Stanton City Council
February 22, 2022

February 22, 2022
Community Pride & Forward Vision
have adopted resolutions supporting the Gypsum Canyon site. In addition, a bipartisan majority of Orange County state and federal delegation members, numerous veterans organization leaders, and more than 140 local elected officials all enthusiastically support a veterans cemetery at Gypsum Canyon. However, legislation is needed to amend the Military & Veterans Code in order to proceed.

AB 1595 would allow CalVet to acquire, study, design, develop, construct, and equip a state-owned and state-operated Southern California Veterans Cemetery in Orange County so that we may honor the men and women who served our country and who deserve the right to be buried in Orange County. For these reasons, the City of Stanton proudly supports AB 1595.

Sincerely,
__________________________
David J. Shawver
Mayor
Cc: Assemblymember Jacqui Irwin: Chair, Assembly Military & Veterans Affairs Committee
Senator Bob Archuleta, Chair – Senate Military & Veterans Affairs Committee Christian Burkin – Chief Consultant, Assembly Military & Veterans Affairs Committee
Veronica Badillo – Staff Director, Senate Military & Veterans Affairs Committee Members, Orange County Legislative Delegation
Members, Orange County Board of Supervisors
RESOLUTION NO. 2022-11

RESOLUTION NO. 2022-11

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF STANTON, CALIFORNIA, DECLARING SUPPORT FOR ASSEMBLY BILL 1595, WHICH FACILITATES THE

AUTHORIZATION OF A STATE VETERANS CEMETERY IN ORANGE COUNTY WHEREAS, the City of Stanton (“City”) wholeheartedly endorses building a Veterans cemetery in Orange County; and
WHEREAS, the City has a rich history of supporting the military, having dedicated Veterans Memorial Park at 10970 Cedar St. on November 11, 2007; and WHEREAS, currently the nearest open Veterans cemetery to Orange County is the National Cemetery in Riverside, California; and
WHEREAS, to honor and respect the men and women who served our country and who deserve the right to be buried in Orange County, we ask federal, state, and local governments to closely consider this proposed project as a benefit, not only to Orange County, but to the broader region, as well; and
WHEREAS, the County of Orange has deeded to the Orange County Cemetery District (OCCD) over 200 acres of county-owned land, located at Gypsum Canyon near the intersection of the 91 freeway and 241 toll road in Anaheim Hills, for the purpose of building a veterans cemetery; and
WHEREAS, existing law only authorizes the California Department of Veterans Affairs (CalVet) to evaluate the placement of a veterans cemetery at either the specified site in the Orange County Great Park or the site known as the Golf Course Site, thereby excluding from consideration the Gypsum Canyon Site and any other site that might be deemed suitable by CalVet and the local community; and
WHEREAS, Assembly Bill 1595 of 2022 will amend Section 1410 of the Military and Veterans Code to give CalVet broader authorization to acquire, study, design, develop, construct, and equip a state-owned and state-operated Southern California Veterans Cemetery in the County of Orange at large.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Stanton, California, does hereby support the passage of Assembly Bill 1595.

Attachment: B
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RESOLUTION NO. 2022-11

ADOPTED, SIGNED, AND APPROVED this 22nd day of February, 2022. __________________________
DAVID J. SHAWVER, MAYOR
APPROVED AS TO FORM:
__________________________________________

HONGDAO NGUYEN, CITY ATTORNEY
ATTEST:

I, Patricia A. Vazquez, City Clerk of the City of Stanton, California DO HEREBY CERTIFY that the foregoing Resolution, being Resolution No. 2022-11 has been duly signed by the Mayor and attested by the City Clerk, all at a regular meeting of the Stanton City Council, held on February 22, 2022, and that the same was adopted, signed and approved by the following vote to wit:

AYES:

NOES:

ABSENT:

ABSTAIN:

PATRICIA A. VAZQUEZ, CITY CLERK
1 CITY OF STANTON

REPORT TO CITY COUNCIL
TO: Honorable Mayor and City Council
DATE: February 22, 2022
SUBJECT: AMENDMENT TO AGREEMENT FOR CONSULTANT SERVICES WITH CHARLES ABBOTT ASSOCIATES, INC. FOR BUILDING SERVICES
REPORT IN BRIEF:

Request authorization to allow the City Manager to amend the Agreement with Charles Abbot Associates, Inc., to extend the existing contract from February 22, 2022, through June 30, 2022.

RECOMMENDED ACTION:

1. City Council declare the action not a project as defined by the California Environmental Quality Act (“CEQA”) and will have no result direct or indirect to physical changes in the environment; and

2. Approve the Amendment to the Agreement with Charles Abbott Associates, Inc.; and

3. Authorize the City Manager to bind the City of Stanton and Charles Abbott Associates, Inc. in an amended agreement to provide building services.

BACKGROUND:

The City has been using the services of Charles Abbott and Associates to provide plan checking, field inspection and Building Official staffing during this contract term of November 2014 to February 20, 2022.

The City issued an RFP on August 31, 2021 to solicit proposals from various firms providing similar services. On September 22, 2021 the City received ten proposals and has been reviewing the staffing plan, costs, and references provided by these firms.

During the review for these proposal a review to bring services in house was considered.

In December 2021 staff released a job opportunity for building inspection services to evaluate options for staffing this need. The City has received more than 20 qualified applications and is in the process of conducting interviews to determine if an appropriate candidate can be found.

Item: 6N
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2 ANALYSIS/JUSTIFICATION:

The City is experiencing a high level of development and construction activity. The building services provided to the development community, business community and residents of Stanton are a high priority and need to reflect the values of the community.

The decision to continue with the current service provider or make a change is an important decision for the City of Stanton and must take into consideration, technical capabilities, efficiency, effectiveness and cost. The City is also evaluating the quality of service, continuity of staff and costs related to the building services for Stanton. In order to complete this review, determine the best staff solution and bring the Council a comprehensive plan, City staff needs additional time to complete the process. Charles Abbott (CAA) is committed to providing support to the City while we complete this review.

It is our goal to complete the review and present the final proposed plan for Council consideration before the June 30, 2022, end of contract date, but given challenges that could arise, the June timeline is appropriate at this time.

FISCAL IMPACT:

The Amendment to the Agreement is an extension of time and does not change the billing rates or payment terms of the contract. The budget has anticipated Building services to be provided based on past annual costs and the services are paid based on the permit fees as established in the Agreement. No impact to the General Fund is anticipated.

ENVIRONMENTAL IMPACT:

In accordance with the provisions of the California Environmental Quality Act, this action is not a project.

PUBLIC NOTIFICATION:

Public notice for this item was made through the regular agenda process.

STRATEGIC PLAN:
1 – Provide a Safe Community
6 – Maintain and Promote a Responsive, High Quality and Transparent Government Prepared By: Approved by:
/s/ Jennifer A. Lilley /s/ Jarad L. Hildenbrand
____________________ _____________________
Jennifer A. Lilley, AICP Jarad Hildenbrand
Community & Economic Development Director City Manager
3 Attachment:

A. Charles Abbott Associates, Inc. Contract and Proposal B. Draft Amendment to Agreement for Consultant Services Attachment: A
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55414.00000\31609842. 1B-1

CITY OF STANTON

SECOND AMENDMENT TO

AGREEMENT FOR BUILDING SERVICES

1. PARTIES AND DATE.

This Second Amendment to the Agreement for Building Services (“Second Amendment”) is entered into on the 22nd day of February, 2022 by and between the City of Stanton (hereinafter referred to as the “City”) and Charles Abbott Associates, Inc. (hereinafter referred to as the Consultant. City and Charles Abbott Associates, Inc. are sometimes collectively referred to herein as the “Parties.”

2. RECITALS.

2.1 Agreement. The Parties entered into that certain Agreement for Building Services dated February 22, 2022 (“Agreement”). The Agreement was amended, per the First Amendment to February 20, 2022

2.2 Second Amendment. The Parties now desire to amend the Agreement to extend the term in order to provide Building Services to the City while completing the review, vetting and decision-making process for providing these services to the City long-term.

3. TERMS.

3.1 Term. This Amended Agreement shall commence on February 22, 2022 and shall remain and continue in effect until tasks described herein are completed, but in no event later than June 30, 2022.

3.2 Scope of Services. The Agreement is hereby amended to include the scope of services set forth in Exhibit “A,” attached hereto and incorporated herein by reference.

3.3 Compensation. The Agreement is hereby amended to revise the Compensation as follows:
(a) The City agrees to pay Consultant monthly, in accordance with the payment rates and terms and the schedule of payment as set forth herein, attached hereto and incorporated herein by this reference as though set forth in full, based upon actual time spent on the above tasks. This amount shall not exceed 55% of permit fees for the first $20,000, 50% of permit fees for fees collected between $20,001 and $30,000, and 40% of fees for more than $30,000, in addition to special plan check and inspection services charged at the hourly rate identified in the payment schedule for the total term of the Amended Agreement unless additional payment is approved as provided in this Agreement.

Attachment: B
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55414.00000\31609842. 1B-2
(b) Consultant shall not be compensated for any services rendered in connection with its performance of this Agreement that are in addition to those set forth herein, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and Consultant at the time City's written authorization is given to Consultant for the performance of said services. The City Manager may approve additional work not to exceed ten percent (10%) of the amount of the Agreement, but in no event shall such sum exceed ten thousand dollars ($10,000.00). Any additional work in excess of this amount shall be approved by the City Council. (c) Consultant will submit invoices monthly for actual services performed.

Invoices shall be submitted on or about the first business day of each month, or as soon thereafter as practical, for services provided in the previous month.

Payment shall be made within thirty (30) days of receipt of each invoice as to all non-disputed fees. If the City disputes any of Consultant's fees it shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth on the invoice.

3.4 Remaining Provisions of Agreement. Except as otherwise specifically set forth in this Second Amendment, the remaining provisions of the Agreement shall remain in full force and effect.
[Signatures on following page]
55414.00000\31609842. 1B-3

SIGNATURE PAGE TO CITY OF STANTON AND CHARLES ABBOTT
ASSOCIATES, INC. SECOND AMENDMENT TO AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Second Amendment to Agreement on this 22nd day of February, 2022.

CITY OF STANTON CHARLES ABBOTT ASSOCIATES, INC.

By:

Jarad L. Hildenbrand
City Manager
By:

RUSTY REED
ATTEST:

By:

Patricia A. Vazquez
City Clerk
By:

APPROVED AS TO FORM:

By:

Best Best & Krieger LLP
City Attorney
55414.00000\31609842. 1B-4
EXHIBIT “A”

TO SECOND AMENDMENT TO

AGREEMENT FOR BUILDING SERVICES

SCOPE OF SERVICES
1 CITY OF STANTON

REPORT TO CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 22, 2021
SUBJECT: CYPRESS COLLEGE FOUNDATION ANNUAL AMERICANA AWARDS REPORT IN BRIEF:

City Council consider participation through a sponsorship contribution for the 47th Annual Cypress College Foundation Americana Awards Live Stream Gala scheduled for Saturday, March 26, 2022. This gala is used as a fundraiser for the Cypress College Foundation with all proceeds benefiting Cypress College students and programs and also honors the Citizen of the Year from surrounding communities.

RECOMMENDED ACTION:

1. City Council find that this item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment); and

2. Approve the City’s participation through a sponsorship contribution for the 47th Annual Cypress College Foundation Americana Awards; and

3. Direct staff to proceed with selection and purchase of the Benefactor Sponsorship at a cost of $3,000 for the City’s participation through sponsorship contribution for the 47th Annual Cypress College Foundation Americana Awards.

