580 44,490 40.920 7 .............................................................................................................................. ..................... 40,120 50,170 46,140 8 .............................................................................................................................. ..................... 44,660 55,850 51,360 For families/households with more than 8 persons, add the following amounts for each additional person:
48 Contiguous States and the District of Columbia: $4,540.
Alaska: $5,680.
Hawaii: $5,220.
Source: ‘‘HHS Poverty Guidelines for 2021,’’ available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines.
Rationale. In defining low income, the
final rule uses both the FPG and AMI to
account for national trends and regional
differences. The metric of 185 percent of
FPG aligns with some other programs;
for instance, under the National School
Lunch Program, students with
household incomes under 185 percent
of FPG qualify for free or reduced-price
lunch, and schools often use eligibility
for free or reduced-price lunch as an
indicator of low-income status under
Title 1–A of the Elementary and
Secondary Education Act. Eligibility for
other programs, such as the Federal
Communications Commission’s e-Rate
program and the Special Supplemental
Nutrition Program for Women, Infants
and Children employ this metric as
well. In addition, 185 percent of the
FPG for a family of four is $49,025,
which is approximately the wage
earnings for a two-earner household in
which both earners receive the median
wage in occupations, such as waiters
and waitresses and hotel clerks, that
were heavily impacted by COVID–19.
27 This measure is targeted toward those at
the bottom of the income distribution
and thus helps to promote use of SLFRF
funds towards populations with the
greatest needs. At the same time, with
approximately one-quarter of Americans
below 185 percent of the poverty
threshold, this approach is broad
enough to facilitate use of SLFRF funds
across many jurisdictions.
28 Because
regions have different cost and income
levels, this definition also allows for
upward adjustment based on AMI for
those regions where 40 percent of AMI
exceeds 185 percent of FPG. The metric
of 40 percent of AMI is based on the
midpoint of values often used to
designate certain categories of low-
income households; specifically, it is
the midpoint of the 30 percent income
limit and the 50 percent income limit
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4347 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 29 For instance, Melissa Kearney et al. (2013) cap
the ‘‘struggling lower middle-income class’’ at 250
percent of the federal poverty level, while Isabel
Sawhill and Edward Rodrigue (2015) define the
‘‘middle class’’ as those with incomes of at least 300
percent of the poverty line. Melissa Kearney et al.,
‘‘A Dozen Facts about America’s Struggling Lower-
Middle Class,’’ The Hamilton Project (December
2013), https://www.hamiltonproject.org/assets/
legacy/files/downloads_and_links/THP_12Low
IncomeFacts_Final.pdf; Isabel Sawhill and Edward
Rodrigue, ‘‘An Agenda for Reducing Poverty and
Improving Opportunity,’’ Brookings Institution,
https://www.brookings.edu/wp-content/uploads/
2016/07/Sawhill_FINAL.pdf.
30 Data on median annual wages from: U.S.
Bureau of Labor and Statistics, Occupational
Employment and Wage Statistics, available at
https://www.bls.gov/oes/current/oes_nat.htm (last
visited December 7, 2021).
31 For instance, households earning between 200
and 300 percent of the FPG have significantly
higher rates of food and housing insecurity than
those earning above 300 percent of the FPG. Table
1, Kyle J. Caswell and Stephen Zuckerman, Food
Insecurity, Housing Hardship, and Medical Care
Utilization, Urban Institute (June 2018), https://
www.urban.org/sites/default/files/publication/
98701/2001896_foodinsecurity_housinghardship_
medicalcareutilization_finalized.pdf.
used in programs such as the
Community Development Block Grant
(CDBG) Program.
In defining moderate income, the final
rule uses both the FPG and AMI to
account for national trends and regional
differences. While there are different
definitions of moderate income, 300
percent of FPG falls within the range
commonly used by researchers.
29 Analysis of median wages among a
sample of occupations likely impacted
by the pandemic also suggests that an
income cutoff of 300 percent of FPG
would include many households with
workers in such occupations.
30 Moreover, the metric of 300 percent of
FPG covers households that, while
above the poverty line, often lack
economic security.
31 Treasury
determined the AMI threshold for
moderate income by maintaining the
same ratio of FPG multiplier to AMI
multiplier as in the definition of low
income. This anchors the threshold to
the existing definitions of moderate
income from the literature while taking
into account geographical variation in
income and expenses in the same
manner as the definition of low income.
Eligibility Presumptions
Public Comment: Many commenters
believed that a broader range of groups
should be considered presumptively
impacted and disproportionately
impacted, arguing that many
households had been affected by the
pandemic and that broader presumed
eligibility would help recipients provide
assistance quickly and effectively.
Treasury also received many
comments on the presumption that
families living in QCTs or receiving
services from Tribal governments were
disproportionately impacted by the
pandemic. While many commenters
supported the interim final rule’s
recognition of disproportionate impacts
of the pandemic on low-income
communities, many commenters
disagreed with treating QCTs as the only
presumed eligible group of
disproportionately impacted
households, apart from households
served by Tribal governments. While
acknowledging a potential increase in
administrative burden, commenters
recommended that Treasury presume
other households or geographic areas, in
addition to QCTs, were
disproportionately impacted;
suggestions included all low- and
moderate-income households,
geographic areas designated as
Opportunity Zones, Difficult
Development Areas (DDAs), areas with
a certain amount of Real Estate
Advantage Program (REAP) recipients,
or use of eligibility criteria from the
Community Reinvestment Act. One
commenter generally recommended that
a clearer definition of
‘‘disproportionately impacted’’ should
be provided and that any definition
should include communities of color
and people of limited means. Another
recommended specific eligibility for
people that had recently interacted with
the criminal justice system. Many
commenters representing Tribal
governments and groups recommended
a presumption of eligibility for all Tribal
uses of funds, clarification that off
reservation members remained eligible,
and broad flexibility on use of funds.
Additionally, commenters noted that
some areas are technically eligible to be
QCTs but fall short because of the
aggregate population of eligible tracts.
One commenter noted that these areas
should be considered the same as QCTs
for the purpose of SLFRF funds. Some
commenters argued that rural counties
typically have few QCTs despite high
levels of poverty and disruption caused
by the COVID–19 pandemic. Other rural
commenters recommended that the
designation be by county rather than at
a more granular level, arguing that the
QCT designation is biased towards
urban areas and understates the harm
done to rural America. Many
commenters representing Tribal
governments supported the
presumption that services provided by
Tribal governments respond to
disproportionate impacts.
Treasury Response
Summary: While households residing
in QCTs or served by Tribal
governments were presumed to be
disproportionately impacted, Treasury
emphasizes that under the interim final
rule recipients could also identify other
households, populations, or geographic
areas that were disproportionately
impacted by the pandemic and provide
services to respond.
The final rule maintains the
presumptions identified in the interim
final rule, as well as recipients’ ability
to identify other impacted or
disproportionately impacted classes.
The final rule also allows recipients to
presume that low-income households
were disproportionately impacted, and
as discussed above, defines low- and
moderate-income. Finally, under the
final rule recipients may also presume
that households residing in the U.S.
territories or receiving services from
territorial governments were
disproportionately impacted.
Households presumed to be impacted:
Impacted households are those that
experienced a public health or negative
economic impact from the pandemic.
With regard to public health impacts,
recipients may presume that the general
public experienced public health
impacts from the pandemic for the
purposes of providing services for
COVID–19 mitigation and behavioral
health. In other words, recipients may
provide a wide range of enumerated
eligible uses in these categories to the
general public without further analysis.
As discussed in the introduction,
COVID–19 as a disease has directly
affected the health of tens of millions of
Americans, and efforts to prevent and
mitigate the spread of the disease are
needed and in use across the country.
Further, the stress of the pandemic and
resulting recession have affected nearly
all Americans. Accordingly, the final
rule presumes that the general public
are impacted by and eligible for services
to respond to COVID–19 mitigation and
prevention needs, as well as behavioral
health needs.
With regard to negative economic
impacts, as with the interim final rule,
under the final rule recipients may
presume that a household or population
that experienced unemployment,
experienced increased food or housing
insecurity, or is low- or moderate-
income experienced negative economic
impacts resulting from the pandemic.
The final rule’s definition of low- and
moderate-income, by providing
standard metrics based on widely
available data, is intended to simplify
administration for recipients.
Households presumed to be
disproportionately impacted:
Disproportionately impacted
households are those that experienced a
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4348 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 32 For instance, the American Community Survey
does not include all territories. U.S. Census Bureau,
Areas Published, https://www.census.gov/
programs-surveys/acs/geography-acs/areas-
published.html (last visited November 9, 2021).
33 U.S. Department of Health and Human
Services, supra note 24.
34 For instance, data from the American
Community Survey is based on geographical
location rather than Tribal membership. U.S.
Census Bureau, My Tribal Area, https://
www.census.gov/Tribal/Tribal_glossary.php.
35 Lina Stoylar et. al., Challenges in the U.S.
Territories: COVID–19 and the Medicaid Financing
Cliff, Kaiser Family Foundation (May 18, 2021),
https://www.kff.org/coronavirus-covid-19/issue-
brief/challenges-in-the-u-s-territories-covid-19-and-
the-medicaid-financing-cliff/.
disproportionate, or meaningfully more
severe, impact from the pandemic. As
discussed in the interim final rule, pre-
existing disparities in health and
economic outcomes magnified the
impact of the COVID–19 public health
emergency on certain households and
communities. As with the interim final
rule, under the final rule recipients may
presume that households residing in
QCTs or receiving services provided by
Tribal governments were
disproportionately impacted by the
pandemic. In addition, under the final
rule recipients may presume that low-
income households were
disproportionately impacted by the
pandemic. Finally, under the final rule
recipients may also presume that
households residing in the U.S.
territories or receiving services from
territorial governments were
disproportionately impacted.
Treasury notes that households
presumed to be disproportionately
impacted would also be presumptively
impacted, as these households have not
only experienced pandemic impacts but
have experienced disproportionate
pandemic impacts; as a result, these
households are presumptively eligible
for responsive services for both
impacted and disproportionately
impacted households.
Many different geographic, income-
based, or poverty-based presumptions
could be used to designate
disproportionately impacted
populations. The combination of
permitting recipients to use QCTs, low-
income households, and services
provided by Tribal or territorial
governments as presumptions balances
these varying methods. Specifically,
QCTs are a commonly used designation
of geographic areas based on low
incomes or high poverty rates of
households in the community; for
recipients providing geographically
targeted services, QCTs may provide a
simple metric with readily available
maps for use. However, Treasury
recognizes that QCTs do not capture all
underserved populations, including for
reasons noted by commenters. By
allowing recipients to also presume that
low-income households were
disproportionately impacted, the final
rule provides greater flexibility to serve
underserved households or
communities. Data on household
incomes is also readily available at
varying levels of geographic granularity
(e.g., Census Tracts, counties), again
permitting flexibility to adapt to local
circumstances and needs. Finally,
Treasury notes that, as discussed further
below, recipients may also identify
other households, populations, and
communities disproportionately
impacted by the pandemic, in addition
to those presumed to be
disproportionately impacted.
Additionally, Tribal and territorial
governments may face both
disproportionate impacts of the
pandemic and administrability
challenges with operationalizing the
income-based standard; therefore,
Treasury has presumed that services
provided by these governments respond
to disproportionate pandemic impacts.
Given a lack of regularly published data
on household incomes in most
territories,
32 as well as a lack of poverty
guidelines developed for these
jurisdictions,
33 it may be highly
challenging to assess disproportionate
impact in these communities according
to an income- or poverty-based
standard. Similarly, data on incomes in
Tribal communities are not readily
available.
34 Finally, as described in the
sections on Public Health and Negative
Economic Impacts, Tribal communities
have faced particularly severe health
and economic impacts of the pandemic.
Similarly, available research suggests
that preexisting health and economic
disparities in the territories amplified
the impact of the pandemic on these
communities.
35 Categorical Eligibility
Public Comment: Several commenters
suggested that the final rule permit
recipients to rely on a beneficiary’s
eligibility for other federal benefits
programs as an easily administrable
proxy for identifying a group or
population that experienced a negative
economic impact as a result of the
COVID–19 public health emergency
(i.e., categorical eligibility). In other
words, a recipient would determine that
individuals or households are eligible
for an SLFRF-funded program based on
the individual or household’s eligibility
in another program, typically another
federal benefit program. Commenters
noted that categorical eligibility is a
common policy in program
administration that can significantly
ease administrative burden on both
program administrators and
beneficiaries.
Treasury Response: Treasury agrees
that allowing recipients to identify
impacted and disproportionately
impacted beneficiaries based on their
eligibility for other programs with
similar income tests would ease
administrative burden. To the extent
that the other program’s eligibility
criteria align with a population or class
that experienced a negative economic
impact of the pandemic, this approach
is also consistent with the process
allowed under the final rule for
recipients to determine that a class has
experienced a negative economic
impact, and then document that an
individual receiving services is a
member of the class. For these reasons,
the final rule recognizes categorical
eligibility for the following programs
and populations:
• Impacted households. Treasury will
recognize a household as impacted if it
otherwise qualifies for any of the
following programs:
Æ Children’s Health Insurance
Program (CHIP)
Æ Childcare Subsidies through the
Child Care and Development Fund
(CCDF) Program
Æ Medicaid
Æ National Housing Trust Fund
(HTF), for affordable housing programs
only
Æ Home Investment Partnerships
Program (HOME), for affordable housing
programs only
• Disproportionately impacted
households. Treasury will recognize a
household as disproportionately
impacted if it otherwise qualifies for any
of the following programs:
Æ Temporary Assistance for Needy
Families (TANF)
Æ Supplemental Nutrition Assistance
Program (SNAP)
Æ Free and Reduced-Price Lunch
(NSLP) and/or School Breakfast (SBP)
programs
Æ Medicare Part D Low-income
Subsidies
Æ Supplemental Security Income
(SSI)
Æ Head Start and/or Early Head Start
Æ Special Supplemental Nutrition
Program for Women, Infants, and
Children (WIC)
Æ Section 8 Vouchers
Æ Low-Income Home Energy
Assistance Program (LIHEAP)
Æ Pell Grants
Æ For services to address educational
disparities, Treasury will recognize Title
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4349 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 36 Title I eligible schools means schools eligible to
receive services under section 1113 of Title I, Part
A of the Elementary and Secondary Education Act
of 1965, as amended (20 U.S.C. 6313), including
schools served under section 1113(b)(1)(C) of that
Act.
I eligible schools 36 as
disproportionately impacted and
responsive services that support the
school generally or support the whole
school as eligible
c. Standards for Identifying Other
Eligible Populations
Standards: Designating Other Impacted
Classes
Public Comment: Treasury received
multiple comments requesting
additional clarification about how
classes of impacted individuals may be
designated, as well as questions asking
whether recipients must demonstrate a
specific public health or negative
economic impact to each entity served
(e.g., each household receiving
assistance under a program). There were
several comments requesting that
specific geographic designations, like a
county or Impact Zone, be eligible to
use as a determining boundary.
Treasury Response: The interim final
rule allowed, and the final rule
maintains, the ability for recipients to
demonstrate a public health or negative
economic impact on a class and to
provide assistance to beneficiaries that
fall within that class. Consistent with
the scope of beneficiaries included in
sections 602(c)(1)(A) and 603(c)(1)(A) of
the Social Security Act, Treasury is
clarifying that a recipient may identify
such impacts for a class of households,
small businesses, or nonprofits. In such
cases, the recipient need only
demonstrate that the household, small
business, or nonprofit is within the
relevant class. For example, a recipient
could determine that restaurants in the
downtown area had generally
experienced a negative economic impact
and provide assistance to those small
businesses to respond. When providing
this assistance, the recipient would only
need to demonstrate that the small
businesses receiving assistance were
restaurants in the downtown area. The
recipient would not need to
demonstrate that each restaurant served
experienced its own negative economic
impact.
In identifying an impacted class and
responsive program, service, or capital
expenditure, recipients should consider
the relationship between the definition
of the class and proposed response.
Larger and less-specific classes are less
likely to have experienced similar
harms and thus the responses are less
likely to be responsive to the harms
identified. That is, as the group of
entities being served by a program has
a wider set of fact patterns, or the type
of entities, their circumstances, or their
pandemic experiences differ more
substantially, it may be more difficult to
determine that the class has actually
experienced the same or similar
negative economic impact and that the
response is appropriately tailored to
address that impact.
Standard: Designating Other
Disproportionately Impacted Classes
Summary of Interim Final Rule: As
noted above, the interim final rule
provided a broad set of enumerated
eligible uses of funds in
disproportionately impacted
communities, including to address pre-
existing disparities that contributed to
more severe pandemic impacts in these
communities. The interim final rule
presumed that these services are eligible
uses when provided in a QCT, to
families and individuals 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’’ and, in identifying these
disproportionately impacted
communities, should be able to support
their determination that the pandemic
resulted in disproportionate public
health or economic outcomes to the
group identified.