BACKGROUND:

The 47th Annual Cypress College Foundation Americana Awards Live Stream Gala will be held on March 26, 2022. Annually each surrounding City has had the opportunity to honor an individual who has made a significant contribution to their community as Citizen of the Year. This year Mr. Tom Carpenter has been selected and will be honored as the City of Stanton’s Citizen of the Year.

Item: 6O
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2 ANALYSIS/JUSTIFICATION:

Historically the City Council has participated in the Cypress College Foundation Americana Awards Dinner. This gala is used as a fundraiser for the Cypress College Foundation with all proceeds benefiting Cypress College students and programs.

FISCAL IMPACT:

The participation cost for the City’s sponsorship contribution to the event is available from the City Council’s Travel / Conference / Meeting Expense account number 101-1100- 607110.

ENVIRONMENTAL IMPACT:

This item is not subject to California Environmental Quality Act (“CEQA”) pursuant to Sections 15378(b)(5)(Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment).

LEGAL REVIEW:

None.

STRATEGIC PLAN OBJECTIVE ADDRESSED:

Objective 6: Maintain and Promote a Responsive, High Quality and Transparent Government.

PUBLIC NOTIFICATION:

Through the normal agenda process.

Prepared By: Concurred by:
/s/ Patricia A. Vazquez /s/ Michelle Bannigan
Patricia A. Vazquez Michelle Bannigan
City Clerk Finance Director
Approved by:
/s/ Jarad L. Hildenbrand
Jarad L. Hildenbrand
City Manager
Attachment:

A. Cypress College Foundation Letter of Invitation / Sponsorship Opportunities Attachment: A
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1 CITY OF STANTON

REPORT TO CITY COUNCIL
TO: Honorable Mayor and City Council
DATE: February 22, 2022
SUBJECT: CONSIDERATION OF REVISED CITY COUNCIL DISTRICT ELECTORAL BOUNDARIES AS REQUIRED BY ELECTIONS CODE SECTION 21601
REPORT IN BRIEF:

Pursuant to Election Code section 21601, cities with by-district election systems are required to redraw their district boundary maps to ensure compliance with the California and federal Voting Rights Acts. The process to complete the redistricting requires a minimum of four public hearings and dedicated public outreach to ensure minority populations and communities of interest are aware of the redistricting effort and are provided with options to participate. The City held its first public hearing on November 23, 2021, its second public hearing on December 16, 2021, and its third public hearing on January 25, 2022. The deadline for Stanton to complete the redistricting process is April 17, 2022.

RECOMMENDED ACTION:

1. City Council declare the action not a project as defined by the California Environmental Quality Act (“CEQA”) and will have no result direct or indirect to physical changes in the environment; and

2. Continue public hearing #4 to the next regularly scheduled City Council meeting of March 8, 2022, at 6:45 pm (City Hall / Council Chambers: 7800 Katella Avenue, Stanton, 90680).

Prepared By: Approved by:
/s/ Patricia A. Vazquez /s/ Jarad L. Hildenbrand
Patricia A. Vazquez Jarad L. Hildenbrand
City Clerk City Manager
Item: 7A
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ORDINANCE NO. 1119

ORDINANCE NO. 1119
AN ORDINANCE ADDING CHAPTERS 19.23 AND 20.211 TO THE STANTON

MUNICIPAL CODE TO REGULATE URBAN LOT SPLITS AND TWO-UNIT PROJECTS UNDER SB 9; AND FINDING THE ACTION TO BE EXEMPT FROM CEQA
WHEREAS, the City of Stanton, California (“City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, in 2021, the California Legislature approved, and the Governor signed into law Senate Bill 9 (“SB 9”), which among other things, adds Government Code section 65852.21 and 66411.7 to impose new limits on local authority to regulate urban lot splits and two-unit projects; and
WHEREAS, SB 9 allows local agencies to adopt objective zoning, subdivision, and design review standards for urban lot splits and two-unit projects; and WHEREAS, SB 9 takes effect January 1, 2022, and preempts any conflicting city regulation; and
WHEREAS, the City desires to amend its local regulatory scheme to comply with Government Code sections 66411.7 and 65852.21 and to appropriately regulate projects under SB 9; and
WHEREAS, staff and the City Attorney prepared the proposed Ordinance, including the proposed language and terminology, and any additional information and documents deemed necessary for the Planning Commission to take action; and WHEREAS, on December 14, 2021, the City Council adopted an Urgency Ordinance to address the immediate threats to public health and safety; and WHEREAS, on December 15, 2021, the Planning Commission conducted and concluded a duly noticed public hearing concerning the Zoning Text Amendment contained herein as required by law and received testimony from City staff and all interested parties regarding the proposed amendments and recommended that the City Council adopt the amendments; and
WHEREAS, on January 25, 2022), the City Council conducted and concluded a duly noticed public hearing concerning the Municipal Code amendments contained herein as required by law and received testimony from City staff and all interested parties regarding the proposed amendments; and
WHEREAS, all legal prerequisites to the adoption of the Ordinance have occurred.

Item: 8A
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ORDINANCE NO. 1119

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF STANTON DOES ORDAIN AS FOLLOWS:

SECTION 1: The recitals above are each incorporated by reference and adopted as findings by the City Council.

SECTION 2: Under California Government Code sections 65852.21, subd. (j), and 66411.7, subd. (n), the adoption of an ordinance by a city or county implementing the provisions of Government Code sections 66411.7 and 65852.21 and regulating urban lot splits and two-unit projects is statutorily exempt from the requirements of the California Environmental Quality Act (“CEQA”). Therefore, adoption of this Ordinance is statutorily exempt from CEQA because it implements these new laws enacted by SB 9.

SECTION 3: The Stanton Municipal Code is hereby amended as indicated in Exhibit A, attached hereto and incorporated herein by reference.

PASSED, APPROVED, AND ADOPTED this 22nd day of February, 2022.

DAVID J. SHAWVER, MAYOR
ATTEST:

PATRICIA A. VAZQUEZ, CITY CLERK
APPROVED AS TO FORM:

HONGDAO NGUYEN, CITY ATTORNEY
ORDINANCE NO. 1119

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

CITY OF STANTON )
I, Patricia A. Vazquez, City Clerk of the City of Stanton, do hereby certify that the foregoing Ordinance No. 1119 was duly introduced and placed upon its first reading at a regular meeting of the City Council on the 8th day of February, 2022, and thereafter, said Ordinance was duly adopted and passed at a regular meeting of the City Council on the 22nd day of February, 2022, by the following vote, to wit:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:
_____________________________

CITY CLERK, CITY OF STANTON
ORDINANCE NO. 1119

EXHIBIT A
Amendments to Stanton Municipal Code
(Follows this page)
Chapter 19.23 is hereby added to the Stanton municipal code to read as follows:

Chapter 19.23 – State-mandated Subdivisions.

Section 19.23.010 – Urban Lot Splits.

A. Purpose. The purpose of this section is to allow and appropriately regulate urban lot splits in accordance with Government Code section 66411.7.

B. Definition. An “urban lot split” means a the subdivision of an existing, legally subdivided lot into two lots in accordance with the requirements of this section.

C. Application.

1. Owners.
a. Only individual property owners may apply for an urban lot split. “Individual property owner” means a natural person holding fee title individually or jointly in the person’s own name or a beneficiary of a trust that holds fee title. “Individual property owner” does not include any corporation or corporate person of any kind (partnership, LP, LLC, C corp, S corp, etc.) except for a community land trust (as defined by Rev. & Tax Code § 402.1(a)(11)(C)(ii)) or a qualified nonprofit corporation (as defined by § 214.15).
b. Any person with a mortgage interest in the lot to be split under this section must sign the application and the parcel map indicating the person’s consent to the project

2. An application for an urban lot split must be submitted on the city’s approved form.

Only a complete application will be considered. The city will inform the applicant in writing of any incompleteness within 30 days after the application is submitted.

3. The city may establish a fee to recover its costs for adopting, implementing, and enforcing this section of the code, in accordance with applicable law. The city council may establish and change the fee by resolution. The fee must be paid with the application.

D. Approval.

1. An application for a parcel map for an urban lot split is approved or denied ministerially, by the Director of Community and Economic Development, without discretionary review.

2. A tentative parcel map for an urban lot split is approved ministerially if it complies with all the requirements of this section. The tentative parcel map may not be recorded. A final parcel map is approved ministerially as well, but not until the owner demonstrates that the required documents have been recorded, such as the deed restriction and easements. The tentative parcel map expires three months after approval.

3. The approval must require the owner and applicant to hold the city harmless from all claims and damages related to the approval and its subject matter.

4. The approval must require the owner and applicant to reimburse the city for all costs of enforcement, including attorneys’ fees and costs associated with enforcing the requirements of this code.

E. Requirements. An urban lot split must satisfy each of the following requirements:

1. Map Act Compliance.
a. The urban lot split must conform to all applicable objective requirements of the Subdivision Map Act (Gov. Code § 66410 et. seq., “SMA”) and implementing requirements in this title, except as otherwise expressly provided in this section. b. If an urban lot split violates any part of the SMA, the city’s subdivision regulations, including this section, or any other legal requirement:
(1) The buyer or grantee of a lot that is created by the urban lot split has all the remedies available under the SMA, including but not limited to an action for damages or to void the deed, sale, or contract. (2) The city has all the remedies available to it under the SMA, including but not limited to the following:
(a). An action to enjoin any attempt to sell, lease, or finance the property.
(b) An action for other legal, equitable, or summary remedy, such as declaratory and injunctive relief.
(c) Criminal prosecution, punishable by imprisonment in county jail or state prison for up to one year, by a fine of up to $10,000, or both; or a misdemeanor.
(d) Record a notice of violation.
(e) Withhold any or all future permits and approvals.
c. Notwithstanding section 66411.1 of the SMA, no dedication of rights-of-way or construction of offsite improvements is required for an urban lot split.

2. Zone. The lot to be split is in a single-family residential zone. For purposes of this section, a single-family residential zone is a zone where the only residential use that is allowed as a primary use is a single residential dwelling on a lot.

3. Lot Location.
a. The lot to be split is not located on a site that is any of the following:
(1) Prime farmland, farmland of statewide importance, or land that is zoned or designated for agricultural protection or preservation by the voters.
(2) A wetland.
(3) Within a very high fire hazard severity zone, unless the site complies with all fire-hazard mitigation measures required by existing building standards.
(4) A hazardous waste site that has not been cleared for residential use. (5) Within a delineated earthquake fault zone, unless all development on the site complies with applicable seismic protection building code standards.
(6) Within a 100-year flood hazard area, unless the site has either:
(a) been subject to a Letter of Map Revision prepared by the Federal Emergency Management Agency and issued to the local jurisdiction, or
(b) meets Federal Emergency Management Agency requirements necessary to meet minimum flood plain management criteria of the National Flood Insurance Program.
(7). Within a regulatory floodway, unless all development on the site has received a no-rise certification.
(8). Land identified for conservation in an adopted natural community conservation plan, habitat conservation plan, or other adopted natural resource protection plan.
(9). Habitat for protected species.
(10). Land under conservation easement.
b. The purpose of subpart E.3.a above is merely to summarize the requirements of Government Code section 65913.4(a)(6)(B)–(K). (See Gov. Code § 66411.7(a)(3)(C).)
c. The applicant must provide evidence that the requirements of Government Code section 65913.4(a)(6)(B)-(K) are satisfied.

4. Not Historic. The lot to be split must not be a historic property or within a historic district that is included on the State Historic Resources Inventory. Nor may the lot be or be within a site that is designated by ordinance as a city or county landmark or as a historic property or district.

5. No Prior Urban Lot Split.
a. The lot to be split was not established through a prior urban lot split. b. The lot to be split is not adjacent to any lot that was established through a prior urban lot split by the owner of the lot to be split or by any person acting in concert with the owner. “Any person acting in concert with the owner” here includes any third-party that coordinates or assists the owners of two adjacent lots with their respective urban lot splits.

6. No Impact on Protected Housing.
a. The urban lot split must not require or include the demolition or alteration of any of the following types of housing:
(1) Housing that is income-restricted for households of moderate, low, or very low income.
(2) Housing that is subject to any form of rent or price control through a public entity’s valid exercise of its policy power.
(3) Housing, or a lot that used to have housing, that has been withdrawn from rental or lease under the Ellis Act (Gov. Code §§ 7060–7060.7) at any time in the 15 years prior to submission of the urban lot split application.
(4) Housing that has been occupied by a tenant in the last three years. b. The applicant and the owner of a property for which an urban lot split is sought must provide a sworn statement as to this fact with the application for the parcel map.
(1) The sworn statement must state that:
(a) No housing that is income-restricted for households of moderate, low or very low income will be demolished or altered. (b) No housing that is subject to any form of rent or price control will be demolished or altered.
(c) No housing that has been withdrawn from rental or lease under the Ellis Act at any time in the last 15 years will be demolished or altered.
(d) No housing that has been occupied by a tenant in the last three years will be demolished or altered.
(2) The city may conduct its own inquiries and investigation to ascertain the veracity of the sworn statement, including but not limited to, surveying owners of nearby properties; and the city may require additional evidence of the applicant and owner as necessary to determine compliance with this requirement.

7. Lot Size.
a. The lot to be split must be at least 2,400 square feet. b. The resulting lots must each be at least 1,200 square feet. c. Each of the resulting lots must be between 60 percent and 40 percent of the original lot area.

8. Easements.
a. The owner must enter into an easement agreement with each public-service provider to establish easements that are sufficient for the provision of public services and facilities to each of the resulting lots.
b. Each easement must be shown on the tentative parcel map. c. Copies of the unrecorded easement agreements must be submitted with the application. The easement agreements must be recorded against the property before the final map may be approved, in accordance with section D.2 above. d. If an easement is recorded and the project is not completed, making the easement moot, the property owner may request, and the city will provide, a notice of termination of the easement, which the owner may record.

9. Lot Access.
a. Each resulting lot must adjoin the public right-of-way. b. Each resulting lot must have frontage on the public right-of-way of at least 12.5 feet.

10. Unit Standards.
a. Quantity. No more than two dwelling units of any kind may be built on a lot that results from an urban lot split. For purposes of this paragraph, “unit” means any dwelling unit, including, but not limited to, a primary dwelling unit, a unit created under section 17.86.010 of this code, an ADU, or a JADU b. Unit Size.
(1) The total floor area of each primary dwelling that is developed on a resulting lot must be
(a) less than or equal to 800 and
(b) more than 500 square feet.
(2) A primary dwelling that was legally established prior to the urban lot split and that is larger than 800 square feet is limited to the lawful floor area at the time of the urban lot split. It may not be expanded. (3) A primary dwelling that was legally established prior to the urban lot split and that is smaller than 800 square feet may be expanded to 800 square feet after the urban lot split.
c. Height Restrictions.
(1). On a resulting lot that is larger than 2,000 square feet, no new primary dwelling unit may exceed a single story or 16 feet in height, measured from grade to peak of the structure.
(2) On a resulting lot that is smaller than 2,000 square feet, no new primary dwelling unit may exceed two stories or 22 feet in height, measured from grade to peak of the structure. Any portion of a new primary dwelling that exceeds one story must be stepped back by an additional five feet from the ground floor; no balcony deck or other portion of the second story may project into the stepback. (3) No rooftop deck is permitted on any new or remodeled dwelling or structure on a lot resulting from an urban lot split.
d. Lot Coverage. Lot coverage may not exceed 50 percent of the lot. This lot coverage standard is only enforced to the extent that it does not prevent two primary dwelling units on the lot at 800 square feet each. e. Open Space. A minimum of 50 percent of the lot must be maintained as open space. This open space standard is only enforced to the extent that it does not prevent two primary dwelling units on the lot at 800 square feet each. f. Setbacks.
(1). Generally. All setbacks must conform to those objective setbacks that are imposed through the underlying zone.
(2) Exceptions. Notwithstanding subpart E.10.f(1) above:
(a) Existing Structures. No setback is required for an existing legally established structure or for a new structure that is constructed in the same location and to the same dimensions as an existing legally established structure.
(b). 800 sf; four-foot side and rear. The setbacks imposed by the underlying zone must yield to the degree necessary to avoid physically precluding the construction of up to two units on the lot or either of the two units from being at least 800 square feet in floor area; but in no event may any structure be less than four feet from a side or rear property line.
(3) Front Setback Area. Notwithstanding any other part of this code, dwellings that are constructed after an urban lot split must be at least 30 feet from the front property lines. The front setback areas must:
(a) be kept free from all structures greater than three feet high; (b) be at least 50 percent landscaped with drought-tolerant plants, with vegetation and irrigation plans approved by a licensed landscape architect;
(c) allow for vehicular and fire-safety access to the front structure. g. Parking. Each new primary dwelling unit that is built on a lot after an urban lot split must have at least one off-street parking space per unit unless one of the following applies:
(1) The lot is located within one-half mile walking distance of either (a) a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours or
(b) a site that contains
(i) an existing rail or bus rapid transit station,
(ii) a ferry terminal served by either a bus or rail transit service, or
(iii) the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.
(2) The site is located within one block of a car-share vehicle location. h. Architecture.
(1) If there is a legal primary dwelling on the lot that was established before the urban lot split, any new primary dwelling unit must match the existing primary dwelling unit in exterior materials, color, and dominant roof pitch. The dominant roof slope is the slope shared by the largest portion of the roof.
(2) If there is no legal primary dwelling on the lot before the urban lot split, and if two primary dwellings are developed on the lot, the dwellings must match each other in exterior materials, color, and dominant roof pitch. The dominant roof slope is the slope shared by the largest portion of the roof.
(3) All exterior lighting must be limited to down-lights. (4) No window or door of a dwelling that is constructed on the lot after the urban lot split may have a direct line of sight to an adjoining residential property. Fencing, landscaping, or privacy glass may be used to provide screening and prevent a direct line of sight.
(5) If a dwelling is constructed on a lot after an urban lot split and any portion of the dwelling is less than 30 feet from a property line that is not a public right-of-way line, then all windows and doors in that portion must either be (for windows) clerestory with the bottom of the glass at least six feet above the finished floor, or (for windows and for doors) utilize frosted or obscure glass.
i. Landscaping.
(1) Tree Removal.
(a) No mature tree may be removed on a lot with any development under this section unless removal is necessary to constructing a dwelling unit that must be allowed under state law.
(b)“Mature tree” means a tree with a diameter of six inches or more or a height of eight feet or taller.
(c) A tree may only be removed under subparagraph E.10.i(1)(a) above if it is replaced with at least two mature trees of the same type and with a trunk diameter that is the same or larger than that of the removed tree.
(d) If a certified arborist determines that there is not space on the lot for a replacement tree that is required under subparagraph E.10.i(1)(c) above, owner may pay the replacement cost of the tree, as determined by the tree-replacement cost schedule.
(2) Evergreen landscape screening must be planted and maintained between each dwelling and adjacent lots (but not rights of way) as follows:
(a) According to a planting and irrigation plan that is prepared by a licensed landscape architect.
(b) At least one 15-gallon size plant shall be provided for every five linear feet of exterior wall. Alternatively, at least one 24-inch box size plant shall be provided for every ten linear feet of exterior wall.
(c) Plant specimens must be at least six feet tall when installed. As an alternative, a solid fence of at least six feet in height may be installed.
(d) All landscaping must be drought-tolerant.
j. Nonconforming Conditions. An urban lot split is approved without requiring a legal nonconforming zoning condition to be corrected.
k. Utilities.
(1) Each primary dwelling unit on the lot must have its own direct utility connection to the utility service provider.
(2) Notwithstanding paragraph E.10.k(i) above, a primary dwelling unit may have a direct utility connection to an onsite wastewater treatment system in accordance with this paragraph and the city’s code. Each primary dwelling unit on the lot that is or that is proposed to be connected to an onsite wastewater treatment system must first have a percolation test completed within the last five years or, if the percolation test has been recertified, within the last 10 years.
(3) All utilities must be underground.
l. Building & Safety. All structures built on the lot must comply with all current local building standards. An urban lot split is a change of use.

11. Fire-Hazard Mitigation Measures.
a. A lot in a very high fire hazard severity zone must comply with each of the following fire-hazard mitigation measures:
(1) It must have direct access to a public right of way with a paved street with a width of at least 40 feet. The public right of way must have at least two independent points of access for fire and life safety to access and for residents to evacuate.
(2) All dwellings on the site must comply with current fire code requirements for dwellings in a very high fire hazard severity zone. (3) All enclosed structures on the site must have fire sprinklers. (4) All sides of all dwellings on the site must be within a 150-foot hosepull distance from either the public right of way or of an onsite fire hydrant or standpipe.
(5) If the lot does not have a swimming pool, the lot must have a water reservoir of at least 5,000 gallons per dwelling, with fire-authority approved hookups compatible with fire-authority standard pump and hose equipment.
b. Prior to submitting an application for an urban lot split, the applicant must obtain a certificate of compliance with all applicable fire-hazard mitigation measures in accordance with this subpart E.11. The city or its authorized agent must inspect the site, including all structures on the site, and certify as to its compliance. The certificate must be included with the application. The applicant must pay the city’s costs for inspection. Failure to pay is grounds for denying the application.

12. Separate Conveyance.
a. Within a resulting lot.
(1) Primary dwelling units on a lot that is created by an urban lot split may not be owned or conveyed separately from each other.
(2) Condominium airspace divisions and common interest developments are not permitted on a lot that is created by an urban lot split. (3) All fee interest in a lot and all dwellings on the lot must be held equally and undivided by all individual property owners. (4) No timeshare, as defined by state law or this code, is permitted. This includes any co-ownership arrangement that gives an owner the right to exclusive use of the property for a defined period or periods of time. b. Between resulting lots. Separate conveyance of the resulting lots is permitted.

If dwellings or other structures (such as garages) on different lots are adjacent or attached to each other, the urban lot split boundary may separate them for conveyance purposes if the structures meet building code safety standards and are sufficient to allow separate conveyance. If any attached structures span or will span the new lot line, the owner must record appropriate CC&Rs, easements, or other documentation that is necessary to allocate rights and responsibility between the owners of the two lots.

13. Regulation of Uses.
a. Residential-only. No non-residential use is permitted on any lot created by urban lot split.
b. No Short-term Rentals. No dwelling unit on a lot that is created by an urban lot split may be rented for a period of less than 30 days. c. Owner Occupancy. The applicant for an urban lot split must sign an affidavit stating that the applicant intends to occupy one of the dwelling units on one of the resulting lots as the applicant's principal residence for a minimum of three years after the urban lot split is approved.

14. Notice of Construction.
a. At least 30 business days before starting any construction of a structure on a lot created by an urban lot split, the property owner must give written notice to all the owners of record of each of the adjacent residential parcels, which notice must include the following information:
(1) Notice that construction has been authorized,
(2) The anticipated start and end dates for construction, (3) The hours of construction,
(4) Contact information for the project manager (for construction-related complaints), and
(5) Contact information for the Building & Safety Department. b. This notice requirement does not confer a right on the noticed persons or on anyone else to comment on the project before permits are issued. Approval is ministerial. Under state law, the City has no discretion in approving or denying a particular project under this section. This notice requirement is purely to promote neighborhood awareness and expectation.