Public Comment: A significant
number of commenters expressed
uncertainty regarding the process for
determining eligibility for
disproportionately impacted
communities beyond QCTs. A
commenter noted that a clearer
definition of ‘‘disproportionately
impacted’’ should be delineated and
that any definition should include
communities of color and people of
limited means. Some commenters
suggested a template or checklist to see
if an area meets the standard for
disproportionately impacted
communities outside of QCTs. Some
commenters stated that QCT and non-
QCT beneficiaries should be treated the
same.
Treasury Response: Under the interim
final rule, presuming eligibility for
services in QCTs, for populations living
in QCTs, and for Tribal governments
was intended to ease administrative
burden, providing a simple path for
recipients to offer services in
underserved communities, and is not an
exhaustive list of disproportionately
impacted communities. To further
clarify, the final rule codifies the
interpretive framework discussed above,
including presumptions of groups
disproportionately impacted, as well as
the ability to identify other
disproportionately impacted
populations, households, or geographies
(referred to here as disproportionately
impacted classes).
As discussed in the interim final rule,
in identifying other disproportionately
impacted classes, recipients should be
able to support their determination that
the pandemic resulted in
disproportionate public health or
economic outcomes to the specific
populations, households, or geographic
areas to be served. For example, the
interim final rule considered data
regarding the rate of COVID–19
infections and deaths in low-income
and socially vulnerable communities,
noting that these communities have
experienced the most severe health
impacts, compared to national averages.
Similarly, the interim final rule
considered the high concentration of
low-income workers performing
essential work, the reduced ability to
socially distance, and other pre-existing
public health challenges, all of which
correlate with more severe COVID–19
outcomes. The interim final rule also
considered the disproportionate
economic impacts of the pandemic,
citing, for example, the rate of job losses
among low-income persons as compared
to the general population. The interim
final rule then identified QCTs, a
common, readily accessible, and
geographically granular method of
identifying communities with a large
proportion of low-income residents, as
presumed to be disproportionately
impacted by the pandemic.
In other words, the interim final rule
identified disproportionately impacted
populations by assessing the impacts of
the pandemic and finding that some
populations experienced meaningfully
more severe impacts than the general
public. Similarly, to identify
disproportionately impacted classes,
recipients should compare the impacts
experienced by that class to the typical
or average impacts of the pandemic in
their local area, state, or nationally.
Recipients may identify classes of
households, communities, small
businesses, nonprofits, or populations
that have experienced a
disproportionate impact based on
academic research or government
research publications, through analysis
of their own data, or through analysis of
other existing data sources. To augment
their analysis, or when quantitative data
is not readily available, recipients may
also consider qualitative research and
sources like resident interviews or
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4350 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 37 Press Release, Centers for Disease Control and
Prevention, First Travel-related Case of 2019 Novel
Coronavirus Detected in United States (Jan. 21,
2020), https://www.cdc.gov/media/releases/2020/
p0121-novel-coronavirus-travel-case.html.
38 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in Number of COVID–
19 Cases and Deaths in the US Reported to CDC,
by State/Territory, https://covid.cdc.gov/covid-data-
tracker/#trends_dailytrendscases (last visited
December 7, 2021).
39 Id.
40 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
December 31, 2021).
41 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID–19 Vaccinations in the
United States, https://covid.cdc.gov/covid-data-
tracker/#vaccinations (last visited December 7,
2021).
42 Id.
43 Columbus, Ohio Recovery Plan, https://
www.columbus.gov/recovery/.
44 Luzerne County, Pennsylvania Recovery Plan,
https://www.luzernecounty.org/DocumentCenter/
View/26304/Final-Interim-Recovery-Plan-
Performance-Report-83121.
45 This includes implementing mitigation
strategies consistent with the Centers for Disease
Control and Prevention’s (CDC) Guidance for
COVID–19 Prevention in K–12 Schools (November
5, 2021), available at https://www.cdc.gov/
coronavirus/2019-ncov/community/schools-
childcare/k-12-guidance.html.
feedback from relevant state and local
agencies, such as public health
departments or social services
departments. In both cases, recipients
should consider the quality of the
research, data, and applicability of
analysis to their determination.
In designing a program or service that
responds to a disproportionately
impacted class, a recipient must first
identify the impact and then identify an
appropriate response. To assess
disproportionate impact, recipients
should rely on data or research that
measures the public health or negative
economic impact. An assessment of the
effects of a response (e.g., survey data on
levels of resident support for various
potential responses) is not a substitute
for an assessment of the impact
experienced by a particular class. Data
about the appropriateness or desirability
of a response may be used to assess the
reasonableness of a response, once an
impact or disproportionate impact has
been identified but should not be the
basis for assessing impact.
2. Public Health
Background
On January 21, 2020, the Centers for
Disease Control and Prevention (CDC)
identified the first case of novel
coronavirus in the United States.
37 Since that time, and through present
day, the United States has faced
numerous waves of the virus that have
brought acute strain on health care and
public health systems. At various points
in the pandemic, hospitals and
emergency medical services have seen
significant influxes of patients; response
personnel have faced shortages of
personal protective equipment; testing
for the virus has been scarce; and
congregate living facilities like nursing
homes have seen rapid spread.
Since the initial wave of the COVID–
19 pandemic, the United States has
faced several additional major waves
that continued to impact communities
and stretch public health services. The
summer 2020 wave impacted
communities in the south and
southwest. As the weather turned colder
and people spent more time indoors, a
wave throughout fall and winter 2020
impacted communities in almost every
region of the country as the virus
reached a point of uncontrolled spread
and over 3,000 people died per day due
to COVID–19.
38 In December 2020, the Food and Drug
Administration (FDA) authorized
COVID–19 vaccines for emergency use,
and soon thereafter, mass vaccination in
the United States began. At the time of
the interim final rule publication in May
2021, the number of daily new
infections was steeply declining as
rapid vaccination campaigns progressed
across the country. By summer 2021,
COVID–19 cases had fallen to their
lowest level since early months of the
pandemic, when testing was scarce.
However, throughout late summer and
early fall, the Delta variant, a more
infectious and transmittable variant of
the SARS–CoV–2 virus, sparked yet
another surge. From June to early
September, the seven-day moving
average of reported cases rose from
12,000 to 165,000.
39 As of December 2021, COVID–19 in
total has infected over 50 million and
killed over 800,000 Americans.
40 Preventing and mitigating the spread of
COVID–19 continues to require a major
public health response from federal,
state, local, and Tribal governments.
First, state, local, and Tribal
governments across the country have
mobilized to support the national
vaccination campaign. As of December
2021, more than 80 percent of adults
have received at least one dose, with
more than 470 million total doses
administered.
41 Additionally, more than
15 million children over the age of 12
have received at least one dose of the
vaccine and over 47 million people have
received a booster dose.
42 Vaccines for
younger children, ages 5 through 11,
have been approved and are reaching
communities and families across the
country. As new variants continue to
emerge globally, the national effort to
administer vaccinations and other
COVID–19 mitigation strategies will be
a critical component of the public
health response.
In early reporting on uses of SLFRF
funds, recipients have indicated that
they plan to put funds to immediate use
to support continued vaccination
campaigns. For example, one recipient
has indicated that it plans to use SLFRF
funds to support a vaccine incentive
program, providing $100 gift cards to
residents at community vaccination
clinics. The program aimed to target
communities with high public health
needs.
43 Another recipient reported that
it is partnering with multiple agencies,
organizations, and providers to
distribute COVID–19 vaccinations to
homebound residents in assisted living
facilities.
44 State, local, and Tribal governments
have also continued to execute other
aspects of a wide-ranging public health
response, including increasing access to
COVID–19 testing and rapid at-home
tests, contact tracing, support for
individuals in isolation or quarantine,
enforcement of public health orders,
new public communication efforts,
public health surveillance (e.g.,
monitoring case trends and genomic
sequencing for variants), enhancement
to health care capacity through
alternative care facilities, and
enhancement of public health data
systems to meet new demands or scaling
needs.
State, local, and Tribal governments
have also supported major efforts to
prevent COVID–19 spread through
safety measures at key settings like
nursing homes, schools, congregate
living settings, dense worksites,
incarceration settings, and in other
public facilities. This has included, for
example, implementing infection
prevention measures or making
ventilation improvements.
In particular, state, local, and Tribal
governments have mounted significant
efforts to safely reopen schools. A key
factor in school reopening is the ability
to implement COVID–19 mitigation
strategies such as providing masks and
other hygiene resources, improving air-
quality and ventilation, increasing
outdoor learning and eating spaces,
testing and contact tracing protocols,
and a number of other measures.
45 For
example, one recipient described plans
to use SLFRF funds to further invest in
school health resources that were
critical components of school reopening
and reducing the spread of COVID–19 in
schools. Those investments include the
increasing school nurses and social
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4351 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 46 Nirmita Panchal et al., The Implications of
COVID–19 for Mental Health and Substance Abuse
(Feb. 10, 2021), https://www.kff.org/coronavirus
covid-19/issue-brief/the-implications-of-covid-19-
for-mental-health-and-substance-use/#:∼:text=
Older%20adults%20are%20also%20 more,
prior%20to%20the%20current%20crisis; Mark E´ .
Czeisler et al., Mental Health, Substance Abuse, and
Suicidal Ideation During COVID–19 Pandemic—
United States, June 24–30 2020, Morb. Mortal.
Wkly. Rep. 69(32):1049–57 (Aug. 14, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6932a1.htm.
47 Id.
48 Rebecca T. Leeb et al., Mental Health-Related
Emergency Department Visits Among Children
Aged <18 Years During the COVID Pandemic—
United States, January 1–October 17, 2020, Morb.
Mortal. Wkly. Rep. 69(45):1675–80 (Nov. 13, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/
mm6945a3.htm.
49 Centers for Disease Prevention and Control,
National Center for Health Statistics, Provisional
Drug Overdose Death Counts, https://www.cdc.gov/
nchs/nvss/vsrr/drug-overdose-data.htm (last visited
May 8 December 6, 2021).
50 Panchal, supra note 46; Mark E´. Czeisler et al.,
supra note 46.
51 The White House, FACT SHEET: More Details
on the Biden-Harris Administration’s Investments
in Community Violence Interventions (April 7,
2021), https://www.whitehouse.gov/briefing-room/
statements-releases/2021/04/07/fact-sheet-more-
details-on-the-biden-harris-administrations-
investments-in-community-violence-interventions/.
52 Federal Bureau of Investigation, FBI Releases
2020 Crime Statistics (September 27, 2021) https://
www.fbi.gov/news/pressrel/press-releases/fbi-
releases-2020-crime-statistics.
53 Id.
54 Id.
55 The Educational Fund to Stop Gun Violence,
Community Gun Violence, https://efsgv.org/learn/
type-of-gun-violence/community-gun-violence/ (last
visited November 9, 2021).
56 Giffords Law Center, Healing Communities in
Crisis: Lifesaving Solutions to the Urban Gun
Violence Epidemic (March 2016), https://giffords.
org/wp-content/uploads/2019/01/Healing-
Communities-in-Crisis.pdf.
57 St. Louis, MO Recovery Plan, https://
www.stlouis-mo.gov/government/recovery/covid-19/
arpa/plan/.
58 Los Angeles County, CA Recovery Plan, http://
file.lacounty.gov/SDSInter/bos/supdocs/
160391.pdf.
59 Office of the White House, National Strategy for
the COVID–19 Response and Pandemic
Preparedness (Jan. 21, 2021), https://
www.whitehouse.gov/wp-content/uploads/2021/01/
National-Strategy-for-the-COVID-19-Response-and-
Pandemic-Preparedness.pdf.
60 In a study of 13 states from October to
December 2020, the CDC found that Hispanic or
Latino and Native American or Alaska Native
individuals were 1.7 times more likely to visit an
emergency room for COVID–19 than White
individuals, and Black individuals were 1.4 times
more likely to do so than White individuals. See
Sebastian D. Romano et al., Trends in Racial and
Ethnic Disparities in COVID–19 Hospitalizations,
by Region—United States, March–December 2020,
MMWR Morb Mortal Wkly Rep 2021, 70:560–565
(Apr. 16, 2021), https://www.cdc.gov/mmwr/
volumes/70/wr/mm7015e2.htm?s_cid=mm7015e2_
w.
61 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID–19 Cases
and Deaths in the United States, by County-level
Population Factors, https://covid.cdc.gov/covid-
data-tracker/#pop-factors_totaldeaths (last visited
December 7, 2021).
62 The CDC’s Social Vulnerability Index includes
fifteen variables measuring social vulnerability,
including unemployment, poverty, education
levels, single-parent households, disability status,
non-English speaking households, crowded
housing, and transportation access.
Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID–19 Cases
and Deaths in the United States, by Social
Continued
workers, improved ventilation systems,
and other health and safety measures.
The need for public health measures
to respond to COVID–19 will continue
moving forward. This includes the
continuation of vaccination campaigns
for the general public, booster doses,
and children. This also includes
monitoring the spread of COVID–19
variants, understanding the impact of
these variants, developing approaches to
respond, and monitoring global COVID–
19 trends. Finally, the long-term health
impacts of COVID–19 will continue to
require a public health response,
including medical services for
individuals with ‘‘long COVID,’’ and
research to understand how COVID–19
impacts future health needs and raises
risks for the tens of millions of
Americans who have been infected.
The COVID–19 pandemic also
negatively impacted other areas of
public health, particularly mental health
and substance use. In January 2021, over
40 percent of American adults reported
symptoms of depression or anxiety, up
from 11 percent in the first half of
2019.
46 The mental health impacts of
the pandemic have been particularly
acute for adults ages 18 to 24, racial and
ethnic minorities, caregivers for adults,
and essential workers, with all reporting
significantly higher rates of considering
suicide.
47 The proportion of children’s
emergency department visits related to
mental health has also risen
noticeably.
48 Similarly, rates of
substance use and overdose deaths have
spiked: Preliminary data from the CDC
show a nearly 30 percent increase in
drug overdose mortality from April 2020
to April 2021, bringing the estimated
overdose death toll for a 12-month
period over 100,000 for the first time
ever.
49 The CDC also found that 13
percent of adults started or increased
substance use to cope with stress related
to COVID–19 and 26 percent reported
having symptoms of trauma- and
stressor-related disorder (TRSD) related
to the pandemic.
50 Another public health challenge
exacerbated by the pandemic was
violent crime and gun violence, which
increased during the pandemic and has
disproportionately impacted low-
income communities.
51 According to
the Federal Bureau of Investigation
(FBI), although the property crime rate
fell 8 percent in 2020, the violent crime
rate increased 6 percent in 2020
compared to 2019 data.
52 In particular,
the estimated number of aggravated
assault offenses rose 12 percent, while
murder and manslaughter increased 30
percent from 2019 to 2020.
53 The
proportion of homicides committed
with firearms rose from 73 percent in
2019 to 76 percent in 2020.
54 Exposure
to violence can create serious short-term
and long-term harmful effects to health
and development, and repeated
exposure to violence may be connected
to negative health outcomes.
55 Addressing community violence as a
public health issue may help prevent
and even reduce additional harm to
individuals, households, and
communities.
56 Many communities are using SLFRF
funds to invest in holistic approaches in
violence prevention that are rooted in
targeted outreach and addressing root
causes. For example, the City of St.
Louis is planning to invest in expanding
a ‘‘community responder’’ model
designed to provide clinical help and to
divert non-violent calls away from the
police department. Additionally, the
city will expand access to mental health
services, allowing residents to seek
support at city recreation centers,
libraries, and other public spaces.
57 Similarly, Los Angeles County will
further invest in its ‘‘Care First, Jails
Last’’ program which seeks to replace
‘‘arrest and incarceration’’ responses
with health interventions.
58 While the pandemic affected
communities across the country, it
disproportionately impacted some
demographic groups and exacerbated
health inequities along racial, ethnic,
and socioeconomic lines.
59 The CDC
has found that racial and ethnic
minorities are at increased risk for
infection, hospitalization, and death
from COVID–19, with Hispanic or
Latino and Native American or Alaska
Native patients at highest risk.
60 Similarly, low-income and socially
vulnerable communities have seen the
most severe health impacts. For
example, counties with high poverty
rates also have the highest rates of
infections and deaths, with 308 deaths
per 100,000 compared to the U.S.
average of 238 deaths per 100,000, as of
December 2021.
61 Counties with high
social vulnerability, as measured by
factors such as poverty and educational
attainment, have also fared more poorly
than the national average, with 325
deaths per 100,000 as of December
2021.
62 Over the course of the
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17.A
4352 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations Vulnerability Index, https://covid.cdc.gov/covid-
data-tracker/#pop-factors_totaldeaths (last visited
December 7, 2021).
63 Centers for Disease Control and Prevention,
Risk for COVID–19 Infection, Hospitalization, and
Death By Race/Ethnicity, https://www.cdc.gov/
coronavirus/2019-ncov/covid-data/investigations-
discovery/hospitalization-death-by-race-
ethnicity.html (last visited December 7, 2021).
64 See, e.g., Centers for Disease Control and
Prevention, Risk of Severe Illness or Death from
COVID–19 (Dec. 10, 2020), https://www.cdc.gov/
coronavirus/2019-ncov/community/health-equity/
racial-ethnic-disparities/disparities-illness.html
(last visited December 7, 2021).
65 Milena Almagro et al., Racial Disparities in
Frontline Workers and Housing Crowding During
COVID–19: Evidence from Geolocation Data (Sept.
22, 2020), NYU Stern School of Business
(forthcoming), available at https://papers.ssrn.com/
sol3/papers.cfm?abstract_id=3695249; Grace
McCormack et al., Economic Vulnerability of
Households with Essential Workers, JAMA
324(4):388–90 (2020), available at https://jamanet
work.com/journals/jama/fullarticle/2767630.
66 See, e.g., Joseph G. Courtney et al., Decreases
in Young Children Who Received Blood Lead Level
Testing During COVID–19—34 Jurisdictions,
January–May 2020, Morb. Mort. Wkly. Rep.
70(5):155–61 (Feb. 5, 2021), https://www.cdc.gov/
mmwr/volumes/70/wr/mm7005a2.htm; Emily A.
Benfer & Lindsay F. Wiley, Health Justice Strategies
to Combat COVID–19: Protecting Vulnerable
Communities During a Pandemic, Health Affairs
Blog (Mar. 19, 2020), https://www.healthaffairs.org/
do/10.1377/hblog20200319.757883/full/.
67 See, e.g., Centers for Disease Control and
Prevention, supra note 62; Benfer & Wiley, supra
note 66; Nathaniel M. Lewis et al., Disparities in
COVID–19 Incidence, Hospitalizations, and Testing,
by Area-Level Deprivation—Utah, March 3–July 9,
2020, Morb. Mortal. Wkly. Rep. 69(38):1369–73
(Sept. 25, 2020), https://www.cdc.gov/mmwr/
volumes/69/wr/mm6938a4.htm.
68 Generally, funding uses eligible under CRF as
a response to the direct public health impacts of
COVID–19 will continue to be eligible under the
ARPA, including those not explicitly listed in the
final rule, with the following two exceptions: (1)
The standard for eligibility of public health and
safety payrolls has been updated (see section Public
Sector Capacity and Workforce in General
Provisions: Other) and (2) expenses related to the
issuance of tax-anticipation notes are no longer an
eligible funding use (see section Restrictions on
Use: Debt Service).
pandemic, Native Americans have
experienced more than one and a half
times the rate of COVID–19 infections,
more than triple the rate of
hospitalizations, and more than double
the death rate compared to White
Americans.
63 Low-income and minority
communities also exhibit higher rates of
pre-existing conditions that may
contribute to an increased risk of
COVID–19 mortality.
64 In addition,
individuals living in low-income
communities may have had more
limited ability to socially distance or to
self-isolate when ill, resulting in faster
spread of the virus, and were over-
represented among essential workers,
who face greater risk of exposure.
65 Social distancing measures in
response to the pandemic may have also
exacerbated pre-existing public health
challenges. For example, for children
living in homes with lead paint,
spending substantially more time at
home raises the risk of developing
elevated blood lead levels, while
screenings for elevated blood lead levels
declined during the pandemic.
66 The
combination of these underlying social
and health vulnerabilities may have
contributed to more severe public health
outcomes of the pandemic within these
communities, resulting in an
exacerbation of pre-existing disparities
in health outcomes.
67 Summary of the Interim Final Rule
Approach to Public Health
Summary: As discussed above, the
interim final rule provided flexibility for
recipients to pursue a wide range of
eligible uses to ‘‘respond to’’ the
COVID–19 public health emergency.
Uses of funds to ‘‘respond to’’ the public
health emergency address the SARS-
CoV–2 virus itself, support efforts to
prevent or decrease spread of the virus,
and address other impacts of the
pandemic on public health. The interim
final rule implemented these provisions
by identifying a non-exhaustive list of
programs or services that may be funded
as responding to COVID–19
(‘‘enumerated eligible uses’’), along with
considerations for evaluating other
potential uses of funds not explicitly
listed. Enumerated eligible uses are
discussed below. For guidance on how
to determine whether a particular use is
allowable, beyond those enumerated,
see section Standards: Identifying a
Public Health Impact.
Enumerated eligible uses under this
section built and expanded upon
permissible expenditures under the
Coronavirus Relief Fund; for clarity, the
interim final rule expressly listed as
eligible uses the uses permissible under
the Coronavirus Relief Fund, with
minor exceptions.
68 The interim final
rule also recognized that the nature of
the COVID–19 public health emergency,
and responsive policy measures,
programs, and services, had changed
over time and is expected to continue
evolving.
The interim final rule categorized
enumerated eligible uses to respond to
the public health emergency into several
categories: (1) COVID–19 mitigation and
prevention, (2) medical expenses, (3)
behavioral health care, (4) public health
and safety staff, (5) expenses to improve
the design and execution of health and
public health programs, and (6) eligible
uses to address disparities in public
health outcomes. For each category in
turn, this section describes public
comments received and Treasury’s
responses, as well as comments received
proposing additional enumerated
eligible uses.
Reorganizations and Cross-
References: In some cases, enumerated
eligible uses included in the interim
final rule under responding to the
public health emergency have been re-
categorized in the organization of the
final rule to enhance clarity. For
discussion of eligible uses for public
health and safety staff and to improve
the design and execution of public
health programs, please see section
Public Sector Capacity and Workforce in
General Provisions: Other. For
discussion of eligible uses to address
disparities in public health outcomes,
please see section Assistance to
Households in Negative Economic
Impacts.
Conversely, discussion of eligible
assistance to small businesses and
nonprofits to respond to public health
impacts has been moved from
Assistance to Small Businesses and
Assistance to Nonprofits in Negative
Economic Impacts to this section. This
change is consistent with the interim
final rule, which provides that
appropriate responses to address the
public health impacts of COVID–19 may
be provided to any type of entity.
a. COVID–19 Mitigation and Prevention
COVID–19 public health response and
mitigation tactics. Recognizing the
broad range of services and
programming needed to contain
COVID–19, the interim final rule
provided an extensive list of
enumerated eligible uses to prevent and
mitigate COVID–19 and made clear that
the public health response to the virus
is expected to continue to evolve over
time, necessitating different uses of
funds.
Enumerated eligible uses of funds in
this category included: 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
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4353 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 69 See Centers for Disease Control and Prevention,
COVID Data Tracker, https://covid.cdc.gov/covid-
data-tracker/#trends_dailycases (last visited
December 7, 2021).
70 See Centers for Disease Control and Prevention,
COVID–19, https://www.cdc.gov/coronavirus/2019-
ncov/index.html (last visited November 8, 2021).
71 See § 35.6(b); Coronavirus State and Local
Fiscal Recovery Funds, 86 FR at 26786.
72 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID–19 Vaccinations in the
United States, https://covid.cdc.gov/covid-data-
tracker/#vaccinations (last visited October 18,
2021).
73 U.S. Food and Drug Administration,
Coronavirus (COVID–19) Update: FDA Takes
Additional Actions on the Use of a Booster Dose for
COVID–19 Vaccines, https://www.fda.gov/news-
events/press-announcements/fda-authorizes-pfizer-
biontech-covid-19-vaccine-emergency-use-children-
5-through-11-years-age (last visited November 8,
2021).
74 U.S. Food and Drug Administration, FDA
Authorizes Pfizer-BioNTech COVID–19 Vaccine for
Emergency Use in Children 5 through 11 Years of
Age, https://www.fda.gov/news-events/press-
announcements/fda-authorizes-pfizer-biontech-
covid-19-vaccine-emergency-use-children-5-
through-11-years-age (last visited November 8,
2021).
public health data systems; other public
health responses; and capital
investments in public facilities to meet
pandemic operational needs, such as
physical plant improvements to public
hospitals and health clinics or
adaptations to public buildings to
implement COVID–19 mitigation tactics.
These enumerated uses are consistent
with guidance from public health
authorities, including the CDC.
Public Comment: Many commenters
were supportive of expansive
enumerated eligible uses for mitigating
and preventing COVID–19, noting the
wide range of activities that
governments may undertake and the
continued changing landscape of
pandemic response. Some commenters
requested that Treasury engage in
ongoing consideration of and
consultation on evolving public health
needs and resulting eligible expenses.
Some commenters noted that their
jurisdiction does not have an official
public health program, for example
smaller jurisdictions or those that do not
have a health department, and requested
clarification on whether their public
health expenses would still be eligible
in compliance with program rules.
Treasury Response: In the final rule,
Treasury is maintaining an expansive
list of enumerated eligible uses to
mitigate and prevent COVID–19, given
the wide-ranging activities that
governments may take to further these
goals, including ‘‘other public health
responses.’’ Note that the final rule
discusses several of these enumerated
uses in more detail below.
Treasury is further clarifying that
when providing COVID–19 prevention
and mitigation services, recipients can
identify the impacted population as the
general public. Treasury presumes that
all enumerated eligible uses for
programs and services, including
COVID–19 mitigation and prevention
programs and services, are reasonably
proportional responses to the harm
identified unless a response is grossly
disproportionate to the type or extent of
harm experienced. Note that capital
expenditures are not considered
‘‘programs and services’’ and are not
presumed to be reasonably proportional
responses to an identified harm except
as provided in section Capital
Expenditures in General Provisions:
Other. In other words, recipients can
provide any COVID–19 prevention or
mitigation service to members of the
general public without any further
analysis of impacts of the pandemic on
those individuals and whether the
service is responsive.
This approach gives recipient
governments an extensive set of eligible
uses that can adapt to local needs, as
well as evolving response needs and
developments in understanding of
transmission of COVID–19. Treasury
emphasizes how the enumerated
eligible uses can adapt to changing
circumstances. For example, when the
interim final rule was released, national
daily COVID–19 cases were at relatively
low levels and declining;
69 as the Delta
variant spread and cases peaked in
many areas of the country, particularly
those with low vaccination rates,
government response needs and tactics
evolved, and the SLFRF funds provided
the ability to quickly and nimbly adapt
to new public health needs. Treasury
also notes that funds may be used to
support compliance with and
implementation of COVID–19 safety
requirements, including vaccination
requirements, testing programs, or other
required practices.
Recipient governments do not need to
have an official health or public health
program in order to utilize these eligible
uses; any recipient can pursue these
eligible uses, though Treasury
recommends consulting with health and
public health professionals to support
effective implementation.
The CDC has provided
recommendations and guidelines to
help mitigate and prevent COVID–19.
The interim final rule and final rule
help support recipients in stopping the
spread of COVID–19 through these
recommendations and guidelines.
70 The
final rule reflects changing
circumstances of COVID–19 and
provides a broad range of permissible
uses for mitigating and preventing the
spread of the disease, in a manner
consistent with CDC guidelines and
recommendations.
The purpose of the SLFRF funds is to
mitigate the fiscal effects stemming from
the COVID–19 public health emergency,
including by supporting efforts to stop
the spread of the virus. The interim final
rule and final rule implement this
objective by, in part, providing that
recipients may use SLFRF funds for
COVID–19 mitigation and prevention.
71 A program or service that imposes
conditions on participation in or
acceptance of the service that would
undermine efforts to stop the spread of
COVID–19 or discourage compliance
with recommendations and guidelines
in CDC guidance for stopping the spread
of COVID–19 is not a permissible use of
funds. In other words, recipients may
not use funds for a program that
undermines practices included in the
CDC’s guidelines and recommendations
for stopping the spread of COVID–19.
This includes programs that impose a
condition to discourage compliance
with practices in line with CDC
guidance (e.g., paying off fines to
businesses incurred for violation of
COVID–19 vaccination or safety
requirements), as well as programs that
require households, businesses,
nonprofits, or other entities not to use
practices in line with CDC guidance as
a condition of receiving funds (e.g.,
requiring that businesses abstain from
requiring mask use or employee
vaccination as a condition of receiving
SLFRF funds).
Vaccination programs and vaccine
incentives. At the time of the interim
final rule release, many vaccination
programs were using mass vaccination
tactics to rapidly reach Americans en
masse for first vaccine doses.
72 Since
that time, the FDA has authorized
booster vaccine doses for certain groups
and certain vaccines and has also
authorized vaccines for youths
73 74 The
inclusion of ‘‘vaccination programs’’ as
an eligible use allows for adaptation as
the needs of programs change or new
groups become eligible for different
types of vaccinations.
Public Comment: Since the release of
the interim final rule, many recipient
governments have also requested
clarification on whether vaccine
incentives are a permissible use of
funds.
Treasury Response: Treasury issued
guidance clarifying that ‘‘[vaccine]
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
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4354 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 75 Coronavirus State and Local Fiscal Recovery
Funds, Frequently Asked Questions, as of July 19,
2021; https://home.treasury.gov/system/files/136/
SLFRPFAQ.pdf. Note that programs may provide
incentives to individuals who have already received
a vaccination if the incentive is reasonably expected
to increase the number of people who choose to get
vaccinated or motivate people to get vaccinated
sooner and the costs are reasonably proportional to
the expected public health benefit.
use of funds so long as such costs are
reasonably proportional to the expected
public health benefit.’’
75 This use of
funds remains permissible under the
final rule.
Capital Expenditures
Public Comment: Many commenters
requested clarification around the types
and scope of permissible capital
investments in public facilities to meet
pandemic operational needs; ventilation
improvements in congregate settings,
health care settings, or other key
locations; and whether support for
prevention and mitigation in congregate
facilities could include facilities
renovations, improvements, or
construction of new facilities, or if the
facilities must solely be used for
COVID–19 response.
Treasury Response: For clarity,
Treasury has addressed the eligibility
standard for capital expenditures, or
investments in property, facilities, or
equipment, in one section of this
Supplementary Information; see section
Capital Expenditures in General
Provisions: Other. In recognition of the
importance of capital expenditures in
the COVID–19 public health response,
Treasury enumerates that the following
projects are examples of eligible capital
expenditures, as long as they meet the
standards for capital expenditures in
section Capital Expenditures in General
Provisions: Other:
• Improvements or construction of
COVID–19 testing sites and laboratories,
and acquisition of related equipment;
• Improvements or construction of
COVID–19 vaccination sites;
• Improvements or construction of
medical facilities generally dedicated to
COVID–19 treatment and mitigation
(e.g., emergency rooms, intensive care
units, telemedicine capabilities for
COVID–19 related treatment);
• Expenses of establishing temporary
medical facilities and other measures to
increase COVID–19 treatment capacity,
including related construction costs;
• Acquisition of equipment for
COVID–19 prevention and treatment,
including ventilators, ambulances, and
other medical or emergency services
equipment;
• Improvements to or construction of
emergency operations centers and
acquisition of emergency response
equipment (e.g., emergency response
radio systems);
• Installation and improvements of
ventilation systems;
• Costs of establishing public health
data systems, including technology
infrastructure;
• Adaptations to congregate living
facilities, including skilled nursing
facilities, other long-term care facilities,
incarceration settings, homeless
shelters, residential foster care facilities,
residential behavioral health treatment,
and other group living facilities, as well
as public facilities and schools
(excluding construction of new facilities
for the purpose of mitigating spread of
COVID–19 in the facility); and
• Mitigation measures in small
businesses, nonprofits, and impacted
industries (e.g., developing outdoor
spaces).
Other clarifications on COVID–19
mitigation: Medical care, supports for
vulnerable populations, data systems,
carceral settings. Based on public
comments and questions received from
recipients following the interim final
rule, Treasury is making several further
clarifications on enumerated eligible
uses in this category.
Public Comment: Several commenters
requested clarification on eligible uses
of funds for medical care; Treasury
addresses those comments in the section
Medical Expenses below.
Public Comment: Recipients posed
questions on the type and scope of
activities eligible as ‘‘supports for
vulnerable populations to access
medical or public health services.’’
Treasury Response: Enumerated
eligible uses should be considered in
the context of the eligible use category
or section where they appear; in this
case, ‘‘supports for vulnerable
populations to access medical or public
health services’’ appears in the section
COVID–19 Mitigation and Prevention.
As such, these eligible uses should help
vulnerable or high-risk populations
access services that mitigate COVID–19,
for example, transportation assistance to
reach vaccination sites, mobile
vaccination or testing programs, or on-
site vaccination or testing services for
homebound individuals, those in group
homes, or similar settings.
Public Comment: Some commenters
asked whether ‘‘enhancement of public
health data systems’’ could include
investments in software, databases, and
other information technology resources
that support responses to the COVID–19
public health emergency but also
provide benefits for other use cases and
long-term capacity of public health
departments and systems.
Treasury Response: These are
permissible uses of funds under the
interim final rule and remain eligible
under the final rule.