15. Deed Restriction. The owner must record a deed restriction on each lot that results from the urban lot split, on a form approved by the city, that does each of the following:
a. Expressly prohibits any rental of any dwelling on the property for a period of less than 30 days.
b. Expressly prohibits any non-residential use of the lots created by the urban lot split.
c. Expressly prohibits any separate conveyance of a primary dwelling on the property, any separate fee interest, and any common interest development within the lot.
d. States that:
(1) The lot is formed by an urban lot split and is therefore subject to the city’s urban lot-split regulations, including all applicable limits on dwelling size and development.
(2) Development on the lot is limited to development of residential units under section 17.86.010 of this code, except as required by state law.

F. Specific Adverse Impacts.

1. Notwithstanding anything else in this section, the city may deny an application for an urban lot split if the building official makes a written finding, based on a preponderance of the evidence, that the project would have a “specific, adverse impact” on either public health and safety or on the physical environment and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact.

2. “Specific adverse impact” has the same meaning as in Gov. Code § 65589.5(d)(2): “a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete” and does not include (1) inconsistency with the zoning ordinance or general plan land use designation or (2) the eligibility to claim a welfare exemption under Revenue and Taxation Code section 214(g).

3. The building official may consult with and be assisted by planning staff and others as necessary in making a finding of specific, adverse impact.

Chapter 20.211 is hereby added to the Stanton Municipal Code to read as follows:

Chapter 20.211 – State-mandated Residential Projects
Section 20.211.010 – Two-unit Projects
A. Purpose. The purpose of this section is to allow and appropriately regulate two-unit projects in accordance with Government Code section 65852.21.

B. Definition. A “two-unit project” means the development of two primary dwelling units or, if there is already a primary dwelling unit on the lot, the development of a second primary dwelling unit on a legally subdivided lot in accordance with the requirements of this section.

C. Application.

1. Owner
A. Only individual property owners may apply for a two-unit project. “Individual property owner” means a natural person holding fee title individually or jointly in the person’s own name or a beneficiary of a trust that holds fee title. “Individual property owner” does not include any corporation or corporate person of any kind (partnership, LP, LLC, C corp, S corp, etc.) except for a community land trust (as defined by Rev. & Tax Code § 402.1(a)(11)(C)(ii)) or a qualified nonprofit corporation (as defined by Rev. & Tax Code § 214.15).

B. Any person with a mortgage interest in the lot to be split under this section must sign the application and the parcel map indicating the person’s consent to the project.

2. An application for a two-unit project must be submitted on the city’s approved form.

3. The applicant must obtain a certificate of compliance with the Subdivision Map Act for the lot and provide the certificate with the application.

4. Only a complete application will be considered. The city will inform the applicant in writing of any incompleteness within 30 days after the application is submitted.

5. The city may establish a fee to recover its costs for adopting, implementing, and enforcing this section of the code, in accordance with applicable law. The city council may establish and change the fee by resolution. The fee must be paid with the application.

D. Approval.

1. An application for a two-unit project is approved or denied ministerially, by the director of community development, without discretionary review.

2. The ministerial approval of a two-unit project does not take effect until the city has confirmed that the required documents have been recorded, such as the deed restriction and easements.

3. The approval must require the owner and applicant to hold the city harmless from all claims and damages related to the approval and its subject matter.

4. The approval must require the owner and applicant to reimburse the city for all costs of enforcement, including attorneys’ fees and costs associated with enforcing the requirements of this code.

E. Requirements. A two-unit project must satisfy each of the following requirements:

1. Map Act Compliance. The lot must have been legally subdivided.

2. Zone. The lot is in a single-family residential zone. For purposes of this section, a single-family residential zone is a zone where the only residential use that is allowed as a primary use is a single residential dwelling on a lot.

3. Lot Location.
a. The lot is not located on a site that is any of the following:
(1) Prime farmland, farmland of statewide importance, or land that is zoned or designated for agricultural protection or preservation by the voters.
(2) A wetland.
(3) Within a very high fire hazard severity zone, unless the site complies with all fire-hazard mitigation measures required by existing building standards.
(4) A hazardous waste site that has not been cleared for residential use.
(5) Within a delineated earthquake fault zone, unless all development on the site complies with applicable seismic protection building code standards.
(6) Within a 100-year flood hazard area, unless the site has either:
(a) been subject to a Letter of Map Revision prepared by the Federal Emergency Management Agency and issued to
the local jurisdiction, or
(b) meets Federal Emergency Management Agency
requirements necessary to meet minimum flood plain
management criteria of the National Flood Insurance
Program.
(7) Within a regulatory floodway unless all development on the site has received a no-rise certification.
(8) Land identified for conservation in an adopted natural community conservation plan, habitat conservation plan, or other adopted natural resource protection plan.
(9) Habitat for protected species.
(10) Land under conservation easement.
b. The purpose of subpart E.3.a above is merely to summarize the requirements of Government Code section 65913.4(a)(6)(B)–(K). (See Gov. Code § 66411.7(a)(3)(C).)
c. The applicant must provide evidence that the requirements of Government Code 65913.4(a)(6)(B)-(K) are satisfied.

4. Not Historic. The lot must not be a historic property or within a historic district that is included on the State Historic Resources Inventory. Nor may the lot be or be within a site that is designated by ordinance as a city or county landmark or as a historic property or district.

5. No Impact on Protected Housing.
a. The two-unit project must not require or include the demolition or alteration of any of the following types of housing:
(1). Housing that is income-restricted for households of moderate, low, or very low income.
(2). Housing that is subject to any form of rent or price control through a public entity’s valid exercise of its policy power. (3). Housing, or a lot that used to have housing, that has been withdrawn from rental or lease under the Ellis Act (Gov. Code §§ 7060–7060.7) at any time in the 15 years prior to submission of the urban lot split application.
(4). Housing that has been occupied by a tenant in the last three years.
b. The applicant and the owner of a property for which a two-unit project is sought must provide a sworn statement by affidavit representing and warranting that subpart E.5.a above is satisfied.
(1) The sworn statement must state that:
• (a) No housing that is income-restricted for households of moderate, low, or very low income will be demolished or altered.
• (b) No housing that is subject to any form of rent or price control will be demolished or altered.
• (c) No housing that has been withdrawn from rental or lease under the Ellis Act at any time in the last 15 years will be demolished or altered.
• (d) No housing that has been occupied by a tenant in the last three years will be demolished or altered.
(2) The city may conduct its own inquiries and investigation to ascertain the veracity of the sworn statement, including but not limited to, surveying owners of nearby properties; and the city may require additional evidence of the applicant and owner as necessary to determine compliance with this requirement.

5. Unit Standards.
a. Quantity.
(1) No more than two dwelling units of any kind may be built on a lot that results from an urban lot split. For purposes of this paragraph, “unit” means any dwelling unit, including, but not limited to, a primary dwelling unit, a unit created under this section of this code, an ADU, or a JADU.
(2) A lot that is not created by an urban lot split may have a twounit project under this section, plus any ADU or JADU that must be allowed under state law and the city’s ADU ordinance. b. Unit Size.
(1) The total floor area of each primary dwelling built that is developed under this section must be
(a) less than or equal to 800 and
(b) more than 500 square feet.
(2) A primary dwelling that was legally established on the lot prior to the two-unit project and that is larger than 800 square feet is limited to the lawful floor area at the time of the two-unit project.

The unit may not be expanded.
(3) A primary dwelling that was legally established prior to the two-unit project and that is smaller than 800 square feet may be expanded to 800 square feet after or as part of the two-unit project. c. Height Restrictions.
(1) On a lot that is larger than 2,000 square feet, no new primary dwelling unit may exceed a single story or 16 feet in height, measured from grade to peak of the structure.
(2) On a lot that is smaller than 2,000 square feet, no new primary dwelling unit may exceed two stories or 22 feet in height, measured from grade to peak of the structure. Any portion of a new primary dwelling that exceeds one story must be stepped back by an additional five feet from the ground floor; no balcony deck or other portion of the second story may project into the stepback. (3) No rooftop deck is permitted on any new or remodeled dwelling or structure on a lot with a two-unit project. d. Demo Cap. The two-unit project may not involve the demolition of more than 25 percent of the existing exterior walls of an existing dwelling unless the site has not been occupied by a tenant in the last three years. e. Lot Coverage. Lot coverage may not exceed 50 percent of the lot. This lot coverage standard is only enforced to the extent that it does not prevent two primary dwelling units on the lot at 800 square feet each. f. Open Space. At least 50 percent of the lot must be maintained as open space. This open space standard is only enforced to the extent that it does not prevent two primary dwelling units on the lot at 800 square feet each.

6. Setbacks.
a. Generally. All setbacks must conform to those objective setbacks that are imposed through the underlying zone.
b. Exceptions. Notwithstanding subpart E.6.g(i) above:
(1). Existing Structures. No setback is required for an existing legally established structure or for a new structure that is constructed in the same location and to the same dimensions as an existing legally established structure.
(2) 800 sf; four-foot side and rear. The setbacks imposed by the underlying zone must yield to the degree necessary to avoid physically precluding the construction of up to two units on the lot or either of the two units from being at least 800 square feet in floor area; but in no event may any structure be less than four feet from a side or rear property line.
c. Front Setback Area. Notwithstanding any other part of this code, dwellings that are constructed under this section must be at least 25 feet from the front property lines. The front setback area must:
(1) be kept free from all structures greater than three feet high; (2) be at least 50 percent landscaped with drought-tolerant plants, with vegetation and irrigation plans approved by a licensed landscape architect;
(3) allow for vehicular and fire-safety access to the front structure.

7. Parking. Each new primary dwelling unit must have at least one off-street parking space per unit unless one of the following applies:
a. The lot is located within one-half mile walking distance of either (1) a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours or
(2) a site that contains
(a) an existing rail or bus rapid transit station,
(b) a ferry terminal served by either a bus or rail transit service, or
(c) the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.
(3) The site is located within one block of a car-share vehicle location.

8. Architecture.
a. If there is a legal primary dwelling on the lot that was established before the two-unit project, any new primary dwelling unit must match the existing primary dwelling unit in exterior materials, color, and dominant roof pitch. The dominant roof slope is the slope shared by the largest portion of the roof.
b. If there is no legal primary dwelling on the lot before the two-unit project, and if two primary dwellings are developed on the lot, the dwellings must match each other in exterior materials, color, and dominant roof pitch. The dominant roof slope is the slope shared by the largest portion of the roof.
c. All exterior lighting must be limited to down-lights. d. No window or door of a dwelling that is constructed on the lot may have a direct line of sight to an adjoining residential property. Fencing, landscaping, or privacy glass may be used to provide screening and prevent a direct line of sight.
e. If any portion of a dwelling is less than 30 feet from a property line that is not a public right-of-way line, then all windows and doors in that portion must either be (for windows) clerestory with the bottom of the glass at least six feet above the finished floor, or (for windows and for doors) utilize frosted or obscure glass.

9. Landscaping.
a. Tree Removal.
(1) No mature tree may be removed on a lot with any development under this section unless removal is necessary to constructing a dwelling unit that must be allowed under state law.
(2) “Mature tree” means a tree with a diameter of six inches or more or a height of eight feet or taller.
(3) A tree may only be removed under subparagraph E.9.a.(1) above if it is replaced with at least two mature trees of the same type and with a trunk diameter that is the same or larger than that of the removed tree.
(4) If a certified arborist determines that there is not space on the lot for a replacement tree that is required under subparagraph E.9.a(1) above, owner may pay the replacement cost of the tree, as determined by the city’s tree-replacement cost schedule. b. Screening. Evergreen landscape screening must be planted and maintained between each dwelling and adjacent lots (but not rights of way) as follows:
(1) According to a planting and irrigation plan that is prepared by a licensed landscape architect.
(2) At least one 15-gallon size plant shall be provided for every five linear feet of exterior wall. Alternatively, at least one 24” box size plant shall be provided for every ten linear feet of exterior wall.
(3) Plant specimens must be at least six feet tall when installed. As an alternative, a solid fence of at least 6 feet in height may be installed.
c. All landscaping must be drought-tolerant.
d. All landscaping must be from the city’s approved plant list.

10. Nonconforming Conditions. A two-unit project may only be approved if all nonconforming zoning conditions are corrected.

11. Utilities.
a. Each primary dwelling unit on the lot must have its own direct utility connection to the utility service provider.
b. Notwithstanding paragraph E.11.a above, a primary dwelling unit may have a direct utility connection to an onsite wastewater treatment system in accordance with this paragraph and the city’s code. Each primary dwelling unit on the lot that is or that is proposed to be connected to an onsite wastewater treatment system must first have a percolation test completed within the last five years or, if the percolation test has been recertified, within the last 10 years.
c. All utilities must be underground.

12. Building & Safety. All structures built on the lot must comply with all current local building standards. A project under this section is a change of use and subjects the whole of the lot, and all structures, to the city’s current code.

F.. Fire-Hazard Mitigation Measures.

1. . A lot in a very high fire hazard severity zone must comply with each of the following fire-hazard mitigation measures:
a. It must have direct access to a public right of way with a paved street with a width of at least 40 feet. The public right of way must have at least two independent points of access for fire and life safety to access and for residents to evacuate.
b. All dwellings on the site must comply with current fire code requirements for dwellings in a very high fire hazard severity zone. c. All enclosed structures on the site must have fire sprinklers. d. All sides of all dwellings on the site must be within a 150-foot hose-pull distance from either the public right of way or of an onsite fire hydrant or standpipe.
e. If the lot does not have a swimming pool, the lot must have a water reservoir of at least 5,000 gallons per dwelling, with fire-authority approved hookups compatible with fire-authority standard pump and hose equipment.

2. Prior to submitting an application for an urban lot split, the applicant must obtain a certificate of compliance with all applicable fire-hazard mitigation measures in accordance with this subpart E.7. The city or its authorized agent must inspect the site, including all structures on the site, and certify as to its compliance. The certificate must be included with the application. The applicant must pay the city’s costs for inspection. Failure to pay is grounds for denying the application.

G. Separate Conveyance.
1 Primary dwelling units on the lot may not be owned or conveyed separately from each other.

2. Condominium airspace divisions and common interest developments are not permitted within the lot.

3. All fee interest in the lot and all the dwellings must be held equally and undivided by all individual property owners.
a. No timeshare, as defined by state law or this code, is permitted. This includes any co-ownership arrangement that gives an owner the right to exclusive use of the property for a defined period or periods of time.

H. Regulation of Uses.

1. Residential-only. No non-residential use is permitted on the lot.

2. No Short-term Rentals. No dwelling unit on the lot may be rented for a period of less than 30 days.

3. Owner Occupancy. Unless the lot was formed by an urban lot split, the individual property owners of a lot with a two-unit project must occupy one of the dwellings on the lot as the owners’ principal residence and legal domicile.

I. Notice of Construction.
1 At least 30 business days before starting any construction of a two-unit project, the property owner must give written notice to all the owners of record of each of the adjacent residential parcels, which notice must include the following information:
(a) Notice that construction has been authorized,
(b) The anticipated start and end dates for construction, (c) The hours of construction,
(d) Contact information for the project manager (for construction-related complaints), and
(e) Contact information for the Building & Safety Department. 2 This notice requirement does not confer a right on the noticed persons or on anyone else to comment on the project before permits are issued. Approval is ministerial. Under state law, the City has no discretion in approving or denying a particular project under this section. This notice requirement is purely to promote neighborhood awareness and expectation.

J. Deed Restriction. The owner must record a deed restriction, on a form approved by the city, that does each of the following:
1 Expressly prohibits any rental of any dwelling on the property for a period of less than 30 days.
2 Expressly prohibits any non-residential use of the lot. 3 Expressly prohibits any separate conveyance of a primary dwelling on the property, any separate fee interest, and any common interest development within the lot.

4. If the lot does not undergo an urban lot split: Expressly requires the individual property owners to live in one of the dwelling units on the lot as the owners’ primary residence and legal domicile.

5. Limits development of the lot to residential units that comply with the requirements of this section, except as required by state law.

K. Specific Adverse Impacts.
1 Notwithstanding anything else in this section, the city may deny an application for a two-unit project if the building official makes a written finding, based on a preponderance of the evidence, that the project would have a “specific, adverse impact” on either public health and safety or on the physical environment and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact.
2 “Specific adverse impact” has the same meaning as in Gov. Code § 65589.5(d)(2): “a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete” and does not include (1) inconsistency with the zoning ordinance or general plan land use designation or (2) the eligibility to claim a welfare exemption under Revenue and Taxation Code section 214(g).
3 The building official may consult with and be assisted by planning staff and others as necessary in making a finding of specific, adverse impact.

G. Remedies.

If a two-unit project violates any part of this code or any other legal requirement:
1 The buyer, grantee, or lessee of any part of the property has an action for damages or to void the deed, sale, or contract.
2 The city may:
a Bring an action to enjoin any attempt to sell, lease, or finance the property.
b Bring an action for other legal, equitable, or summary remedy, such as declaratory and injunctive relief.
c Pursue criminal prosecution, punishable by imprisonment in county jail or state prison for up to one year, by a fine of up to $10,000, or both; or a misdemeanor.
d Record a notice of violation.
e Withhold any or all future permits and approvals.
f Pursue all other administrative, legal, or equitable remedies that are allowed by law or the city’s code.
1 CITY OF STANTON

REPORT TO CITY COUNCIL
TO: Honorable Mayor and Members of the City Council
DATE: February 22, 2022
SUBJECT: CITY OF STANTON’S AMERICAN RESCUE PLAN ACT (ARPA)

ALLOCATION OF FUNDS REVIEW AND UPDATE
REPORT IN BRIEF:

Staff will provide an American Rescue Plan Act (ARPA) presentation to provide the City Council with an update and review of the City’s ARPA allocation plans.

RECOMMENDED ACTION:

1. City Council declare that this item is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) and 15060(c)(3); and

2. Receive and file the presentation.

BACKGROUND:

Through the passage of H.R. 1319, the American Rescue Plan Act of 2021 (ARPA), state, tribal, and local governments have received billions in much-needed relief to help offset the negative impacts of COVID-19. The City of Stanton has been allocated a total of $9,123,660 of these Coronavirus State and Local Fiscal Recovery Funds (SLFRF), with the second of two equal installments expected to be received at the end of July 2022.

The entire SLFRF allocation must be encumbered by the end of calendar year 2024. The first Annual Project and Expenditure report is due to the U.S. Department of the Treasury by April 30, 2022.

ANALYSIS:

On January 27, 2022, the U.S. Treasury Department published a Final Rule to implement the SLFRF program. The Final Rule establishes five eligible use categories for the funds:
• Responding to the public health emergency or its negative economic impacts. • Providing premium pay to eligible workers (performing essential work). • Providing government services (to the extent of the reduction in the recipient’s general revenue due to the public health emergency).

Item: 8B
Click here to return to the agenda.
2 • Making necessary investments in water, sewer, and broadband infrastructure. • Meeting the non-federal matching requirements for Bureau of Reclamation projects.

Under the Final Rule’s Standard Allowance threshold, the City is allowed to claim $10 million as general revenue loss due to the public health emergency. By opting to take the Standard Allowance, the City is permitted to use its entire $9,123,660 for the provision of government services. The Treasury Department has clarified that “generally speaking, services provided by the recipient governments are ‘government services’ under the interim final rule and final rule, unless Treasury has stated otherwise.” Activities that the Treasury Department has explicitly excluded from the definition of government services include:
• Payment of debt service;
• Replenishing of financial reserves (e.g., rainy day funds); • Satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or regulatory proceeding, unless the judgment or settlement required the provision of government services;
• Deposits into any pension fund; and
• Uses that conflict with the overall statutory purpose of ARPA to reduce the spread of COVID-19.

FISCAL IMPACT:

No new fiscal impact.

ENVIRONMENTAL IMPACT:

None. This item is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378(b)(5) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly).

LEGAL REVIEW:

None.

STRATEGIC PLAN OBJECTIVE(S) ADDRESSED:

1. Provide a safe community.

2. Provide a strong local economy.

3. Provide a quality infrastructure.

4. Ensure fiscal stability and efficiency in governance. 3 5. Provide a high quality of life.

6. Maintain and promote a responsive, high-quality, and transparent government.

PUBLIC NOTIFICATION:

Public notice for this item was made through the regular agenda process.

Prepared By: Reviewed By:
/s/ Jason Huynh
__________________________
/s/ Soo Elisabeth Kang
__________________________
Jason Huynh
Management Analyst
Soo Elisabeth Kang
Assistant to the City Manager
Approved By: Approved By:
/s/ Jarad L. Hildenbrand
__________________________
__________________________
Jarad L. Hildenbrand
City Manager
Attachment(s):

A. City of Stanton’s ARPA Update Presentation – Year 1, Quarter 2 B. U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds Final Rule
ARPA
YEAR 1, QUARTER 2

CITY COUNCIL UPDATE

RESPOND, RECOVER, REBUILD
Reporting Period:

September 29, 2021, to January 25, 2022
Att achment: A
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What HAS NOT Changed

FINAL RULE UNVEILED
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What HAS Changed

THE SPIRIT OF ARPA

1. Fight the pandemic and support families and
businesses struggling with its public health and
economic impacts

2. Maintain vital public services, even amid
declines in revenue resulting from the crisis

3. Build a strong, resilient, and equitable
recovery by making investments that support
long-term growth and opportunity
“Related and Reasonably Proportional”

INCREASED THRESHOLDS
COVID-19 Response
• Restoring pre-pandemic employment up to

7.5% above the City’s pre-pandemic
employment baseline
• Revised definitions of “impacted” and
“disproportionately impacted” communities/
classes
Backfilling Loss Revenue
• Standard Allowance of up to $10 M for
“provision of government services”
And More Eligibility Expansions

RESPOND

RECOVER

REBUILD
3 RECOVER & REBUILD: HELPING OUR MOST VULNERABLE
Department Project Progress
Public Safety Homeless Outreach
Homeless Outreach Coordination
• Expansion of outreach and engagement to homeless individuals impacted by COVID-19 to provide resources such as shelter, mental health services, and housing placement. • 69 street exits facilitated (homeless individuals placed or successfully referred) between August 1 and December 21
Community &
Economic
Development
Permanent
Supportive Housing
Riviera Motel Conversion
• Application to Homekey program submitted
• $2.5 M encumbered by the City (contingent on Homekey award) Community &
Economic
Development
Affordable Housing
Magnolia Crossings (Revitalization)
• Exclusive negotiations with Brandywine Homes, C&C Development, and National CORE regarding the Tina-Pacific neighborhood
Community Services Addressing Food
Insecurity
Emergency Food Distribution
• Hundreds of meals served from October to December
• 280 grocery gift cards distributed to families
Community Services Community Needs
Assessment
Community Needs Assessment
• Survey launched in Arabic, Chinese, English, Korean, and Spanish • Random sample, intended to match the overall demographics of residents in Stanton • Approx. 2 weeks of response gathering (phone call, email) • Results and recommendations upcoming
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Who says small cities can’t be smart cities? The City of Stanton is using emerging technology to enhance our services to the community, harnessing the power of data to adapt to the community’s needs in real time, and centering our operations around performance indicators that support community well-being. This transparency and accountability hub will ensure that the City’s work is effective, efficient, and equitable. We hope these digital tools will help empower you to reach out so we can better serve you. Together, we will make our community healthier and more resilient. Welcome to a Smarter Stanton!
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Community Needs Assessment
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Welcome to the City of Stanton’s COVID COVID-19 Vulnerability -19 Dashboards. My name is David and I serve as your Mayor. These last 2 years have been very challenging for our community with many parts of our lives disrupted in ways we could not have imagined.