Assistance to Businesses and Nonprofits
To Implement COVID–19 Mitigation
Strategies
Background: As detailed above,
Treasury received many public
comments describing uncertainty about
which eligible use category should be
used to assess different potential uses of
funds. As a result, Treasury has re-
categorized some uses of funds in the
final rule to provide greater clarity,
consistent with the principle that uses
of funds should be assessed based on
their intended beneficiary. For example,
COVID–19 mitigation and prevention
serves the general public or specific
populations within the public.
However, in the interim final rule,
assistance to small businesses,
nonprofits, and impacted industries to
implement COVID–19 mitigation and
prevention strategies was categorized in
the respective sections within Negative
Economic Impacts. The final rule
consolidates all COVID–19 mitigation
and prevention within Public Health.
Public Comment: Treasury has
received multiple comments and
questions about which eligible use
permits the recipient to provide
assistance to businesses and nonprofits
to address the public health impacts of
COVID–19.
Treasury Response: In the final rule,
these services have been re-categorized
under COVID–19 mitigation and
prevention to reflect the fact that this
assistance responds to public health
impacts of the pandemic rather than the
negative economic impacts to a small
business, nonprofit, or impacted
industry. When providing COVID–19
mitigation and prevention services,
recipients can identify the impacted
entity as small businesses, nonprofits, or
businesses in impacted industries in
general. As with all enumerated eligible
uses, recipients may presume that all
COVID–19 mitigation and prevention
programs and services are reasonably
proportional responses to the harm
identified unless a response is grossly
disproportionate to the type or extent of
harm experienced. Note that capital
expenditures are not considered
‘‘programs and services’’ and are not
presumed to be reasonably proportional
responses to an identified harm except
as provided in section Capital
Expenditures in General Provisions:
Other. In other words, recipients can
provide any COVID–19 prevention or
mitigation service to small businesses,
nonprofits, and businesses in impacted
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4355 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 76 See Centers for Disease Control and Prevention,
Participate in Outdoor and Indoor Activities,
https://www.cdc.gov/coronavirus/2019-ncov/daily-
life-coping/outdoor-activities.html (last visited
November 8, 2021).
77 Hotlines or warmlines, crisis intervention,
overdose prevention, infectious disease prevention,
and services or outreach to promote access to
physical or behavioral health primary care and
preventative medicine.
industries without any further analysis
of impacts of the pandemic on those
entities and whether the service is
responsive.
In some cases, this means that an
entity not otherwise eligible to receive
assistance to respond to negative
economic impacts of the pandemic, for
example an entity that did not
experience a negative economic impact,
may still be eligible to receive assistance
under this category for COVID–19
mitigation and prevention services.
Uses of funds can include loans,
grants, or in-kind assistance to small
businesses, nonprofits, or other entities
to implement COVID–19 prevention or
mitigation tactics, such as vaccination;
testing; contact tracing programs;
physical plant changes to enable greater
use of outdoor spaces or ventilation
improvements; enhanced cleaning
efforts; and barriers or partitions. For
example, this would include assistance
to a restaurant to establish an outdoor
patio, given evidence showing much
lower risk of COVID–19 transmission
outdoors.
76 Uses of funds can also
include aid to travel, tourism,
hospitality, and other impacted
industries to implement COVID–19
mitigation and prevention measures to
enable safe reopening, for example,
vaccination or testing programs,
improvements to ventilation, physical
barriers or partitions, signage to
facilitate social distancing, provision of
masks or personal protective equipment,
or consultation with infection
prevention professionals to develop safe
reopening plans.
Recipients providing assistance to
small businesses, nonprofits, or
impacted industries that includes
capital expenditures (i.e., expenditures
on property, facilities, or equipment)
should also review the section Capital
Expenditures in General Provisions:
Other, which describes eligibility
standards for these expenditures.
Recipients providing assistances in the
form of loans should review the section
Treatment of Loans Made with SLFRF
Funds in General Provisions: Other.
Recipients should also be aware of the
difference between beneficiaries of
assistance and subrecipients when
working with small businesses,
nonprofits, or impacted industries. As
noted above, Treasury presumes that the
general public, as well as small
businesses, nonprofits, and impacted
industries in general, has been impacted
by the COVID–19 disease itself and is
eligible for services that mitigate or
prevent COVID–19 spread. As such, a
small business, nonprofit, or impacted
industry receiving assistance to
implement COVID–19 mitigation
measures is a beneficiary of assistance
(e.g., granting funds to a small business
to develop an outdoor patio to reduce
transmission). In contrast, if a recipient
contracts with, or grants funds to, a
small business, nonprofit, or impacted
industry to carry out an eligible use for
COVID–19 mitigation on behalf of the
recipient, the entity is a subrecipient
(e.g., contracting with a small business
to operate COVID–19 vaccination sites).
For further information on
distinguishing between beneficiaries
and subrecipients, as well as the
impacts of the distinction on reporting
and other requirements, see section
Distinguishing Subrecipients versus
Beneficiaries.
b. Medical Expenses
Background: The interim final rule
also included as an enumerated eligible
use medical expenses, including
medical care and services to address the
near-term and potential longer-term
impacts of the disease on individuals
infected.
Public Comment: Some commenters
sought clarification on the types of
medical expenses eligible and for
whom, including whether funds could
be used under this category for
expanding health insurance coverage
(e.g., subsidies for premiums, expanding
a group health plan), improvements to
healthcare facilities or establishment of
new medical facilities, direct costs of
medical services, and costs to a self-
funded health insurance plan (e.g., a
county government health plan) for
COVID–19 medical care.
Treasury Response: In the final rule,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers costs related to medical care
provided directly to an individual due
to COVID–19 infection (e.g., treatment)
or a potential infection (e.g., testing).
This can include medical costs to
uninsured individuals; deductibles, co-
pays, or other costs not covered by
insurance; costs for uncompensated care
at a health provider; emergency medical
response costs; and, for recipients with
a self-funded health insurance plan,
excess health insurance costs due to
COVID–19 medical care. These are
medical expenses due to COVID–19 and
distinguish this category of eligible uses
from other related eligible uses, like
COVID–19 mitigation and prevention
and health insurance expenses to
households, to provide greater clarity
for recipients in determining which
category of eligible uses they should
review to assess a potential use of funds.
For discussion of eligibility for
programs to expand health insurance
coverage, see section Assistance to
Households.
c. Behavioral Health Care
Background: Recognizing that the
public health emergency, necessary
mitigation measures like social
distancing, and the economic downturn
have exacerbated mental health and
substance use challenges for many
Americans, the interim final rule
included an enumerated eligible use for
mental health treatment, substance use
treatment, and other behavioral health
services, including a non-exhaustive list
of specific services that would be
eligible under this category.
Public Comment: Many commenters
expressed support for the interim final
rule’s recognition of behavioral health
impacts of the pandemic and eligible
uses under this category. Several
commenters requested clarification on
the types of eligible services under this
category, specifically whether both
acute and chronic care are included as
well as services that often do not
directly accept insurance payments, like
peer support groups. Some commenters
highlighted the importance of cultural
competence in providing effective
behavioral health services. Some
commenters suggested that funding
should be available broadly and quickly
for this purpose, recommending that
funding available for behavioral health
not be tied to the amount of revenue
loss experienced by the recipient.
Treasury Response: In the final rule,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers an expansive array of services
for prevention, treatment, recovery, and
harm reduction for mental health,
substance use, and other behavioral
health challenges caused or exacerbated
by the public health emergency. The
specific services listed in the interim
final rule also remain eligible.
77 Treasury is further clarifying that
when providing behavioral health
services, recipients can identify the
impacted population as the general
public and, as with all enumerated
eligible uses, presume that all programs
and services are reasonably proportional
responses to the harm identified unless
a response is grossly disproportionate to
the type or extent of harm experienced.
In contrast, capital expenditures are not
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4356 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 78 However, SLFRF funds may not be used to
reimburse a service that was also billed to
insurance.
79 In line with the Department of Health and
Human Services, Overdose Prevention Strategy,
https://www.hhs.gov/overdose-prevention/, and the
Office of National Drug Control Policy,
Administration’s Statement on Drug Policy
Priorities for Year One (April 1, 2021), https://
www.whitehouse.gov/wp-content/uploads/2021/03/
BidenHarris-Statement-of-Drug-Policy-Priorities-
April-1.pdf.
considered ‘‘programs and services’’ and
are not presumed to be reasonably
proportional responses to an identified
harm except as provided in section
Capital Expenditures in General
Provisions: Other.
In other words, recipients can provide
behavioral health services to members
of the general public without any
further analysis of impacts of the
pandemic on those individuals and
whether the service is responsive.
Recipients may also use this eligible use
category to respond to increased rates of
behavioral health challenges at a
population level or, at an individual
level, new behavioral health challenges
or exacerbation of pre-existing
challenges, including new barriers to
accessing treatment.
Services that respond to these impacts
of the public health emergency may
include services across the continuum
of care, including both acute and
chronic care, such as prevention,
outpatient treatment, inpatient
treatment, crisis care, diversion
programs (e.g., from emergency
departments or criminal justice system
involvement), outreach to individuals
not yet engaged in treatment, harm
reduction, and supports for long-term
recovery (e.g., peer support or recovery
coaching, housing, transportation,
employment services).
Recipients may also provide services
for special populations, for example,
enhanced services in schools to address
increased rates of behavioral health
challenges for youths, mental health
first responder or law enforcement-
mental health co-responder programs to
divert individuals experiencing mental
illness from the criminal justice system,
or services for pregnant women with
substance use disorders or infants born
with neonatal abstinence syndrome.
Finally, recipients may use funds for
programs or services to support
equitable access to services and reduce
racial, ethnic, or socioeconomic
disparities in access to high-quality
treatment.
Eligible uses of funds may include
services typically billable to
insurance
78 or services not typically
billable to insurance, such as peer
support groups, costs for residence in
supportive housing or recovery housing,
and the 988 National Suicide Prevention
Lifeline or other hotline services.
Recipients may also use funds in
conjunction with other federal grants or
programs (see section Program
Administration Provisions), though
eligible services under SLFRF are not
limited to those eligible under existing
federal programs.
Given the public health emergency’s
exacerbation of the ongoing opioid and
overdose crisis, Treasury highlights
several ways that funds may be used to
respond to opioid use disorder and
prevent overdose mortality.
79 Specifically, eligible uses of funds
include programs to expand access to
evidence-based treatment like
medications to treat opioid use disorder
(e.g., direct costs or incentives for
emergency departments, prisons, jails,
and outpatient providers to offer
medications and low-barrier treatment),
naloxone distribution, syringe service
programs, outreach to individuals in
active use, post-overdose follow up
programs, programs for diversion from
the criminal justice system, and
contingency management interventions.
Finally, for clarity, Treasury has
addressed the eligibility standard for
capital expenditures, or investments in
property, facilities, or equipment, in one
section of this Supplementary
Information; see section Capital
Expenditures in General Provisions:
Other. Examples of capital expenditures
related to behavioral health that
Treasury recognizes as eligible include
behavioral health facilities and
equipment (e.g., inpatient or outpatient
mental health or substance use
treatment facilities, crisis centers,
diversion centers), as long as they
adhere to the standards detailed in the
Capital Expenditures section.
d. Preventing and Responding to
Violence
Background: The interim final rule
highlighted that some types of violence
had increased during the pandemic and
that the ability of victims to access
services had decreased, noting as an
example the challenges that individuals
affected by domestic violence face in
accessing services. Accordingly, the
interim final rule enumerated as an
eligible use, in disproportionately
impacted communities, evidence-based
community violence intervention
programs. Following the release of the
interim final rule, Treasury received
several recipient questions regarding
whether and how funds may be used to
respond to an increase in crime,
violence, or gun violence in some
communities during the pandemic.
Treasury released further guidance
identifying how enumerated eligible
uses and eligible use categories under
the interim final rule could support
violence reduction efforts, including
rehiring public sector staff, behavioral
health services, and services to address
negative economic impacts of the
pandemic that may aid victims of crime.
The guidance also identified an
expanded set of enumerated eligible
uses to address increased gun violence.
Public Comment: Several commenters
expressed support for this use of funds.
Treasury Response: In the final rule,
Treasury is maintaining enumerated
eligible uses in this area and clarifying
how to apply eligibility standards.
Throughout the final rule, enumerated
eligible uses should respond to an
identified impact of the COVID–19
public health emergency in a reasonably
proportional manner to the extent and
type of harm experienced. Many of the
enumerated eligible uses—like
behavioral health services, services to
improve employment opportunities, and
services to address educational
disparities in disproportionately
impacted communities—that respond to
the public health and negative economic
impacts of the pandemic may also have
benefits for reducing crime or aiding
victims of crime. For example, the
pandemic exacerbated the impact of
domestic violence, sexual assault, and
human trafficking; enumerated eligible
uses like emergency housing assistance,
cash assistance, or assistance with food,
childcare, and other needs could be
used to support survivors of domestic
violence, sexual assault, or human
trafficking who experienced public
health or economic impacts due to the
pandemic.
Public Comment: Several commenters
expressed support for community
violence intervention programs or
argued that traditional public safety
approaches had negatively impacted the
social determinants of health in their
communities. Several commenters
recommended inclusion of approaches
like mental health or substance use
diversion programs.
Treasury Response: Treasury
recognizes the importance of
comprehensive approaches to
challenges like violence. The final rule
includes an enumerated eligible use for
community violence intervention
programs in all communities, not just
the disproportionately impacted
communities eligible under the interim
final rule. Given the increased rate of
violence during the pandemic, Treasury
has determined that this enumerated
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17.A
4357 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 80 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS (last visited
December 7, 2021).
81 Id.
82 U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.
stlouisfed.org/series/UNRATE (last visited
December 7, 2021).
83 U.S. Bureau of Labor Statistics, supra note 80.
84 U.S. Bureau of Labor Statistics, supra note 82.
85 U.S. Bureau of Economic Analysis, Real Gross
Domestic Product [GDPC1], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://fred.
stlouisfed.org/series/GDPC1 (last visited December
7, 2021).
86 U.S. Department of the Treasury, Economy
Statement by Catherine Wolfram, Acting Assistant
Secretary for Economy Policy, for the Treasury
Borrowing Advisory Committee (November 1,
2021), available at https://home.treasury.gov/news/
press-releases/jy0453.
87 Yuka Hayashi, IMF Cuts Global Growth
Forecast Amid Supply-Chain Disruptions,
Pandemic Pressures, Wall Street Journal (October
12, 2021), available at https://www.wsj.com/
articles/imf-cuts-global-growth-forecast-amid-
supply-chain-disruptions-warns-of-inflation-risks-
11634043601.
88 U.S. Bureau of Labor Statistics, supra note 80.
89 U.S. Bureau of Labor Statistics, Civilian Labor
Force Level [CLF16OV], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://fred.
stlouisfed.org/series/CLF16OV (last visited
December 7, 2021).
90 U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian population by sex
and age (December 6, 2021), https://www.bls.gov/
news.release/empsit.t01.htm (last visited December
7, 2021); U.S. Bureau of Labor Statistics, Labor
Force Statistics from the Current Population
Survey: Employment status of the civilian
noninstitutional population by race, Hispanic or
Latino ethnicity, sex, and age (December 6, 2021),
https://www.bls.gov/web/empsit/cpseea04.htm (last
visited December 7, 2021); U.S. Bureau of Labor
Statistics, Labor Force Statistics from the Current
Population Survey: Employment status of the
civilian noninstitutional population 25 years and
over by educational attainment (December 6, 2021),
https://www.bls.gov/web/empsit/cpseea05.htm (last
visited December 7, 2021).
91 Elise Gould & Jori Kandra, Wages grew in 2020
because the bottom fell out of the low-wage labor
market, Economic Policy Institute (Feb. 24, 2021),
https://files.epi.org/pdf/219418.pdf. See also,
Michael Dalton et al., The K-Shaped Recovery:
Examining the Diverging Fortunes of Workers in the
Recovery from the COVID–19 Pandemic using
Business and Household Survey Microdata, U.S.
Bureau of Labor Statistics Working Paper Series
(July 2021), https://www.bls.gov/osmr/research-
papers/2021/pdf/ec210020.pdf.
92 Center on Budget and Policy Priorities,
Tracking the COVID–19 Recession’s Effects on
Food, Housing, and Employment Hardships,
https://www.cbpp.org/research/poverty-and-
inequality/tracking-the-covid-19-economys-effects-
on-food-housing-and (last visited December 17,
2021).
eligible use is responsive to the impacts
of the pandemic in all communities.
The final rule incorporates guidance
issued after the interim final rule on
specifically types of services eligible,
including:
• Evidence-based practices like
focused deterrence, street outreach,
violence interrupters, and hospital-
based violence intervention models,
complete with wraparound services
such as behavioral therapy, trauma
recovery, job training, education,
housing and relocation services, and
financial assistance; and
• Capacity-building efforts at
community violence intervention
programs like funding more
intervention workers, increasing their
pay, providing training and professional
development for intervention workers,
and hiring and training workers to
administer the programs.
Public Comment: Some commenters
sought further clarification on whether
some of the enumerated eligible uses are
considered responsive to all crime,
violent crime, or gun violence.
Treasury Response: Enumerated
eligible uses that respond to an increase
in gun violence may be pursued in
communities experiencing an increase
in gun violence associated with the
pandemic, specifically: (1) Hiring law
enforcement officials—even above pre-
pandemic levels—or paying overtime
where the funds are directly focused on
advancing community policing
strategies for gun violence, (2)
additional enforcement efforts to reduce
gun violence exacerbated by the
pandemic, including prosecuting gun
traffickers, dealers, and other parties
contributing to the supply of crime
guns, as well as collaborative federal,
state, and local efforts to identify and
address gun trafficking channels, and (3)
investing in technology and equipment
to allow law enforcement to more
efficiently and effectively respond to the
rise in gun violence resulting from the
pandemic, for example technology to
assist in the identification of guns
whose serial numbers have been
damaged.
3. Negative Economic Impacts
a. Assistance to Households
Background
While the U.S. economy is now on the
path to a strong recovery, the public
health emergency, including the
necessary measures taken to protect
public health, resulted in significant
economic and financial hardship for
many Americans. As businesses closed,
consumers stayed home, schools shifted
to remote education, and travel declined
precipitously, over 22 million jobs were
lost in March and April 2020.
80 One
year later, in April 2021, the economy
still remained over 8 million jobs below
its pre-pandemic peak,
81 and the
unemployment rate hovered around 6
percent.
82 In the months since Treasury issued
the interim final rule in May 2021, the
economy has made large strides in its
recovery. The economy gained over 4
million jobs in the seven months from
May to November 2021;
83 the
unemployment rate fell more than 1.5
percentage points to 4.2 percent, which
is the lowest rate since February 2020;
84 and the size of the nation’s economy
surpassed the pre-pandemic peak in the
second quarter of 2021.
85 While the economy has made
immense progress in its recovery since
May 2021, the economy has also faced
setbacks that illustrate the continued
risks to the recovery. As the Delta
variant spread across the country this
summer and fall, the United States faced
another severe wave of cases, deaths,
and strain on the healthcare system,
which contributed to a slowdown in the
pace of recovery in the third quarter.
86 Supply chain disruptions have also
demonstrated the difficulties of
restarting a global economy.
87 Moreover, although many Americans
have returned to work as of November
2021, the economy remains 3.9 million
jobs below its pre-pandemic peak,
88 and
2.4 million workers have dropped out of
the labor market altogether relative to
February 2020.
89 Thus, despite much
progress, there is a continued need to
respond to the pandemic’s economic
effects to ensure a full, broad-based, and
equitable recovery.
Indeed, the pandemic’s economic
impacts continue to affect some
demographic groups more than others.
Rates of unemployment remain
particularly severe among workers of
color and workers with lower levels of
educational attainment; for example, the
overall unemployment rate in the
United States was 4.2 percent in
November 2021, but certain groups saw
much higher rates: 6.7 percent for Black
workers, 5.2 percent for Hispanic or
Latino workers, and 5.7 percent for
workers without a high school
diploma.
90 Job losses have also been
particularly steep among low-wage
workers, with these workers remaining
furthest from recovery as of the end of
2020.
91 A severe recession, and its
concentrated impact among low-income
workers, has amplified food and
housing insecurity, with an estimated
nearly 20 million adults living in
households where there is sometimes or
often not enough food to eat and an
estimated 12 million adults living in
households that were not current on
rent.
92 While economic effects have been
seen across many communities, there
are additional disparities by race and
income. For example, approximately
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4358 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 93 Michael Karpman, Dulce Gonzalez, Genevieve
M. Kenney, Parents Are Struggling to Provide for
Their Families during the Pandemic, Urban
Institute (May 2020), https://www.urban.org/
research/publication/parents-are-struggling-
provide-their-families-during-pandemic?utm_
source=urban_researcher&utm_
medium=email&utm_campaign=covid_
parents&utm_term=lhp.
94 Women have carried a larger share of childcare
responsibilities than men during the COVID–19
crisis. See, e.g., Gema Zamarro & Marı´a J. Prados,
Gender differences in couples’ division of
childcare, work and mental health during COVID–
19, Rev. Econ. Household 19:11–40 (2021),
available at https://link.springer.com/article/
10.1007/s11150-020-09534-7; Titan Alon et al., The
Impact of COVID–19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
95 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, Black or African
American Women [LNS11300032], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300032 (last visited
December 7, 2021).
96 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, Black or African
American Men [LNS11300031], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300031 (last visited
December 7, 2021).
97 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, White Women
[LNS11300029], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.stlouis
fed.org/series/LNS11300029 (last visited December
7, 2021).
98 See, e.g., Michael Greenstone & Adam Looney,
Unemployment and Earnings Losses: A Look at
Long-Term Impacts of the Great Recession on
American Workers, Brookings Institution (Nov. 4,
2011), https://www.brookings.edu/blog/jobs/2011/
11/04/unemployment-and-earnings-losses-a-look-
at-long-term-impacts-of-the-great-recession-on-
american-workers/.
99 Chi Chi Wu, Solving the Credit Conundrum:
Helping Consumers’ Credit Records Impaired by the
Foreclosure Crisis and Great Recession, National
Consumer Law Center (Dec. 2013), https://
www.nclc.org/images/pdf/credit_reports/report-
credit-conundrum-2013.pdf.
100 Irwin Garfinkel, Sara McLanahan, Christopher
Wimer, eds., Children of the Great Recession,
Russell Sage Foundation (Aug. 2016), available at
https://www.russellsage.org/publications/children-
great-recession.
101 Kyle J. Casewell and Stephen Zuckerman,
Food Insecurity, Housing Hardship, and Medical
Care Utilization, Urban Institute (June 2018),
available at https://www.urban.org/sites/default/
files/publication/98701/2001896_foodinsecurity_
housinghardship_medicalcareutilization_
finalized.pdf.
102 Housing insecurity is defined as not paying
the full amount of rent or mortgage and/or utility
bills (gas, oil, or electricity) sometime in the
previous 12 months.
103 Housing quality hardship is defined as an
affirmative response to one or more questions
related to problems with a respondent’s physical
dwelling: Pests and/or insects; leaking roof or
ceiling; windows that are broken or cannot shut;
exposed electrical wires; broken plumbing (toilet,
hot water, other); holes in walls, ceiling, or floor;
no appliances (refrigerator or stove); and no phone
(of any kind).
104 Id.
105 Elise Gould and Melat Kassa. Low-wage, low-
hours workers were hit hardest in the COVID–19
recession: The State of Working America 2020
employment report, Economic Policy Institute (May
2021), available at https://www.epi.org/publication/
swa-2020-employment-report/.
106 Id.
107 Id.
108 Id.
109 R. Chetty, J. Friedman, N. Hendren, M.
Stepner, & Team, T. O. I., The Economic Impacts
of COVID–19: Evidence from a New Public Database
Built Using Private Sector Data (No. w27431; p.
w27431) (2020), National Bureau of Economic
Research. https://doi.org/10.3386/w27431.
110 M. Despard, Michal Grinstein-Weiss, Yung
Chun, and Stephen Roll, COVID–19 job and income
loss leading to more hunger and financial hardship,
Brookings Institute (July 13, 2020), https://
www.brookings.edu/blog/upfront/2020/07/13/
covid-19-job-and-income-loss-leading-to-more-
hunger-and-financial-hardship/.
111 N. Panchal, R. Kamal, C. Mun˜ana, & P.
Chidambaram, The Implications of COVID–19 for
Mental Health and Substance Use, Kaiser Family
Foundation (February 10, 2021), https://
half of low-income, Black, and Hispanic
parents reported difficulty covering
costs related to food, housing, utility, or
medical care.
93 Over the course of the
pandemic, inequities also manifested
along gender lines, as schools closed to
in-person activities, leaving many
working families without childcare
during the day.
94 Women of color have
been hit especially hard: The labor force
participation rate for Black women has
fallen by 3.6 percentage points
95 during
the pandemic as compared to 1.3
percentage points for Black men
96 and
1.7 percentage points for White
women.
97 As the economy recovers, the effects
of the pandemic-related recession may
continue to impact households,
including a risk of longer-term effects on
earnings and economic potential. For
example, unemployed workers,
especially those who have experienced
longer periods of unemployment, earn
lower wages over the long term once
rehired.
98 In addition to the labor
market consequences for unemployed
workers, recessions can also cause
longer-term economic challenges
through, among other factors, damaged
consumer credit scores
99 and reduced
familial and childhood wellbeing.100
These potential long-term economic
consequences underscore the continued
need for robust policy support.
Low- and moderate-income
households, those with income levels at
or below 300 percent of the federal
poverty level (FPL), face particular
hardships and challenges. These
households report much higher rates of
food insecurity and housing hardships
than households with higher incomes.
For example, households with incomes
at or below 300 percent FPL are several
times more likely to have reported
struggling with food insecurity
compared to households with income
above 300 percent FPL.
101 Similarly,
low- and moderate-income households
reported being housing insecure
102 at
rates more than twice as high as higher-
income households, and low- and
moderate-income households reported
housing quality hardship
103 at rates
statistically significantly greater than
the rate for higher-income
households.
104 The economic crisis
caused by the pandemic worsened
economic outcomes for workers in many
low- and moderate-income households.
Industries that employed low-wage
workers experienced a disproportionate
level of job loss. For example, from
February 2020 to February 2021, the
hospitality and leisure industry lost
nearly 3.5 million jobs.
105 While the
entire industry was impacted, 72
percent of the job losses occurred in the
lowest wage service occupations
compared to only a 6 percent rate of job
loss in the highest wage management
and finance jobs.
106 Similar trends exist
in other heavily impacted industries. In
public education, the lowest wage
occupations, service and transportation
jobs, saw a job loss rate of 20 and 26
percent, respectively.
107 During that
same time period, the highest wage
occupations in public education,
management, actually saw jobs increase
by 7 percent.
108
While many households suffered
negative economic outcomes as a result
of the COVID–19 pandemic and
economic recession, households with
low incomes were impacted in
disproportionate and exceptional ways.
From January 2020 to March 2021, low-
wage workers experienced job loss at a
rate five times higher than middle-wage
workers, and high-wage workers
actually experienced an increase in job
opportunities.
109 Because workers in
low-income households were more
likely to lose their job or experience
reductions in pay, those same
households were also more likely to
experience economic hardships like
trouble paying utility bills, affording
rent or mortgage payments, purchasing
food, and paying for medical
expenses.
110 The disproportionate
negative impacts the pandemic has had
on low-income families extend beyond
financial insecurity. For example, low-
income families have reported higher
levels of social isolation, stress, and
other negative mental health outcomes
during the pandemic. While over half of
all U.S. adults report that their mental
health was negatively affected by the
pandemic, adults with low incomes
reported major negative mental health
impacts at a rate nearly twice that of
adults with high incomes.
111
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4359 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations www.kff.org/coronavirus-covid-19/issue-brief/the-
implications-of-covid-19-for-mental-health-and-
substance-use/.
112 For which recipients may presume that any
student who did not have access to in-person
instruction for a significant period of time was
impacted by the pandemic.
Summary of Interim Final Rule and
Final Rule Structure
Summary: The interim final rule
provided a non-exhaustive list of
enumerated eligible uses to respond to
the negative economic impacts of the
pandemic through assistance to
households, as well as a standard for
assessing whether uses of funds beyond
those enumerated are eligible.
The interim final rule described
enumerated eligible uses for assistance
to households in several categories: (1)
Assistance to unemployed workers, (2)
state Unemployment Insurance Trust
Funds, (3) assistance to households, and
(4) expenses to improve the efficacy of
economic relief. Note that the interim
final rule posed several questions to the
public on enumerated eligible uses for
assistance to households; comments on
these questions are addressed in the
relevant subject matter section below.
In addition, in recognition that pre-
existing health, economic, and social
disparities contributed to
disproportionate pandemic impacts in
certain communities, the interim final
rule also provided a broader list of
enumerated eligible uses to respond to
the pandemic in disproportionately
impacted communities, specifically: (1)
Building stronger communities through
investments in housing and
neighborhoods, (2) addressing
educational disparities, and (3)
promoting healthy childhood
environments. In the interim final rule,
under the Public Health section,
recipients could also provide services to
address health disparities and increase
access to health and social services;
these eligible uses have been re-
organized into the Assistance to
Households section to consolidate
responses in disproportionately
impacted communities and enhance
clarity.
This section addresses enumerated
eligible uses in the final rule to respond
to negative economic impacts to
households. As a reminder, recipients
may presume that a household or
population that experienced
unemployment, experienced increased
food or housing insecurity, or is low or
moderate income experienced negative
economic impacts resulting from the
pandemic, and recipients may provide
services to them that respond to these
impacts, including these enumerated
eligible uses.
For guidance on how to determine
whether a particular use, beyond those
enumerated, is eligible; further detail on
which households and communities are
presumed eligible for services; and how
to identify eligible households and
communities beyond those presumed
eligible, see section General Provisions:
Structure and Standards.
Reorganizations and Cross-
References: The final rule reorganizes
all enumerated eligible uses for
impacted and disproportionately
impacted households into the section
Assistance to Households, with the
exception that expenses to improve the
efficacy of economic relief has been re-
categorized into a different section of
the final rule for increased clarity; for
discussion of that use category, see
section General Provisions: Other.
Note that in conducting this
reorganization, and based on further
analysis and in response to comments,
Treasury has determined that several
enumerated uses included in the
interim final rule for disproportionately
impacted communities are directly
responsive to negative economic
impacts experienced by impacted
households. In the final rule, these uses
have been moved from
‘‘disproportionately impacted’’ to
‘‘impacted’’ households accordingly,
making these services available to both
disproportionately impacted and
impacted households. These uses
include assistance applying for public
benefits or services; programs or
services that address or mitigate the
impacts of the COVID–19 public health
emergency on childhood health or
welfare, including childcare, early
learning services, programs to provide
home visits, and services for families
involved in the child welfare system
and foster youth; programs to address
the impacts of lost instructional time for
students;
112 and programs or services
that address housing insecurity, lack of
affordable housing, or homelessness.
The following activities remain
enumerated eligible uses for
disproportionately impacted
households: Remediation of lead paint
or other lead hazards; housing vouchers
and assistance relocating to
neighborhoods with higher levels of
economic opportunity; and programs or
services that address educational
disparities, including assistance to high-
poverty school districts to advance
equitable funding across districts and
geographies and evidence-based
services to address the academic, social,
emotional, and mental health needs of
students.
Enumerated Eligible Uses for Impacted
Households
The interim final rule included
several enumerated eligible uses to
provide assistance to households or
populations facing negative economic
impacts due to COVID–19. Enumerated
eligible uses included: Food assistance;
rent, mortgage, or utility assistance;
counseling and legal aid to prevent
eviction or homelessness; emergency
assistance for burials, home repairs,
weatherization, or other needs; internet
access or digital literacy assistance; cash
assistance; or job training to address
negative economic or public health
impacts experienced due to a worker’s
occupation or level of training. It also
posed a question as to what other types
of services or costs Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID–19.
This section addresses each of these
enumerated eligible uses in turn, with
the exception of job training, which has
been re-categorized for increased clarity
to the eligible use for ‘‘assistance to
unemployed and underemployed
workers.’’ In general, commenters
supported inclusion of these
enumerated eligible uses to address key
economic needs among households due
to the pandemic, and Treasury is
maintaining these eligible uses in the
final rule, in line with commenters’
recommendations.
1. Food assistance. The interim final
rule included an enumerated eligible
use for food assistance. Some
commenters expressed support for this
eligible use and emphasized the
importance of aid to address food
insecurity. Some commenters raised
questions as to whether food assistance
funds could be used to augment services
provided through organizations like
food banks, churches, and other food
delivery services, or generally be sub-
awarded to these organizations.
Treasury Response: Treasury is
maintaining this enumerated eligible
use without change. Recipients may, as
was the case under the interim final
rule, administer programs through a
wide range of entities, including
nonprofit and for-profit entities, to carry
out eligible uses on behalf of the
recipient government (see section
Distinguishing Subrecipients versus
Beneficiaries). Further, Treasury is
clarifying that capital expenditures
related to food banks and other facilities
primarily dedicated to addressing food
insecurity are eligible; recipients
seeking to use funds for capital
expenditures should refer to the section
Capital Expenditures in General
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4360 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 113 See FAQ 2.21. Coronavirus State and Local
Fiscal Recovery Funds, Frequently Asked
Questions, as of July 19, 2021; https://
home.treasury.gov/system/files/136/SLFRPFAQ.pdf.
114 Jung Hyun Choi, Laurie Goodman, and Daniel
Pang, The Pandemic Is Making It Difficult for Mom-
and-Pop Landlords to Maintain Their Properties,
Urban Institute (July 23, 2021), https://
www.urban.org/urban-wire/pandemic-making-it-
difficult-mom-and-pop-landlords-maintain-their-
properties.