As a result of these events, the city of Stanton launched new services to address the specific needs from the community during the pandemic. We will share information about these activities in the following data dashboards.

Home > Smarter Stanton > COVID-19 Response & Recovery
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These dashboards will help you see the impact of the pandemic on your neighborhood, as well as the risk COVID-19 poses to your neighborhood today.

First, click on the button below to look up your census tract. From there, type in the last 5 digits into the Stanton Equity Map below to spotlight your neighborhood.

If you have any questions or encounter any difficulties with these dashboards, please contact Jason Huynh
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Click Here to Look Up Your Census Tract

LOOKING AHEAD
• ARPA Budget Reassessment, Research, & Reporting
• Shade Structure Expansion at Stanton Central Park
• Outdoor Fitness Court (Stanton Park)
• Bauman’s Market Environmental Site Assessment
• NeoGov Recruitment Software Rollout
• Cybersecurity Modernization
• City Rebranding
• Boys & Girls Club of Stanton Update
• On-Call Translation Services
• Crime Prevention Program
AND MORE!
6 oro
4338 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations

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, 20213 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
Public Law 117- 2. haps:11w , cmoness.gov1
117/p1atys1m,b121PLAW-117publ2pdf.
z 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 nonentitiement units of
local government.
e 86 FR 26786 ( May 17, 2021).
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 days 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
Centers for Disease Control and Prevention,
COVID Data Tracker: COVID- 19 Vaccinations in the
United States, https:llcovid.cdcgovlcoviddatntracker/# vaccinations (last visited December 31, 2021).
s Centers for Disease Control and Prevention,
COVID Data Tracker, http:/ 1.. vid.cdc.gov1
covid-data- tracker1#dmtseocker-home (last visited
December 7, 2021).
e U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; hup, 11fred.
stlouisfed.org/ series/ UNRATE (last visited
December 7, 2021).
7Id,
exceeded its pre -pandemic size e 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 levels36 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" maybe 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
U.S. Bmeau of Economic Analysis, Real Gross
Domestic Product [GDPC1], retrieved from FRED,
Federal Reserve Sank of St. Louis, https:11fred.
st1ouisfed.org/ series1GDPC1 ( lastvisited December
7, sU. 2021). S. Bureau of Labor Statistics, supra note 6.

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:11Jred. stlouisfed.org/ series/
CES9092000001 mdhttps:11fredst1ouisfed. org1
series/ CES9093000001 ( last visited December 7,
2021).
ii 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, nonentitiement units
of local government, and counties.

Attachment: B
Click here to return to the agenda.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4339 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 ofMajor 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 subcategories)
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
4340 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
Americansl2 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
11 Centers for Disease Control and Prevention,
COVIDData Tracker, http:// w , covid,cdcgov/
covid-data-tracker1#dotntmcker-home (last visited
December 31, 2021).

U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS] hops://fred.
stlomsfed,mg/ senes/ PAYEMS (last visited
December 7, 2021).

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4341 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 SURF
program provides the resources needed
to re -invest in vital public services and
workers to avoid this outcome36

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
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
hfe. In the interimfinal rule, Treasury generally
used the term " disadvantaged" to refer to these
same populations and communities.

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:llfrsd.stlouisfed.org/ series/
CES9092000001 and https:llfred.stiouisfed.orgl
series/ CES9093000001 ( last visited December 7,
2021).
16 Tracy Gordon, State and Local Budgets and the
Great Recession, Brookings Institution (Dec. 31,
2012), http:llwww.bnooldngs.edulanticleslstat -and—
local-budgets-and- the-great-recession.
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 lowerincome families, who were more likely to experience income loss and more
likely to have a job that required inperson 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
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.
4342 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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"). ' R 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
is Note that small businesses, nonprofits, and
industries may also function as subrecipients. For
additional information on these distinctions see
s action Distinguishing Subrecipients versus
Senefidaries.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4343 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
1" In designing an intervention to mitigate
COVID- 19, the recipient should consider guidance
frompublic 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: 11
www.cdcgov/comnavuuv12019-ncov/indexheat .

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.
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, costeffectiveness, 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
4344 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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. 2' 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
20For 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.

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.
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.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4345 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 longterm 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 (FPC) 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
33 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.
4346 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
2021 FEDERAL POVERTY GUIDELINES
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

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 Distnct of Columbia: $ 4,540.

Alaska: $5, 680.

Hawaii: $ 5, 220.

Source: " HHS Poverty Guidelines for 2021," available at https.Ilaspe.hhs.govltopicslpoverty-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
24 U.S. Department of Health and Human Service,
HHS Poverty Guidelines for 2021, available at
https:llaspe hhs.gov/ topicslpover2yeccnorm,
mobility/poverty- guidelines.
25 U.S. Department of Housing and Urban
Development, FY 2021 Section 8Income, Limits,
available athttps:11.. huduse, go, 1portal1
datasets/ iLrl211Section8-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
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
State and Metropolitan Area, available othttps:ll
www.huduseagov/portalldataset lillil21/ amadefinitions-FY21.pdf 26 The U.S. Census Bureau provides an interactive
map: U.S. Census Bureau, Median Household
Income State Selection Meg available of https:ll
data. census govlcedsci/ map?q=Median
20Househo1d %201nccme& g= 010000OUS
2404000 %24001& tid=ACBBT5Y2019.51901 &cid=
S1901_ C01_ 012E&vinmge= 2019. The U.S. Census
Bureau also provides an interactive table: U.S.

Census Bureau, Median Household Income In The
Past 12 Months Do 2019 Inflation -Adjusted Dollars),
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 lowincome households; specifically, it is the midpoint of the 30 percent income
limit and the 50 percent income limit
available at https:lldata.census.govlcedsci/ table?q—
bl9013& tid=ACSDT5Y2019.Bl9Ol3&hidePrevieu—
true.
21 See U.S. Bureau of Labor Statistics,
Occupational Employment and Wage Estimates,
https:11www.bls.gov1csv1cmoant/ oes_nothtm (last
visited December 7, 2021).
za U.S. Census Bureau, Poverty Status by State,
https:11www.census.gov/ data/ tablesltime- series/
demo/income-poverty/ cps- povlpov / 6html (last
visited December 712021).

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4347 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
For instance, Melissa Kearney at 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.h. milt, nproject.org/assets/
legacy/fi'les/ downloads_and _Gnks/ 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/ uploods/
2016107/Sawhill FINAL.pdf.

Data on median annual wages from: U.S.

Bureau of Labor and Statistics, Occupational
Employment and Wage Statistics, available at
haps:// www.bis.gov/ors/ currenCoes_nothtm (last
visited December 7, 2021).

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), haps://
www urban. org/ sites/ default/files/pubhbation/
98701/ 2001896_ foodinsecurity_housinghardship_
medicalcareuelization_finalizedpdf
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
OCT 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
4348 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations disproportionate, or meaningfully more
severe, impact from the pandemic. As
discussed in the interim final rule, preexisting 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 lowincome 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, lowincome 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
3z For instance, the American Community Survey
does not include all territories. U.S. Census Bureau,
Areas Published, https:// wwwcensus.gov/
programs- surveys/ acs/ geography-acs/ measpubhshed.html (last visited November 9, 2021). 33U. S. Department of Health and Human
Services, supra note 24.
34For 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.
31 Lina Stoylar at. al., Challenges in the U.S.

Territories: COVID- 19 and the Medicaid Financing
Cliff, Kaiser Family Foundation (May 18, 2021),
h ttps:// www.kff.org/ comnaviruscovid-19/ issuebrief/challenges-in-the- u- s- territories-covid- l9-andthe-medicaid finsincon-cliffl, 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:
o Children' s Health Insurance
Program (CHIP)
o Childcare Subsidies through the
Child Care and Development Fund
CCDF) Program
o Medicaid
o National Housing Trust Fund
HTF), for affordable housing programs
only
o 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:
o Temporary Assistance for Needy
Families (TANF)
o Supplemental Nutrition Assistance
Program (SNAP)
o Free and Reduced -Price Lunch
NSLP) and/ or School Breakfast (SBP)
programs
o Medicare Part D Low-income
Subsidies
o Supplemental Security Income
SSI)
o Head Start and/ or Early Head Start
o Special Supplemental Nutrition
Program for Women, Infants, and
Children (WIC)
o Section 8 Vouchers
o Low -Income Home Energy
Assistance Program ( LIHEAP)
o Pell Grants
o For services to address educational
disparities, Treasury will recognize Title
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4349 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
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 emended (20 U.S. C. 6313), including
schools served under section 1113( b)( 1)( C) of that
Act.
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 preexisting 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 OCT, 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 OCT 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
4350 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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 COVID19 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
a ' Press Release, Centers for Disease Control and
Prevention, First Travel -related Case of 2019 Novel
Comnavirus Detected in United States Dan. 21,
2020), https:11.., dc.gov/media/ releases/ 2020/
p0121-novel- coronavirus-travel-cose.ht 1.

Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in Number of COVID—
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
19 Cases and Deaths in the US Reported to CDC,
by State/ Territory, https:// covid.cdc.gov/ coviddatntrockar4trends—dailyeandscases (last visited December 7, 2021).
3sld.
4° Centers for Disease Control and Prevention,
COVID Data Tracker, http:11w covid.cdc.gov/
id-data- tracker1#datseocker-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.cdcgov/ coviddatntracker/# vaccinations (last visited December 7, 2021).
4z Id,
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 airquality 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
43 Columbus, Ohio Recovery Plan, https://
w , columbus.gov/ recovery/.
44 Luzern County, Pennsylvania Recovery Plan,
h ttps: 11.. Iuzerne. un ty. orgIDocumen tCenter/
View/26304/ Final-Interim-Recovery-PIanPerforman ce- 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:11.. cdcgov/
coronavirus/ 2019-ncov/ comm uni ty/school schildcare/ k- 12-guidance hteal.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4351 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 COVID19 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
4o Nirmits Parched at al., The Implications of
COVID- 19 for Mental Health and Substance Abuse
Feb. 10, 2021), https: 11., kff.orglcoronavirus
covid-19/ issue-brief/the- implica tions- of-covi d- 19- formental-healthond-substance- usel#:-: text=
Older%2oadults% 20are %20also% 20 more,
prior%20to%2Othe% 2Ocurmnt% 2Ocrisis; Mark E.

Czeisler at al., Mental Health, Substance Abuse, and
Suicidal Ideation During COVID- 19 Pandemic—
United States, June 2440 2020, Morb. Mortal.

Wkly. Rep. 69( 32): 1049- 57 ( Aug. 14, 2020), hup, 11
wwwcdcgov/mmwr/ volumes1691wr1
mm6932a1.han,
4 7Id,
4n Rebecca T. Loeb at 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): 16750 (Nov. 13, 2020),
https:llw , cdcgov/mmwr/volumesl69lwr/
mm6945a3.han,
4o Centers for Disease Prevention and Control,
National Center for Health Statistics, Provisional
Drug Overdose Death Counts, https:// www.cdcgov/
nchslnvsslvsrr/ drugoverdosedatn.htm (last visited
May 8 December 6, 2021).
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 lowincome 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,
sOPanchal, supra note 46; Mark E. Czeisler at al.,
supra note 46.
11 The White House, FACT SHEET: More Details
on the Biden-Harris Adminishation' s Investments
in Community Violence Interventions (April 7,
2021), https:11www widtehouse.gov/briefing-room/
sta Yemen ts- releases/ 2021 /04/ 07/fact-sheet-moredetails- on- the- biden- harris- administrations - investments -in -comm uni ty-violence-interventions/
sz Federal Bureau of Investigation, FSI Releases
2020 Crime Statistics ( September 27, 2021) haps:11
www. fbi.govlnews/prsssrel/press-releasedfbireleases- 2020-cume-sta tis tics.