115 U.S. Energy Information Administration,
Residential Energy Consumption Survey (2017),
Retrieved from https://www.eia.gov/consumption/
residential/data/2015/hc/php/hc11.1.php.
D. Herna´ndez, Understanding ‘energy insecurity’
and why it matters to health, Social Science &
Medicine, 167, 1–10 (2016), https://doi.org/
10.1016/j.socscimed.2016.08.029.
116 Herna´ndez, D. (2016). Understanding ‘energy
insecurity’ and why it matters to health. Social
Science & Medicine, 167, 1–10. https://doi.org/
10.1016/j.socscimed.2016.08.029.
117 U.S. Energy Information Administration,
Residential Energy Consumption Survey (RECS)
https://www.eia.gov/consumption/residential/data/
2015/hc/php/hc11.1.php. (last visited November 9,
2021)
Provisions: Other for additional
eligibility standards that apply to uses
of funds for capital expenditures.
2. Emergency housing assistance. The
interim final rule included an
enumerated eligible use for rent,
mortgage, or utility assistance and
counseling and legal aid to prevent
eviction or homelessness.
Public Comment: Several commenters
supported the inclusion of eviction
prevention activities as an eligible use
given the high number of households
behind on rent and potentially at risk of
eviction. Following release of the
interim final rule, Treasury had also
received requests for elaboration on the
types of eligible services in this
category. Some commenters also
recommended including assistance to
households for delinquent property
taxes, for example to prevent tax
foreclosures on homes, as an
enumerated eligible use.
Treasury Response: In response to
requests for elaboration on the types of
eligible services for eviction prevention,
Treasury has provided further guidance
that these services include ‘‘housing
stability services that enable eligible
households to maintain or obtain
housing, such as housing counseling,
fair housing counseling, case
management related to housing stability,
outreach to households at risk of
eviction or promotion of housing
support programs, housing related
services for survivors of domestic abuse
or human trafficking, and specialized
services for individuals with disabilities
or seniors that support their ability to
access or maintain housing,’’ as well as
‘‘legal aid such as legal services or
attorney’s fees related to eviction
proceedings and maintaining housing
stability, court-based eviction
prevention or eviction diversion
programs, and other legal services that
help households maintain or obtain
housing.’’
113 Treasury also emphasized
that recipients may work with court
systems, nonprofits, and a wide range of
other organizations to implement
strategies to support housing stability
and prevent evictions.
In the final rule, Treasury is
maintaining these enumerated eligible
uses, including those described in the
interim final rule and later guidance, in
line with commenters’
recommendations. To enhance clarity,
Treasury is also elaborating on some
types of services included under this
eligible use category; this remains a
non-exhaustive list of eligible services.
For example, eligible services under this
use category include: Rent, rental
arrears, utility costs or arrears (e.g.,
electricity, gas, water and sewer, trash
removal, and energy costs, such as fuel
oil), reasonable accrued late fees (if not
included in rental or utility arrears),
mortgage payment assistance, financial
assistance to allow a homeowner to
reinstate a mortgage or to pay other
housing-related costs related to a period
of forbearance, delinquency, or default,
mortgage principal reduction,
facilitating mortgage interest rate
reductions, counseling to prevent
foreclosure or displacement, relocation
expenses following eviction or
foreclosure (e.g., rental security
deposits, application or screening fees).
Treasury is clarifying that assistance to
households for delinquent property
taxes, for example to prevent tax
foreclosures on homes, was permissible
under the interim final rule and
continues to be so under the final rule.
In addition, Treasury is also clarifying
that recipients may administer utility
assistance or address arrears on behalf
of households through direct or bulk
payments to utility providers to
facilitate utility assistance to multiple
consumers at once, so long as the
payments offset customer balances and
therefore provide assistance to
households.
This eligible use category also
includes emergency assistance for
individuals experiencing homelessness,
either individual-level assistance (e.g.,
rapid rehousing services) or assistance
for groups of individuals (e.g., master
leases of hotels, motels, or similar
facilities to expand available shelter).
Further, Treasury is clarifying that
transitional shelters (e.g., temporary
residences for people experiencing
homelessness) are eligible capital
expenditures. Recipients seeking to use
funds for capital expenditures should
refer to the section Capital Expenditures
in General Provisions: Other for
additional eligibility standards that
apply to uses of funds for capital
expenditures.
Note that this enumerated eligible use
describes ‘‘emergency housing
assistance,’’ or assistance for responses
to the immediate or near-term negative
economic impacts of the pandemic. The
final rule also clarifies and expands the
ability of recipients to use SLFRF funds
to address the general lack of affordable
housing and housing challenges
underscored by the pandemic. For
discussion of affordable housing eligible
uses, including services that primarily
increase access to affordable, high-
quality housing and support stable
housing and homeownership over the
long term, see the eligible use for
‘‘promoting long-term housing security:
Affordable housing and homelessness.’’
3. Emergency assistance for pressing
needs: Burials, home repairs,
weatherization, or other needs. The
interim final rule included an
enumerated eligible use for emergency
assistance for burials, home repairs,
weatherization, and other needs; these
types of programs may provide
emergency assistance for pressing and
unavoidable household needs. Treasury
did not receive comments on this
eligible use and is maintaining it in the
final rule.
Background on Home Repairs and
Weatherization: The economic
downturn has meant fewer households
had the resources needed to make
necessary home repairs and
improvements. In May 2021, 28 percent
of landlords reported deferring
maintenance and 27 percent of tenants
reported maintenance requests going
unanswered.
114 While small and
cosmetic repairs can often wait,
deferring major repairs, such as
plumbing needs, can result in unsafe
and unhealthy living environments and,
eventually, the need for more expensive
repairs and fixes.
In addition to repairs, many homes
are in need of weatherization.
Weatherization assistance helps low-
and moderate-income Americans save
energy, reduce their utility bills, and
keeps them and their homes safe. One
in three households is energy
insecure,
115 meaning they do not have
the ability to meet their energy needs.116
Weatherization efforts are particularly
important for low- and moderate-
income households. Households of
color, renters, and households with low
or moderate incomes are all more likely
to report energy insecurity.
117 These
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4361 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 118 A. Drehobl, & L. Ross, Lifting the high energy
burden in America’s largest cities: How energy
efficiency can improve low income and
underserved communities, American Council for an
Energy Efficient Economy (2016), https://
www.aceee.org/sites/default/files/publications/
researchreports/u1602.pdf.
119 See, e.g., Nation Telecommunications and
Information Administration, More than Half of
American Households Used the Internet for Health-
Related Activities in 2019, NTIA Data Show
(December 7, 2020), https://www.ntia.gov/blog/
2020/more-half-american-households-used-
internet-health-related-activities-2019-ntia-data-
show; Nation Telecommunications and Information
Administration, Nearly a Third of American
Employees Worked Remotely in 2019, NTIA Data
Show (September 3, 2020) https://www.ntia.gov/
blog/2020/nearly-third-american-employees-
worked-remotely-2019-ntia-data-show; and
generally, Nation Telecommunications and
Information Administration, Digital Nation Data
Explorer (June 10, 2020), https://www.ntia.gov/
data/digital-nation-data-explorer.
120 BroadbandSearch Blog Post, How Do U.S.
Internet Costs Compare To The Rest Of The World?,
available at https://www.broadbandsearch.net/blog/
internet-costs-compared-worldwide.
121 Pew Research Center, Mobile Technology and
Home Broadband 2021 (June 3, 2021), https://
www.pewresearch.org/internet/2021/06/03/mobile-
technology-and-home-broadband-2021/.
122 Pew Research Center, 53% of Americans Say
the internet Has Been Essential During the COVID–
19 Outbreak (April 30, 2020), https://www.pew
research.org/internet/2020/04/30/53-of-americans-
say-the-internet-has-been-essential-during-the-
covid-19-outbreak/.
123 Id.
disparities are partially a result of
economic hardship but are also caused
by inequitable access to housing with
proper insulation, up to date heating,
cooling, and ventilation systems, and
functioning and up to date lighting and
appliances.
118 While programs that
address the effects of energy hardships,
like the Low-Income Home Energy
Assistance Program (LIHEAP), are
critical, weatherization attempts to
address root causes by addressing issues
that lead to energy insecurities.
4. Internet access or digital literacy
assistance. The interim final rule
included an enumerated eligible use for
assistance to households for internet
access or digital literacy assistance. This
enumerated eligible use, which
responds to the negative economic
impacts of the pandemic on a household
by providing assistance that helps them
secure internet access or increase their
ability to use computers and the
internet, is separate from the eligible use
category for investments in broadband
infrastructure, under Sections
602(c)(1)(D) and 603(c)(1)(D), which is
used to build new broadband networks
through infrastructure construction or
modernization. For discussion of
broadband infrastructure investment in
the final rule, see section Broadband
Infrastructure in Infrastructure.
Background: The COVID–19 public
health emergency has underscored the
importance of universally available,
high-speed, reliable, and affordable
broadband coverage as millions of
Americans rely on the internet to
participate in, among other critical
activities, school, healthcare, and work.
Recognizing the need for such
connectivity, SLFRF funds can be used
to make necessary investments in
broadband infrastructure that increase
access over the long term, as well as the
necessary supports to purchase internet
access or gain digital literacy skills
needed to complete activities of daily
living during the pandemic.
The National Telecommunications
and Information Administration (NTIA)
highlighted the growing necessity of
broadband in daily lives through its
analysis of NTIA internet Use Survey
data, noting that Americans turn to
broadband internet service for every
facet of daily life including work, study,
and healthcare.
119 With increased use of
technology for daily activities and the
movement by many businesses and
schools to operating remotely during the
pandemic, broadband has become even
more critical for people across the
country to carry out their daily lives.
However, even in areas where
broadband infrastructure exists,
broadband access may be out of reach
for millions of Americans because it is
unaffordable, as the United States has
some of the highest broadband prices in
the Organisation for Economic Co-
operation and Development (OECD).
120
According to a 2021 Pew Research
Center study, 20 percent of non-
broadband users say that the monthly
cost of home broadband is the primary
reason they do not have broadband at
home, and 40 percent say that cost is
one reason for their lack of home
broadband.
121 Further, according to
another survey, 22 percent of parents
with homebound schoolchildren during
the COVID–19 pandemic say that it is
very or somewhat likely that their
children will have to rely on public wi-
fi to finish their schoolwork because
there is no reliable internet connection
at home; this percentage nearly doubles
for lower-income parents, 40 percent of
whom noted that their children will
have to rely on public wi-fi.
122 The
same survey showed that 36 percent of
lower-income parents with homebound
children say their child will not be able
to complete their schoolwork because
they do not have access to a computer
at home.
123
Public Comment: Many commenters
highlighted the importance of
broadband access during the pandemic,
including for remote work and
education, and argued that affordability
presents a major barrier to broadband
adoption by households; in other words,
many households live in areas that have
broadband infrastructure and service
available but are unable to purchase
service for their household due to the
high cost. These commenters argued
that broadband must be affordable to be
accessible.
Commenters proposed several
potential responses to affordability
concerns. Some commenters
recommended that building ‘‘gap
networks,’’ or broadband networks built
at low cost to provide affordable service
in areas where it is lacking, be eligible
as assistance to households to respond
to the negative economic impacts of the
pandemic, even if they do not meet the
technical standards for eligibility under
the eligible use category of broadband
infrastructure investment, especially the
required speed standards for new
service. These commenters argued that
the networks have shown promise as a
timely means to expand access to
affordable broadband internet during
the pandemic, even if they may not
provide service speeds needed for more
intensive internet uses. Another
commenter requested eligible uses
include funding cellular towers to
decrease costs. One commenter
recommended that affordability should
be addressed through other programs
but not SLFRF given that affordability
and availability may require nuanced
solutions that would be complex to
combine.
Treasury Response: The interpretive
framework and enumerated eligible uses
allow recipients flexibility to address
identified pandemic impacts, including
through solutions that take into account
the particularized issues in their
community. Given extensive commenter
feedback on the importance of
affordability to achieving broadband
access, and the centrality of broadband
to participating in work, education,
healthcare, and other activities during
the pandemic, affordability programs
are an appropriate eligible use to
respond to the negative economic
impacts of the pandemic and Treasury
is maintaining the enumerated eligible
use for assistance to households for
internet access and digital literacy
programs in the final rule.
Building or constructing new
broadband networks is an infrastructure
investment and is governed by a
separate clause in the statute. Treasury
has addressed comments on ‘‘gap
networks’’ that require infrastructure
build-out in the section Broadband
Infrastructure in Infrastructure.
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4362 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 124 Amy Finkelstein & Matthew J Notowidigdo,
Take-Up and Targeting: Experimental Evidence
from SNAP, The Quarterly Journal of Economics,
vol 134(3), pages 1505–1556 (2019), https://
www.nber.org/papers/w24652.
Public Comment: Some commenters
also use the term ‘‘gap networks’’ to
refer to equipment installed as part of
wi-fi systems, such as routers, repeaters,
and access points; this equipment
provides consumer access to an existing
broadband network and does not require
new network build-out or construction.
These commenters recommended that
Treasury permit, as assistance to
households for internet access,
investments in public wi-fi networks,
free wi-fi in public housing
communities, and other equipment that
offers internet access to end users by
utilizing existing broadband networks.
Other commenters recommended that
eligible uses in this category include
providing devices and equipment
necessary to access the internet, like
computers and routers, directly to low-
income households.
Treasury Response: Treasury has
determined that these services, which
expand internet access without
constructing new networks, are an
appropriate enumerated eligible use as
assistance to households to respond to
a negative economic impact, and they
are permitted under the final rule.
Treasury is clarifying that eligible uses
under this category can also include a
wide range of programs and services to
expand internet access and digital
literacy, such as subsidies for the cost of
internet service, other programs that
support adoption of internet service
where available, digital literacy
programs, or programs that provide
devices and equipment to access the
internet (e.g., programs that provide
equipment like tablets, computers, or
routers) to households. Recipients
seeking to use funds for equipment
should refer to the section Capital
Expenditures in General Provisions:
Other for additional eligibility standards
that apply to uses of funds for capital
expenditures (e.g., equipment, property,
and facilities).
5. Cash assistance. The interim final
rule included as an enumerated eligible
use cash assistance and provided that
cash transfers must be ‘‘reasonably
proportional’’ to the negative economic
impact they address and may not be
‘‘grossly in excess of the amount needed
to address’’ the impact. In assessing
whether a transfer is reasonably
proportional, recipients may ‘‘consider
and take guidance from the per person
amounts previously provided by the
Federal Government in response to the
COVID–19 crisis,’’ and transfers
‘‘grossly in excess of such amounts’’ are
not eligible.
Public Comment: Several commenters
expressed support for this eligible use,
noting that this is a common policy tool
for some governments to support the
well-being of households and
individuals in their communities. Some
commenters requested that Treasury set
a specific dollar amount for permissible
cash transfers, and Treasury has also
received recipient questions on whether
specific types of transfers, such as those
to a substantial share of the population
in the jurisdiction, would be a
permissible use of funds.
Treasury Response: Treasury is
maintaining this enumerated eligible
use in the final rule, in line with
commenters’ recommendations. Because
the final rule is intended to provide
flexibility to recipients to respond to the
particularized pandemic impacts in
their communities, which may vary in
type and intensity, setting a specific
dollar threshold for eligible cash
transfers would fail to recognize the
particularized needs of communities
and limit recipients’ flexibility to tailor
their response to those needs.
To provide greater clarity, Treasury is
elaborating on the analysis that
recipients may undertake to assess the
eligibility of specific cash assistance
programs or transfers. Cash transfers,
like all eligible uses in this category,
must respond to the negative economic
impacts of the pandemic on a household
or class of households. For the reasons
discussed above, recipients may
presume that low- and moderate-income
households (as defined in the final rule),
as well as households that experienced
unemployment, food insecurity, or
housing insecurity, experienced a
negative economic impact due to the
pandemic.
Recipients may also identify other
households or classes of households
that experienced a negative economic
impact of the pandemic and provide
cash assistance that is reasonably
proportional to, and not grossly in
excess of, the amount needed to address
the negative economic impact. For
example, in the ARPA, Congress
authorized Economic Impact Payments
to households at certain income levels,
identifying and responding to a negative
economic impact of the pandemic on
these households.
Finally, Treasury has reiterated in the
final rule that responses to negative
economic impacts should be reasonably
proportional to the impact that they are
intended to address. Uses that bear no
relation or are grossly disproportionate
to the type or extent of harm
experienced would not be eligible uses.
Reasonably proportional refers to the
scale of the response compared to the
scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced; for example, it may not be
reasonably proportional for a cash
assistance program to provide assistance
in a very small amount to a group that
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm.
6. Survivor’s benefits. The interim
final rule included an enumerated
eligible use for survivor’s benefits to
surviving family members of
individuals who have died from
COVID–19, including cash assistance to
widows, widowers, or dependents.
Public Comment: Treasury did not
receive any comments on the inclusion
of survivor’s benefits as an enumerated
use for impacted households in the
interim final rule.
Treasury Response: This use of funds
remains eligible under the final rule.
Consistent with the general
reorganization noted above, the final
rule organizes survivor’s benefits under
assistance to households to clarify that
households are the intended
beneficiaries of survivor’s benefits.
7. Assistance accessing or applying
for public benefits or services.
Recognizing that eligible households
often face barriers to accessing public
benefits or services that improve health
and economic outcomes, the interim
final rule included as an enumerated
eligible use in disproportionately
impacted communities, public benefits
navigators to assist community members
with navigating and applying for
available federal, state, and local public
benefits or services. Treasury also
clarified in subsequent guidance after
the interim final rule that this eligible
use category would include outreach
efforts to increase uptake of the Child
Tax Credit.
Background: The under-enrollment of
eligible households in social assistance
programs is a well-recognized and
persistent challenge. There are many
reasons why a household may not be
receiving a particular benefit even
though they are eligible. For many
federal programs, enrollment processes
vary from state-to-state. Sometimes,
households are simply unaware that
they are eligible for a particular
benefit.
124 For example, despite having
one of the highest rates of participation
of any benefits program, nearly 20
percent of eligible individuals do not
participate in the Supplementary
Nutritional Assistance Program
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4363 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 125 United States Department of Agriculture,
Trends in Supplemental Nutrition Assistance
Program Participation Rates: Fiscal Year 2016 to
Fiscal Year 2018 (May 2021), https://fns-prod.
azureedge.net/sites/default/files/resource-files/
Trends2016-2018.pdf.
126 Jeremy Barofsky et al., Spreading Fear: The
Announcement Of The Public Charge Rule Reduced
Enrollment In Child Safety-Net Programs, Health
Affairs (October 2020), https://www.health
affairs.org/doi/full/10.1377/hlthaff.2020.00763.
127 See, e.g., U.S. Department of the Treasury, By
ZIP Code: Number of Children under Age 18 with
a Social Security Number Who Are Not Found on
a Tax Year 2019 or 2020 Tax Return but who
Appear on a Tax Year 2019 Form 1095 and
Associated Number of Policy Holders (June 2021),
https://home.treasury.gov/system/files/131/
Estimated-Counts-of-Children-Unclaimed-for-CTC-
by-ZIP-Code-2019.pdf.
128 Women have carried a larger share of
childcare responsibilities than men during the
COVID–19 crisis. See, e.g., Gema Zamarro & Mar(´a
J. Prados, Gender differences in couples’ division of
childcare, work and mental health during COVID–
19, Rev. Econ. Household 19:11–40 (2021),
available at https://link.springer.com/article/
10.1007/s11150-020-09534-7; Titan Alon et al., The
Impact of COVID–19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
129 See, e.g., Center For The Study Of Child Care
Employment (CSCCE), Child Care Sector Jobs: BLS
Analysis (November 8, 2021), https://cscce.
berkeley.edu/child-care-sector-jobs-bls-analysis/;
Emma K. Lee, and Zachary Parolin. The Care
Burden during COVID–19: A National Database of
Child Care Closures in the United States, Socius
(January 2021), doi:10.1177/23780231211032028.
130 Jason Furman, Melissa Schettini Kearney, and
Wilson Powell, The Role of Childcare Challenges in
the US Jobs Market Recovery During the COVID–
19 Pandemic, NBER Working Paper No. 28934 (June
2021), https://www.nber.org/papers/w28934.
131 U.S. Census Bureau, Phase 3.2 Household
Pulse Survey: Table 2. Childcare Arrangements in
the Last 4 Weeks for Children Under 5 Years Old,
by Selected Characteristics, (Washington: 2021),
available at https://www.census.gov/programs-
surveys/household-pulse-survey/data.html.
132 Id.
133 N. Kalluri, C. Kelly, & A. Garg, Child Care
During the COVID–19 Pandemic: A Bad Situation
Made Worse. Pediatrics (2021), https://doi.org/
10.1542/peds.2020-041525.
134 National Association for the Education of
Young Children, Am I Next? Sacrificing to Stay
Open, Child Care Providers Face a Bleak Future
Without Relief (December 2020), https://
www.naeyc.org/sites/default/files/globally-shared/
downloads/PDF.
135 G. G. Weisenfeld, Impacts of Covid-19 on
Preschool Enrollment and Spending, New
Brunswick, NJ: National Institute for Early
Education Research (2021), https://nieer.org/wp-
content/uploads/2021/03/NIEER_Policy_Brief_
Impacts-of-Covid-19on_Preschool_Enrollment_and_
Spending_3_16_21.pdf.
136 Heather Long, ‘The pay is absolute crap’:
Child-care workers are quitting rapidly, a red flag
for the economy, Washington Post (September 19,
2021), https://www.washingtonpost.com/business/
2021/09/19/childcare-workers-quit/.
137 Monash University, The emotional toll of
COVID–19 among early childhood educators
(August 5, 2020) https://lens.monash.edu/@
education/2020/08/05/1381001/the-emotional-toll-
of-covid-19-among-early-childhood-educators.
138 Daphna Bassok and Anna Shapiro,
Understanding COVID–19-era enrollment drops
Continued
(SNAP).125 In other cases, policies like
public charge and asset testing can
discourage otherwise eligible
households.
126 While the gap between
households that need assistance and the
number of households participating in
public benefit programs has always
existed, narrowing that gap and
ensuring households receive the support
they need is critical in mitigating the
negative economic impacts of the
pandemic.
Public Comment: Treasury has also
received feedback from recipients and
stakeholders noting the need to increase
awareness and uptake of assistance
programs, including gaps that remain in
enrollment of eligible households in
programs to address the negative
economic impacts of the pandemic.
127
Treasury Response: Treasury has
determined that this impact of the
pandemic is widely experienced across
many jurisdictions and programs or
services to increase awareness and
uptake of assistance programs would
respond to the pandemic’s negative
economic impact in all communities. As
such, in the final rule, this use is eligible
for any impacted household or class of
households, not only in
disproportionately impacted
communities.
8. Promoting healthy childhood
environments. The interim final rule
included programs and services that
promote healthy childhood
environments as an enumerated eligible
use for disproportionately impacted
households. The interim final rule listed
three programs or services included
under this use: Childcare; programs to
provide home visits by health
professionals, parent educators, and
social service professionals to
individuals with young children to
provide education and assistance for
economic support, health needs, or
child development; and services for
child welfare-involved families and
foster youth to provide support and
education on child development,
positive parenting, coping skills, or
recovery for mental health and
substance use. The interim final rule
also included an enumerated eligible
use for early learning services in
disproportionately impacted
communities, to address disparities in
education.
Public Comment: Childcare and Early
Learning: Treasury received multiple
comments that were supportive of the
provision of childcare. Treasury has also
received multiple comments and
questions indicating that recipients have
identified a need for childcare for a
broader range of households and
communities, for example those that
may need childcare in order to return to
work, in addition to households and
communities disproportionately
impacted by the pandemic. Several
commenters expressed uncertainty
about how childcare facilities should
interact with the boundaries of a QCT.
Finally, one commenter recommended
that pre-K or early learning services
encompass care for infants and toddlers,
arguing that these types of care are often
more expensive or challenging to access
for families.
Background: Childcare and Early
Learning: As daycares and schools
closed in-person activities during the
pandemic, many working families were
left without childcare during the day.
128
Although daycare centers and schools
have since reopened in many
communities, there remains a persistent
childcare shortage as childcare
employment levels have not fully
rebounded since the sharp decline in
childcare employment at the beginning
of the pandemic.
129 As a result, working
parents in communities across the
country, and more specifically women,
may face challenges entering or
reentering the labor force.
130
Low-income households are also more
likely to lose access to quality
childcare.
131 The widespread closure of
childcare centers combined with a lack
of access to paid family leave means
parents in low-income households are
more likely to experience a reduction of
income or leave their jobs due to a lack
of childcare options.
132
Additionally, childcare providers
serving primarily low-income families
were less likely to remain open during
the pandemic because of tighter profit
margins and general community
financial insecurity, compared to
childcare providers serving primarily
high-income families.
133 134
In addition to disruptions to
childcare, early learning services were
also significantly impacted by the
pandemic, and the disruption of these
services had widespread ramifications
for learning loss, parental support, and
equity. Early learning centers have seen
declined enrollment across the board,
though there was a larger dip in
enrollment for low-income
households.
135 This lower enrollment
coincides with a diminishing workforce,
as similarly to childcare, early
childhood educators have been leaving
the profession due to long hours, low
pay,
136 and health and safety
concerns.137 As a result, children’s
school readiness has suffered, leading to
potential long-term impacts on life
outcomes.
138 The impact also extended
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4364 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations among early-grade public school students,
Brookings Institution (February 22, 2021), https://
www.brookings.edu/blog/brown-center-chalkboard/
2021/02/22/understanding-covid-19-era-
enrollment-drops-among-early-grade-public-school-
students/.
139 Centers for Disease Control and Prevention,
Pregnant and Recently Pregnant People, https://
www.cdc.gov/coronavirus/2019-ncov/need-extra-
precautions/pregnant-people.html (last visited
November 9, 2021).
140 Id.
141 Sarah Javaid, Sarah Barringer, Sarah D
Compton, Elizabeth Kaselitz, Maria Muzik, Cheryl
A. Moyer, The impact of COVID–19 on prenatal
care in the United States: Qualitative analysis from
a survey of 2519 pregnant women, Midwifery,
Volume 98, 2021, 102991, ISSN 0266–6138, https://
doi.org/10.1016/j.midw.2021.102991.
142 A Basu, HH Kim, R Basaldua, KW Choi, L
Charron, et al., A cross-national study of factors
associated with women’s perinatal mental health
and wellbeing during the COVID–19 pandemic,
PLOS ONE 16(4): e0249780, (2021), https://doi.org/
10.1371/journal.pone.0249780.
143 Amanda Taub, A New Covid-19 Crisis:
Domestic Abuse Rises Worldwide, New York Times
(April 6, 2020), https://www.nytimes.com/2020/04/
06/world/coronavirus-domestic-violence.html.
144 Xenia Shih Bion, Efforts to Reduce Black
Maternal Mortality Complicated by COVID–19,
California Health Care Foundation (April 20, 2020),
https://www.chcf.org/blog/efforts-reduce-black-
maternal-mortality-complicated-covid-19/.
145 U.S. Department of Health and Human
Services, Home Visiting Evidence of Effectiveness,
https://homvee.acf.hhs.gov/outcomes/maternal%20
health/In%20Brief.
146 National Conference of State Legislatures,
Criminal Justice System Responses to COVID–19
(November 16, 2020), https://www.ncsl.org/
research/civil-and-criminal-justice/criminal-justice-
and-covid-19.aspx.
147 John Burton Advocates for Youth, The
Cumulative Impact of the Pandemic on Youth Who
Have Been in Foster Care or Homeless (May 2020)
https://jbay.org/wp-content/uploads/2021/04/JBAY-
COVID-19-Impact.pdf.
148 John Kelly, Next Week, Thousands of Foster
Youth Will Age Out on the Same Day (September
21, 2021), https://imprintnews.org/subscriber-
content/thousands-of-foster-youth-will-age-out-on-
the-same-day/59006.
149 Conrad-Hiebner, Aislinn, and Elizabeth
Byram, The Temporal Impact of Economic
Insecurity on Child Maltreatment: A Systematic
Review. Trauma, Violence, & Abuse, vol. 21, no. 1,
Jan. 2020, pp. 157–178, doi:10.1177/
1524838018756122.
to parents. Parents, especially mothers,
may face challenges reentering or
remaining in the workforce if early
learning services are unavailable.
Treasury Response: Childcare and
Early Learning Services: Treasury agrees
with commenters’ analysis that
challenges accessing or affording
childcare have been widespread during
the pandemic, affecting many
jurisdictions and populations across the
country. Disruptions to early care and
learning services similarly have had
broad impact and likely result in
negative impacts for young children and
their parents. As such, these
enumerated eligible uses are generally
responsive to the negative economic
impacts of the pandemic in all
communities, not just in
disproportionately impacted
communities. Under the final rule,
childcare and early learning services are
available to impacted households or
classes of households, not just those
disproportionately impacted. These
eligible uses can include new or
expanded services, increasing access to
services, efforts to bolster, support, or
preserve existing providers and services,
and similar activities.
Further, Treasury is clarifying that
improvements to or new construction of
childcare, daycare, and early learning
facilities are eligible capital
expenditures. Recipients seeking to use
funds for capital expenditures should
refer to the section Capital Expenditures
in General Provisions: Other for
additional eligibility standards that
apply to uses of funds for capital
expenditures.
Public Comment: Home Visiting:
Treasury has also received questions
about whether the provision of home
visiting services would be responsive to
the health and mental health needs of
impacted new mothers, citing the
positive mental health impacts shown
on the mother as well as improved
outcomes for children.
Background: Home Visiting: Pregnant
and recently pregnant individuals are at
an increased risk for serious illness from
COVID–19.
139 Furthermore, pregnant
individuals with COVID–19 are more
likely to experience preterm birth
(delivering the baby earlier than 37
weeks).
140 In addition to heightened
health risks from COVID–19, pregnant
individuals may have experienced
significant changes to their prenatal care
during the pandemic
141 or may also
have experienced increased mental
health challenges, including high levels
of depression, anxiety, loneliness, and
post-traumatic stress during the
pandemic.
142
Home visiting services provided to
families, particularly new mothers and
newborns, feature regular home visits
from trained nurses, social workers,
and/or counselors who provide health
care, mental health resources, positive
parenting support, support in making
personal health decisions, and
awareness of other potentially helpful
services. These functions have become
even more essential at mitigating
negative factors associated with the
pandemic. Home visits give
professionals a chance to flag potential
domestic violence, which has risen
worldwide over the course of the
pandemic.
143 Racial health disparities
can also be driven down by home visits.
For example, Black women are more
likely to avoid hospitals during the
pandemic, and home visitors can help
either assuage concerns around
hospitals or give effective advice for
alternative methods of childbirth.
144
Given the disproportionate effect of the
pandemic on people of color, home
visits are an essential equity tool that
tackle major negative effects of the
pandemic. These are just a few
selections from the evidence that
suggests many home visiting models can
have a positive effect on maternal
physical and mental health.
145
Treasury Response: Home Visiting:
Given the widespread impact of
COVID–19 on pregnant and recently
pregnant individuals, Treasury is re-
categorizing home visiting services as an
eligible use for impacted communities,
not just disproportionately impacted
communities. Under the final rule, these
eligible uses are available to impacted
households or classes of households.
Public Comment: Child Welfare:
While the interim final rule noted that
certain types of assistance, particularly
around child development and
parenting, were eligible for child
welfare-involved families, Treasury has
received some recipient questions
asking whether financial, educational,
housing, or other supports and services
are eligible uses for foster youth,
including those aging out of the system,
and child welfare-involved families.
Other commenters asked about whether
funding for kinship care would be
eligible.
Background: Child Welfare: The
COVID–19 pandemic placed meaningful
strain on the child welfare and foster
care system. Court hearings were
delayed,
146 essential mental health care
was shifted to a virtual environment,
and attendance and performance in
school among foster children dropped
sharply.
147 Additionally, there was a
nationwide rise of new children
entering the foster care system and
many states placed temporary moratoria
on children aging out of the foster care
system.
148 As these temporary moratoria
expire, additional support will be
needed to assist children exiting the
system.
Additionally, financial and material
hardship are causal factors in the
increase of new children entering the
foster care system, whether through loss
of a caregiver, domestic violence,
149 or
other associated costs of the pandemic.
Therefore, support to decrease these
hardships will support families and
increase positive outcomes for youth
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4365 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 150 Verlenden JV, Pampati S, Rasberry CN, et al.
Association of Children’s Mode of School
Instruction with Child and Parent Experiences and
Well-Being During the COVID–19 Pandemic—
COVID Experiences Survey, United States, October
8–November 13, 2020. MMWR Morb Mortal Wkly
Rep 2021;70:369–376. DOI: http://dx.doi.org/
10.15585/mmwr.mm7011a1external icon.
151 U.S. Department of Education, Strategies for
Using American Rescue Plan Funding to Address
the Impact of Lost Instructional Time, August 2021.
Retrieved from https://www2.ed.gov/documents/
coronavirus/lost-instructional-time.pdf.
152 Consumer Financial Protection Bureau,
Housing insecurity and the COVID–19 pandemic
Continued
and families that may otherwise become
involved in the child welfare system.
Treasury Response: In the final rule,
Treasury is clarifying that services to
foster youth, including those aging out
of the system, and child welfare-
involved families may encompass a
wide array of financial, educational,
child development, or health supports,
or other supports necessary, including
supports for kinship care.
9. Addressing the impacts of lost
instructional time.