1. Id,
14 Id,
ss The Educational Fund to Stop Gun Violence,
Community Gun Violence, haps:11efsgv. org/1earn/
eofgun-violencelcommunit gun- violence/( last
visited November 9, 2021).
se Giffords Law Center, Healing Communities in
Crisis: Lifesaving Solutions to the Urban Gun
Violence Epidemic (March 2016), hops:11giffmots,
orglwpcontentluploods/ 2019lollHealingCcmmunities-in- Crisis pdf 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
St. Louis, MO Recovery Plan, haps:11
www.stiouis-mo.govlgo mment/recoverylcovid- 19/
mjo. lplan/
5aLos Angeles County, CA Recovery Plan, htm,11
filelocounty.gov/ SDSlnter/boslsupdocs/
160391. pdf
so Office of the White House, National Strategy for
the COVID- 19 Response and Pandemic
Preparedness Dan. 21, 2021), haps:11
www.whi tehouse.govlwp-= ten t/ uploads/2021lolI
National-Strategy-for-the- COVID- 19-Response-andPandemic-Preparednesspdf o° 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 Slack individuals were 1. 4 times
more likely to do so than White individuals. See
Sebastian D. Romano at al., Trends in Racial and
Ethnic Disparities in COVID- 19 Hospitalizations,
by Region—United States, MarchDecember2020,
MMWR Morb Mortal Wkly Rep 2021, 70: 560- 565
Apr. 16, 2021), https:// www.cdcgov/mmwr/
volumes/ 701orl= 7015e2htm?s cid=mm7015e2
an e1 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:11covid.cdcgov1coviddotn- tracker/#popfactors- totoldeaths (last visited December 7, 2021).
ez 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
4352 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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 overrepresented among essential workers, who facegreater 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
Vulnerability Index, https:// covid.cdcgov/ coviddatn- tacker/#popfactors- totaldeaths (lastvisited December 7, 2021).
6- Centers for Disease Control and Prevention,
Risk for COVID- 19 Infection, Hospitalization, and
Death Ey Race/ Ethnicity, https:// www.cdcgov/
coronavirus/ 2019-nccv/covid-data/investigationsdiscovery/hospi tnlization-death-by-raceethnicity.htial (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:11w , cdcgov/
coanavimu 12019-ncov/ community/health-equity/
racial-ethnic-dispari ties/ disparities-illness.html
last visited December 7, 2021).
66Milena Abnagro at al., Racial Disparities in
Frontline Workers and Housing Crowding During
COVID- 19: Evidence from Geolocation Data ( Sept.
22, 2020), NYU Stem School of Business
forthcoming) available at haps:// papers.ssrmcom/
so13/ papers.cfm? abstract- id=3695249; Grace
McCormack at al., Economic Vulnerability of
Households with Essential Workers, JAMA
324( 4):388- 90 ( 2020), available athtmp :// j.. et
workcom/journals/jama/fullarticle/ 2767630.
66 See, e. g., Joseph G. Courtney at 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.cdcgov/
mmwr/ volumes/ 70/ wr/mm7005a2htm; Emily A.

Bender & Lindsay F. Wiley, Health Justice Strategies
to Combat COVID- 19: Protecting Vulnerable
Communities During a Pandemic, Health Affairs
Blog (Mar. 19, 2020), https: 11., he. Ith.ff.iTs, orgl
do/ 10. 1377/hblog20200319.757883/ fuh/.
61See, e. g., Centers for Disease Control and
Prevention, supra note 62; Bender & Wiley, supra
note 66; Nathaniel M. Lewis at al., Disparities in
COVID- 19 Incidence, Hospitalizations, and Testing,
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 SARSCoV- 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
by AreaLevelDeprivation—Utah, March 3 - July 9,
2020, Morb, Mortal. Wkly. Rep. 69(38): 1369- 73
Sept 25, 2020), https:// www.cdcgov/mmwr/
vo1umes/ 69/ wr/mm6938a4. h tm.
66Generally, funding uses eligible under CRF as
a response to the direct public health impacts of
COVID- 19 will continue to be eligible under the
ARTA, 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).
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
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4353 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 SURF 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 SURF 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 SURF 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
See Centers for Disease Control and Prevention,
COVID Data Tracker, https:11covid. cdcgov/ coviddom- tmcker4trends olmlycases( last visited December 7, 2021).
7° See Centers for Disease Control and Prevention,
COVID- 19, https:llw , cdc.gov/ comnavirus/ 2019-
ncov/index.1tml (last visited November 8, 2021).
71 See § 35. 6da; Comnavims State and Local
Fiscal Recovery Funds, 86 FR at 26786.
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
SURF 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 an
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 7`t 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
R Centers for Disease Control and Prevention,
COVID Data Tracker: COVID- 19 Vaccinations in the
United States, https:11covid. cdc.gov1covid-dotntmcker4vaccinations (last visited October 18, 2021).

T 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:llow , fda.gov/ neosevenis/ press-announcements/ fdo-authorizes-pfizerbiontech- covid-l9-vaccine-emergency- use- childn n5 -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:11.. fd..govine.- e enk Ipressonnouncemen ts/ fdo- authorizes-pfizer-bion techcovid- 19-vaccine-emergency-use-children-5- through -1 l -years -age (last visited November 8,
2021).
4354 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
Coronavirus State and Local Fiscal Recovery
Funds, Frequently Asked Questions, as of July 19,
2021; https:llhome.treasury.gov/system/ files/ 136/
SLFRPFA(gpdf 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.
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 onsite 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
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4355 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
outdoors76 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
Ie See Centers for Disease Control and Prevention,
Participate in Outdoor and Indoor Activities,
https:llw , cdcgov/ coronavirus/ 2019-ncov/ dailylifacoping/ outdooractivitieshtml (last visited November 8, 2021).
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 selffunded 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 eligible77
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
I' Hodines 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.
4356 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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 7e 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
Ia However, SURF funds may not be used to
reimburse a service that was also billed to
insurance.
eligible services under SURF 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 mortality79
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,
79 In line with the Department of Health and
Human Services, Overdose Prevention Strategy,
https:11w , hhsgov/overdose-prevention/, and the
Office of National Drug Control Policy,
Administration' s Statement on Drug Policy
Priorities for Year One (April 1, 2021), haps://
www.whitehouse,govlwp-content/ uploads/ 2021/ 03/
BidenHorris-Statement-of-Drug-Policy-PuoriticsApril-l.pdf 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
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4357 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 hospitalbased 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.e) 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. R5
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. e7
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
U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; heps: 11
fred. stlouisfed.org/ series/ PAYEMS (last visited
December 7, 2021).
a11d.
a1U. S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; hups:11fred.
stlouisfed.org/ series/ UNRATE (last visited
December 7, 2021).

U.S. Bureau of Labor Statistics, supra note 80.
a° U.S. Bureau of Labor Statistics, supra note 82.

U.S. Bureau of Economic Analysis, Real Gross
Domestic Product [GDPC1], retrieved from FRED,
Federal Reserve Bank of St. Louis, https:llfred.
st1ouisfed.org/ series1GDPC1 ( last visited December
7, 2021).

G6U. S. Department of the Treasury, Economy
Staterromby Catherine Wolfram, Acting Assistant
Secretary for Economy Policy, for the Treasury
Borrowing Advisory Committee (November 1,
2021), available at 1ttps:11home, aoasury.gov/news/
press-releasesljy0453.
a7Yuka Hayashi, IMF Cuts Global Growth
Forecast Amid Supply -Chain Disruptions,
Pandemic Pressures, Wall Street Journal (October
12, 2021), available at1ttps:// www.wsj.com1
articlesfimf -cu ts- global-gmwth-forscast-amidsupply-chain-di sruptions- warns- of-inflation -risks - 11634043601.
as U.S. Bureau of Labor Statistics, supra note 80.
as U.S. Bureau of Labor Statistics, Civilian Labor
Force Level [ CLF160V], retrieved from FRED,
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
Federal Reserve Sank of St. Louis, https:11fred.
st1ouisfed,mg/ series1CLF160V (last visited
December 7, 2021).
s° U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:

Employment status of the civilian populationby sex
and age ( December 6, 2021), https:llwwwbls.govl
news.releaselempsit,t0l.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 etluricity, sex, and age (December 6, 2021),
https:llw, bls,govlweblempsiticpseea04htra( 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:llw, bls.gov/ weblempsiticpseea05htm( 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:llfiles.epi.orglpdfl219418.pdf. See also,
Michael Dalton at 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), 1aps: 11w bls.gov/ osmr/resemchpapers/ 20211ydflec210020.pdf. sz Center on Budget and Policy Priorities,
Tracking the COVID- 19 Recession' s Effects on
Food, Housing, and Employment Hardships,
https:11.. cbpp.orglresearchlpoverty-andinequality/ tracking- the-covid-19-econom ys- effectsonfood -housing -and (lastvisited December 17, 2021).
4358 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
93 Michael Karpman, Dulce Gonzalez, Genevieve
M. Kenney, Parents Are Struggling to Provide for
Their Families during the Pandemic, Urban
Institute (May 2020), haps:// www.urbaa,mg/
research/ publico tion/ parents-are- s trugglingprovide- their-families-during-pandemic?u tm_ source= urban researcher& uan
medium=email&uan cam ugn=covid_
parents& u rr_ term= lhp.
94 Women have carried a larger share of childcare
responsibilities than men during the COVID- 19
crisis. See, e g., Gema Zamarro & Maria J. Prados,
Gender differences in couples' division of
childcare, work and mental health during COVID19, Rev. Econ. Household 19:11- 40 (2021), available othttps:// link.springer.com/ article/

10. 1007/ x11150-020-09534- 7; Titan Alan at al., The
Impact of COVID- 19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
April 2020), available athtmp :// wwwnber.oml
papers/ w26947.
9s 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).
90U.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.stiouisfed.org/ series/LNS11300031 ( lastvisited
December 7, 2021).
91U.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:llfred.stiouis
fed.org/ series/LNS11300029 (last visited December
7, 2021).
93See, 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), haps:// www.bTookings. edu/ blog/jobs/ 2011/
11 /04/ unemploymen t-and-earnings-losses- a-lookat-long-term-im pacts -cf-the-great-recession- onameu. n-workers/. through, among other factors, damaged
consumer credit scores 99 and reduced
familial and childhood wellbeing. loo
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
99 Chi CM Wu, Solving the Credit Conundrum:

Helping Consumers' Credit Records Impaired by the
Foreclosure Crisis and Great Recession, National
Consumer Law Center (Dec. 2013), haps://
www.nclaorg/images/ pdf/credi t_reports/ reportcreditconundrum-2013. pdf onhwur Garfinkel, Sara McLanahan, Christopher
Wimer, ads., Children of the Great Recession,
Russell Sage Foundation (Aug. 2016), available at
h ttps:// www.russellsage.org/publim tions/ cldldrengreat-recession. 01 Kyle J. Casewell and Stephen Zuckerman,
Food Insecurity, Housing Hardship, and Medical
Care Utilization, Urban Institute Qune 2018),
available athttps:// www.urban. org/ sites/ default/
files/publication/ 98701/ 2001896 foodinsecurity_
housinghardship_medicalcare utilization_
finalizedpdf
02 Housing insecurity is defined as not paying
the full amount of rent or mortgage and/ or utility
bills (gas, off, or electricity) sometime in the
previous 12 months.