Public Comment: The interim final
rule included an enumerated eligible
use to address educational disparities in
disproportionately impacted
communities, recognizing that
underserved students have been more
severely impacted by the pandemic and
including responsive services for early
learning, enhance funding to high-
poverty districts, and providing
evidence-based services to address the
academic, social, emotional, and mental
health needs of students. Some
commenters expressed concerns that
learning loss or the negative impacts of
lost instructional time due to school
closures or remote education during the
pandemic had affected a significant
share of students in grades kindergarten
through twelve (K–12), including
students who may not fall within a
disproportionally impacted group.
Background: The COVID–19
pandemic resulted in the widespread
closure of schools across the nation.
While many schools and districts
reopened to in-person instruction or
implemented remote learning, the shift
was not immediate or without
consequence. Children who received
virtual only or combined remote and in-
person instruction were more likely to
report experiencing negative mental-
and physical health outcomes than
children who received in-person
instruction.
150
Treasury Response: Under the final
rule, addressing the impact of lost
instructional time and/or learning loss
is an enumerated eligible use for
impacted households. When providing
services to address lost instructional
time, recipients may presume that any
K–12 student who lost access to in-
person instruction for a significant
period of time has been impacted by the
pandemic and is thus eligible for
responsive services.
Interventions or services that address
the impact of lost instructional time
may include offering high-quality
tutoring and other extended learning
opportunities, providing differentiated
instruction, implementing activities to
meet the comprehensive needs of
students, expanding and improving
language access for parents and families,
providing information and assistance to
parents and families on how they can
effectively support students, including
in a distance learning environment,
improving student engagement in
distance education, and administering
and using high-quality assessments to
assess students’ academic progress,
among others. In designing services
under this eligible use, recipients may
wish to reference guidance from the
Department of Education on strategies
for addressing lost instructional time.
151
The final rule also maintains a
separate enumerated eligible use for
addressing educational disparities in
disproportionately impacted
communities. This eligible use includes
services to address disparities in
educational outcomes that predate the
pandemic and amplified its impact on
underserved students; these include, for
example, enhanced funding to high-
poverty districts and providing
evidence-based services to address the
academic, social, emotional, and mental
health needs of students.
Finally, as described in the section
Public Health, recipients can provide a
broad range of behavioral health
services, including services for children
and youth in schools, to respond to the
impacts of the pandemic on mental
health and other behavioral health
issues. When providing behavioral
health services, recipients may presume
that the general public was impacted by
the pandemic and provide behavioral
health services to members of the
general public, including children and
youth in schools, without any further
analysis of impacts of the pandemic on
those individuals and whether the
service is responsive.
10. Promoting long-term housing
security: affordable housing and
homelessness. Under the interim final
rule, recipients may use SLFRF funds to
provide a set of housing services to
communities that have been
disproportionately impacted by the
pandemic. Specifically, the interim final
rule provided that programs or services
that address housing insecurity, lack of
affordable housing, or homelessness,
were responsive to the negative
economic impacts of the pandemic
when provided to disproportionately
impacted households and communities.
The enumerated uses included
supportive housing or other programs or
services to improve access to stable,
affordable housing among individuals
who are homeless and development of
affordable housing to increase supply of
affordable and high-quality living units.
Many recipients have already
announced plans to use SLFRF funds
for affordable housing interventions in
all of these categories. Treasury received
many comments asking for additional
clarity or flexibility in these uses.
As detailed below, based on multiple
public comments and questions and
Treasury’s subsequent analysis,
Treasury has determined that
supportive housing or other programs or
services to improve access to stable,
affordable housing among individuals
who are homeless, and the development
of affordable housing to increase supply
of affordable and high-quality living
units are responsive to the needs of
impacted populations, not only
disproportionately impacted
populations. This final rule reflects this
clarification and builds on the
objectives stated in the interim final rule
to improve access to stable, affordable
housing, including through
interventions that increase the supply of
affordable and high-quality living units,
improve housing security, and support
durable and sustainable
homeownership.
Finally, note that ‘‘emergency housing
assistance,’’ or assistance for responses
to the immediate negative economic
impacts of the pandemic through
services like financial assistance for
rental arrears or mortgage payments, is
also an eligible use category for
assistance to households under the final
rule; see the eligible use for ‘‘emergency
housing assistance’’ above. The
provision of housing vouchers and
assistance relocating to neighborhoods
with higher levels of economic
opportunity remains an eligible use
under assistance to disproportionately
impacted households; for discussion,
see the eligible use for ‘‘housing
vouchers and assistance relocating’’
below.
Background: Affordable Housing: It is
clear that the ongoing pandemic and
resulting economic crisis are having a
profound, long-term negative effect on
the pre-existing affordable housing
crisis facing low-income households.
152
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17.A
4366 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations (March 2020), https://files.consumerfinance.gov/f/
documents/cfpb_Housing_insecurity_and_the_
COVID-19_pandemic.pdf.
153 Joint Center For Housing Studies Of Harvard
University, The State of the Nation’s Housing (June
2021), https://www.jchs.harvard.edu/sites/default/
files/reports/files/Harvard_JCHS_State_Nations_
Housing_2021.pdf.
154 Davin Reed and Eileen Divringi, Household
Rental Debt During COVID–19: Update for 2021,
Federal Reserve Bank of Philadelphia (2020),
available at: https://www.philadelphiafed.org/
community-development/housing-and-
neighborhoods/household-rental-debt-during-covid-
19-update-for-2021. Further, some research suggests
that liquidity may be a more important predictor of
default than other factors, including income or
equity. See Trading Equity for Liquidity (June
2019), available at https://www.jpmorganchase.
com/content/dam/jpmc/jpmorgan-chase-and-co/
institute/pdf/institute-trading-equity-for-
liquidity.pdf.
The combination of a large number of
higher-income households who have
weathered the pandemic without
significant income losses, low interest
rates, and housing supply constraints
exacerbated by the pandemic, have
driven a sharp increase in the sale price
of homes.
153 Meanwhile, many low-
income renters and homeowners are
struggling with lost employment and
income and are behind on their housing
payments.
154
Public Comment: Affordable Housing
Outside of Low-Income Geographies: A
major theme in comments was that
affordable housing interventions,
especially development of affordable
housing, should be allowed outside of
QCTs, as concentrating the supply of
affordable housing in low-income
geographies can have the effect of
increasing both concentrated poverty
and racial and economic segregation,
while locking lower-income households
in need of housing support out of high-
opportunity neighborhoods with access
to employment and amenities.
Treasury Response: Affordable
Housing Outside Low-Income
Geographies: As previously stated,
affordable housing is not confined to
low-income geographies under the
interim final rule. As discussed
elsewhere, the interim final rule
presumed that QCTs, as well as
communities served by Tribal
governments, were disproportionately
impacted for administrative
convenience, but recipients may
identify other populations, households,
or geographic areas with disparate
impacts of COVID–19 and provide
affordable housing services to them. For
example, under the interim final rule, a
city could determine that its low-
income residents faced disproportionate
impacts of COVID–19 and develop
affordable housing targeted to these
households. Such a scenario could
include, for example, affordable projects
in higher-income neighborhoods that
would allow residents to live closer to
jobs and well-resourced schools.
Additionally, as noted above,
Treasury is finalizing the rule with some
changes to the treatment of affordable
housing development designed to
clarify that permanent supportive
housing or other programs or services to
improve access to stable, affordable
housing among individuals who are
homeless, and the development of
affordable housing to increase supply of
affordable and high-quality living units,
are responsive to individuals and
households that were impacted by the
pandemic in addition to those that were
disproportionately impacted. This shift
is in line with commenters’
recommendations and consistent with
the facts described above, which
demonstrate that lack of supply of
affordable housing units contributed to
the pandemic’s impact on housing
insecurity and unsustainable housing
cost burdens and that these impacts
were experienced broadly across the
country.
Public Comment: Eligible Activities:
Many commenters asked for clarity on
what types of activities (e.g., land
acquisition, construction, pre-
construction costs, operating costs, etc.)
are eligible uses of SLFRF, and what
affordability criteria must be applied to
affordable housing development.
Commenters encouraged Treasury to
allow the full array of affordable
housing activities, including particular
requests for broad flexibility for Tribal
communities, and to specify that
‘‘development’’ should include
construction, preservation,
rehabilitation, and operation. Other
commenters requested clarification
about permissible program
administration approaches for
affordable housing, such as contracting
methods and distribution of funds.
Some commenters asked that
Treasury require SLFRF funds to be
focused on the lowest-income
households, who suffer the most severe
rent burdens and risks of housing
instability, and whose housing situation
has left them particularly vulnerable to
COVID–19. For example, one
commenter argued that SLFRF funds
should only be used to support
affordable housing for households
making 50 percent of AMI or less and
that recipients should be required to set
aside significant portions of any
developments for renters making 30
percent of AMI or less and persons with
physical and sensory disabilities. Other
commenters requested a more flexible
approach to affordable housing
definitions.
Treasury Response: Eligible Activities:
The final rule clarifies eligibility of
affordable housing development for
recipients; these uses were eligible
under the interim final rule, but
Treasury is providing further guidance
to enhance clarity and respond to
recipient and commenter questions.
As with all interventions to address
the negative economic impacts of the
pandemic, affordable housing projects
must be responsive and proportional to
the harm identified. This test may be
met by affordable housing development
projects—which may involve large
expenditures and capital investments—
if the developments increase the supply
of long-term affordable housing for low-
income households. While there may be
less costly (or non-capital) alternatives
to affordable housing development, a
comprehensive response to the
widespread housing challenges
underscored by the pandemic will
require the production of additional
affordable homes, and targeted
affordable housing development is a
cost-effective and proportional response
to this need.
For purposes of this test, Treasury
will presume that any projects that
would be eligible for funding under
either the National Housing Trust Fund
(HTF) or the Home Investment
Partnerships Program (HOME) are
eligible uses of SLFRF funds. Note that
these programs use different income
limits than the definition of low- and
moderate-income adopted by Treasury.
Given the severity of the affordable
housing shortage, and the ways in
which the pandemic has exacerbated
the need for affordable, high-quality
dwelling units, Treasury has determined
that the households served by these
federal housing programs have been
impacted by the pandemic and its
negative economic impacts and that
development of affordable housing
consistent with these programs is a
related and reasonably proportional
response to those impacts. Additionally,
affordable housing projects provided by
a Tribal government are eligible uses of
SLFRF if they would be eligible for
funding under the Indian Housing Block
Grant program, the Indian Community
Development Block Grant program, or
the Bureau of Indian Affairs Housing
Improvement Program. Alignment with
these programs, which define
‘‘affordable housing’’ in a manner
consistent with a proportionate
response to the affordable housing
challenges faced by low- and moderate-
income households as a result of the
negative economic impacts of the
pandemic, is intended to give recipients
comfort and clarity as they design a
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17.A
4367 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 155 Stefan Pichler, Katherine Wen, and Nicolas R.
Ziebarth, COVID–19 Emergency Sick Leave Has
Helped Flatten The Curve In The United States:
Study examines the impact of emergency sick leave
on the spread of COVID–19, Health Affairs 39, no.
12 (2020): 2197–2204, https://www.health
affairs.org/doi/10.1377/hlthaff.2020.00863.
156 Scott Brown et al., Employee and Worksite
Perspectives of the Family and Medical Leave Act:
Results from the 2018 Surveys, Abt Associates (July
2020), https://www.dol.gov/sites/dolgov/files/
OASP/evaluation/pdf/WHD_FMLA2018Survey
Results_FinalReport_Aug2020.pdf.
157 Id.
158 Ann P. Bartel et al., Racial and ethnic
disparities in access to and use of paid family and
medical leave: evidence from four nationally
representative datasets, U.S. Bureau of Labor
Statistics (BLS) (January 2019), https://www.bls.gov/
opub/mlr/2019/article/racial-and-ethnic-
disparities-in-access-to-and-use-of-paid-family-
andmedical-leave.htm.
Continued
wide variety of affordable housing
interventions, including production,
rehabilitation, and preservation of
affordable rental housing and, in some
cases, affordable homeownership units.
These programs allow the financing of
a wide range of affordable housing
activities and set clear eligibility criteria
that many recipients are already familiar
with.
Finally, to further support sustainable
and durable homeownership, recipients
may consider offering down payment
assistance, such as through
contributions to a homeowner’s equity
at origination or that establish a post-
closing, mortgage reserve account on
behalf of the borrower that may be
utilized to make a missed or partial
mortgage payment at any point during
the life of the loan (e.g., if the borrower
faces financial stress). Homeownership
assistance that would be eligible under
the Community Development Block
Grant (at 24 CFR 507.201(n)) is also an
eligible use of SLFRF funds.
Public Comment: Permanent
Supportive Housing: Treasury has
received comments encouraging the use
of SLFRF funds for permanent
supportive housing. This is an eligible
use under the interim final rule: Both
the development of affordable housing
(including operating subsidies) and
wraparound services such as behavioral
health services, employment services,
and other supportive services, are
eligible responses to the public health
crisis or its negative economic impacts.
Treasury Response: The final rule
maintains the eligibility of permanent
supportive housing as an enumerated
use. Treasury is also clarifying that
other affordable housing developments
targeted to specialized populations are
also eligible, for example recovery
housing for individuals in recovery from
substance use.
Public Comment: Operating Expenses:
Commenters specifically asked that
Treasury allow the use of SLFRF funds
for operating expenses of affordable
housing units, as operating subsidies are
typically required to reach extremely
low-income households, whose
affordable rents may be lower than the
ongoing cost of operating their unit.
Treasury Response: Operating
expenses for eligible affordable housing
were an eligible use of funds under the
interim final rule and the final rule
maintains this treatment. This may
include capitalized operating reserves.
Rehabilitation and repair of public
housing will also be considered an
eligible use of SLFRF funds.
Public Comment: Affordable Housing
Loans and Revolving Loan Funds: Some
commenters requested that loans with
maturities beyond the period of
performance or revolving loan funds
that revolve beyond the period of
performance be eligible uses of SLFRF
funds if used for affordable housing.
Some commenters pointed out that for-
profit developers of low-income housing
through the Low-Income Housing Tax
Credit (LIHTC) may be deterred from
accepting grants to bridge funding gaps
in current LIHTC deals by the treatment
of grants to for-profit entities in the
calculation of eligible basis for the
LIHTC.
Treasury Response: The final rule
does not change the treatment of loans
from the interim final rule. For more
details see section Treatment of Loans
in Program Administration Provisions.
Similarly, the final rule does not change
the treatment of grants to support
affordable housing development,
including developments supported by
the LIHTC: such grants are an eligible
use of funds.
Additional enumerated eligible uses
for assistance to impacted households.
As noted above, the interim final rule
posed a question on what other types of
services or costs Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID–19. In response, commenters
proposed a wide variety of additional
recommended enumerated eligible uses
to assist households, ranging from
general categories of services (e.g., legal
and social services) to services that
respond to needs widely experienced
across the country (e.g., access to and
affordability of health insurance) to
services that are most applicable to the
particularized needs of certain
populations or geographic areas of the
United States (e.g., senior citizens,
SNAP recipients, immigrants, formerly-
incarcerated individuals, responding to
environmental issues in certain
geographic regions). Other commenters
generally requested a high degree of
flexibility to respond to the particular
needs of their communities.
Treasury Response: Given the large
number and diversity of SLFRF
recipients, Treasury’s approach to
assistance to households in the final
rule aims to clarify additional
enumerated eligible uses that respond to
negative economic impacts of the
pandemic experienced widely in many
jurisdictions across the country, making
it clear and simple for recipients to
pursue these enumerated eligible uses
under the final rule. In the final rule,
Treasury is clarifying several additional
uses, which generally respond to
pandemic impacts experienced broadly
across jurisdictions and populations, are
eligible under the interim final rule as
assistance to households and continue
to be so under the final rule, as outlined
below.
11. Paid sick, medical, or family
leave.
Public Comment: Some commenters
argued that the pandemic increased the
need for paid sick or medical leave, as
staying home when ill is recommended
by the CDC to prevent spread of the
virus but lack of access to paid sick
leave often prevents workers from
staying home. Other commenters
recommended paid family leave as an
eligible use, arguing that shortages in
access to childcare or home health
assistance, as well as school closures,
may increase the need for family
members to serve as caretakers.
Background: The COVID–19
pandemic highlighted the importance of
paid leave as well as the number of
workers who do not have access to paid
sick and/or family leave. When workers
have access to paid leave, they are less
likely to report to work sick, and
therefore less likely to spread illnesses
in the workplace: One study
demonstrates that the emergency sick
leave provision of the Families First
Coronavirus Response Act (FFCRA)
reduced the spread of COVID–19.
155
The lack of paid leave exacerbates
financial hardships experienced as a
result of the public health emergency. A
2018 survey by the Department of Labor
found that two-thirds of employees that
took unpaid or partial-paid leave
experienced financial hardship.
156
Furthermore, because the Family and
Medical Leave Act (FMLA) excludes
small employers, part-time workers, and
workers who have been with their
employer for less than a year, 44 percent
of workers do not have access to even
unpaid leave.
157 Workers of color and
workers with lower incomes are less
likely to have access to paid leave.
158 159
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