Ina 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).

Ioa Id.
101 His. Gould and Melat Kassa. Low-wage, low -
hours workers were hit hardestin the COVID- 19
recession: The State of Working America 2020
employment report, Economic Policy Institute (May
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 jobs106 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 percent108
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, lowwage 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, lowincome 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."'
2021), available at haps://, oaoca i.org/pubhbation/
swa- 2020- employaaam report/.

1. 0Id
107Id,

10. 1d,
100R. Chatty, J. Friedman, N. Hendren, M.

Stepner, & Team, T. O. L, The Economic Impacts
of COVID- 19: Evidence from a New Public Database
Built Using Private Sector Data (No. w27431; p.
w27431) ( 2020), Na Lionel Bureau of Economic
Research. haps:// doi.org/ 10. 3386/ w27431.
110M. Despard, Michel 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), haps:/ 1
bTookings.edulbloglupfTontl2020/ 07/ 13/
covid-l9-job-and -income -loss-leading- to more -
hunger -and -financial -hardship/
IN. Panchal, R. Kernel, C. Minima, & P.

Chidambaram, The Implications of COVID- 19 for
Mental Health and Substance Use, Kaiser Family
Foundation (February 10, 2021), haps://
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4359 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 preexisting 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 reorganized 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
www kff.org/ coronavirus- covid-19fissue- briefltheimplications-of- covid-l9- for -men tal-health- andsubstance-usel. 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 Gross -
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.
z 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.

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
4360 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
13 See FAQ 2. 21. Coronavirus State and Local
Fiscal Recovery Funds, Frequently Asked
Questions, as of July 19, 2021; https:ll
home. treasury.govlsystemlfi'lesll361SLFRPFAQ,pdf.
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 SURF 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, highquality 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
unanswered114 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
114Jung Hymn Choi, Laurie Goodman, and Daniel
Pang, The Pandemic Is Making It Difficult for Mom -
and -Pop Landlords to Maintain Their Properties,
Urban Institute Italy 23, 2021), https:ll
www. urban.org/ urban-wire/pondemit -making -it -
difficult mom - and pop landlords maintain- thenpropeTtie, t -
difficult - mom - and - pop - landlords - maintain - then - properties.
115U. S. Energy Information Administration,
Residential Energy Consumption Survey ( 2017),
Retrieved from https:llwww.eia.gov/ consumption/
residentialldata120151hclphplhcll. l.php.

D. Hernandez, Understanding `energy insecurity'
and why it matters to health, Social Science &
Medicine, 167, 1- 10 ( 2016), https:lldoi.orgl

10.10161j socscimed.2016. 08.029.
11eHernandez, D. ( 2016). Understanding `energy
insecurity' and why it matters to health. Social
Science & Medicine, 167, 1- 10. https:lldoi.orgl

10.10161j socscimed.2016. 08.029.
117U. S. Energy Information Administration,
Residential Energy Consumption Survey (RECS)
https:llw, eia.govlconsumptionlresidentialldotal
20151hc1yhp/ hc11 J nhp. (last visited November 9,
2021)
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4361 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. 18 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 healthcare119 With increased use of
1a 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), haps:/ 1
www aoeee. ong/® tee/ default/files/ pubhbations/
resemchrepous/ u1602pdf
19 See, e g., Nation Telecommunications and
Information Ad.. inishation, More than Half 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 Cooperation 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 wifi 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-fi122 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
American Households Used the Internet for Health -
Related Activities in 2019, NTIA Data Show
December Z 2020), https:11. w ti., gov/ blogl
2020/more-half canencen-households- usedinternet-heal th-related-activities-2019-ntia-datashow; Nation Telecommunications and Information Administration, Nearly a Third of American
Employees Worked Remotely in 2019, NTIA Data
Show (September 3, 2020) htips:// wwwntia.gov/
blog/ 2020/ nearly-thud-american-employessworked-remotely-2019-ntia-data-show; and generally, Nation Telecommunications and
Information Administration, Digital Nation Data
Explorer U. 10, 2020), https:// www.nti.. gov/
data/ digital-nation-data-explorer.
1zn BroadbandSearch Slog Post, How Do U.S.

Internet Costs Compare To The Rest Of The World?,
available athttps:// wwwbroodbandsemchnet/blog/
Internet-costs- cornpared-worldwide.
z1 Pew Research Center, Mobile Technology and
Home Broadband 2021 ( June 3, 2021), https://
www.pewmsearch. org/internet/2021/ O6/ 03/mobiletechnology-and-home- broadband-2021 / zz Pew Research Center, 53% of Americans Say
the internet Has Been Essential During the COVID19 Outbreak (April 30 202x), https:llo w psw rsseanch. o,g/ inte. etl2020/ 04l3Ol58ofame,, canssay-the -internet -has-been-essen tial-during-thscovid- 19-outbreak/ 123Id.
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.
4362 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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 lowincome 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
benefit124 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
24 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), haps:11
nbe, mg/ papers/ w24652.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4363 SNAP). 125 In other cases, policies like
public charge and asset testing can
discourage otherwise eligible
households126 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 pandemic127
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
lo' United States Department of Agriculture,
Trends in Supplemental Nutrition Assistance
Program Participation Rates: Fiscal Year 2016 to
Fiscal Year 2018 ( May 2021), hams:// fns—prod,
ozureedge net/sites/ default/fi'les/ resource-files/
Trends2016-2018pdf
126 Jeremy Barofsky at al., Spreading Fear: The
Announcement Of The Public Charge Rule Reduced
Enrollment In Child Safety Not Programs, Health
Affairs (October 2020), https:11ount health
affairs. org/ doi/full/ 10.1377/hlthaff.2020.00763.
127See, 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 Returnbutwho
Appear on a Tax Year 2019 Form 1095 and
Associated Number of Policy Holders Qune 2021),
https:llh. e. tre. sury.go, lsystem/ files/ 131/
Estimated -Comes -of Children- Unclaimed-for-CTCby -ZIP -Code- 2019. pdf 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. 12e
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
to - Women have carried a larger share of
childcare responsibilities than men during the
COVID- 19 crisis. See, e. g., Gema Zamarro & Man' s
J. Prados, Gender differences in couples' division of
childcare, work and mental health during COVID19, Rev. Econ. Household 19: 11- 40 ( 2021), available athttps:// link,springer.com/ article/

10.1007/ s11150- 020- 09534- 7; Titan Alan at al., The
Impact of COVID- 19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
April 2020), available athttps:11ounnnba mg/
papers/ w26947.
z0 See, e. g., Center For The Study Of Child Care
Employment (CSCCE), Child Care Sector Jobs: SLS
Analysis (November 8, 2021), https:// cscce,
barkeley.edu/ child-care- sector jobs-bls- onalysis/;
Emma K. Lee, and Zachary Parolin. The Care
Burden during COVID- 19: A National Database of
Child Care Closures in the United States, Scams
Eanuary 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 COVID19 Pandemic, NEER Working Paper No. 28934 Qune 2021), https: 11.. nbeT.oTg/ paperslw28934.

Low-income households are also more
likely to lose access to quality
childcare131 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 options132
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 families133134
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. 13e The impact also extended
U.S. Census Bmeau, 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/programssurveys/ household-pulse- survey/ data html. 3' Id,
33N. Kallud, C. Kelly, & A. Garg, Child Care
During the COVID- 19 Pandemic: A Sad Situation
Made Worse. Pediatrics ( 2021), haps:// dm,mg/

10.1542/pe ds. 2020-041525.
3c National Association for the Education of
Young Children, Am Next? Sacrificing to Stay
Open, Child Care Providers Face a Bleak Future
Without Relief (December 2020), https://
www.noeyc.org/ sites/ default/files/glolwlly-shared/
downloads/ PDF.
36 G. G. Wusenfeld, Impacts of Covid-19 on
Preschool Enrollment and Spending, New
Brunswick, NJ: National Institute for Early
Education Research (2021), haps:// nieer.org/ wp
content/ uploads/ 2021/ 03/NIEER_Policy _ Brief
Impacts -of Covid- 19on Preschool Enrollmentand
Spending_3_ I6_21 pdf.
36Heather 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.waslu'ngtonpostcom/ business/
2021/ o9/ i9/childcare- workers- quit/.
37Monash University, The emotional toll of
COVID- 19 among early childhood educators
August 5, 2020) https:111ens m.. a h.edu/ @
educ. tionl2020/08lO5ll3810011the- emotional-tollof-covid-l9-among-early -childhood -ed ucators. 3a Daphna Bassok and Anna Shapiro,
Understanding COVID- 19- era emollment drops
Continued
4364 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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
among early -grade public school students,
Brookings Institution (February 22, 2021), https://
www brookings.edu/ blog/ brown-centerhalkboard/
2021 /02/ 22/ unders tending-covid-l9-eraemollment-drops-among-early -grade -public -school - students/ as Centers for Disease Control and Prevention, Pregnant and Recently Pregnant People, https://
www cdcgov/ coronavirus/ 2019-ncov/need- extraprecautions/pregnant-peoplehtml (last visited November 9, 2021).
weeks). 149 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

14. Id,
41 Sarah Javaid, Sarah Barringer, Sarah D
Compton, Elizabeth Kaselitz, Maria Muzik, Cheryl
A. Moyer, The impact of COVID- 19 on prenatal
care hi the United States: Qualitative analysis from
a survey of 2519 pregnant women, Midwifery,
Volume 98, 2021, 102991, ISSN 0266- 6138, haps://
doi.org/ 10.1016/ jmidw2021. 102991.
41 A Basu, HH Kim, R Basaldua, KW Choi, L
Chevron, at 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):. 0249780, ( 2021), haps:// doi.org/

10. 1371/ journalpone.0249780.
143 Amanda Taub, A New Covid-19 Crisis:

Domestic Abuse Rises Worldwide, New York Times
April 6, 2020), https:11www.nytimes,com/ 2020/ 04/
06/ world/ coronavirus-domestic-violence.ht 1.
44 Xenia SMh Sion, Efforts to Reduce Black
Maternal Mortality Complicated by COVID- 19,
California Health Care Foundation (April 20, 2020),
https:// www.chcf.org/blog/effortsmd uce-blackmo ternal-mortolity-complicated-covid-19/ 45 U.S. Department of Health and Human
Services, Home Visiting Evidence of Effectiveness,
https:llhomvee.. cf.hhs.go, loutcomes/ maternal %20
healthAn% 20Brief.

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
system148 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
146National Conference of State Legislatures,
Criminal Justice System Responses to COVID- 19
November 16, 2020), https:/ 1w ucxLmg/
research/ civi1-and-crimina1-justice/ criminal-justiceand-covid-19. aspx. 147John Burton Advocates for Youth, The
Cumulative Impact of the Pandemic on Youth Who
Have Been in Foster Care or Homeless ( May 2020)
https:lljb. y.oTglwp-. tentluplo. ds/ 2021/ 0411BAYCOVID- 19-Impact.pdf 148John Kelly, Next Week, Thousands of Foster
Youth Will Age Out on the Same Day ( September
21, 2021), https:llimprintne.. orglsubscribeTcon tent/ thousands-of-fos ter -you th- will-age-out-onthe- same-day/59006. 14s Comad-Hi. bn.r, Aislinn, and Elizabeth
Byram, The Temporal Impact of Economic
Insecurity on Child Maltreatment: A Systematic
Revie, Trauma, Violence, & Abuse, vol. 21, no. 1,
Jan. 2020, pp. 157- 178, doi: 10. 1177/
1524838018756122.

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4365 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 inperson 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 inperson instruction for a significant period of time has been impacted by the
pandemic and is thus eligible for
responsive services.
so Verlenden JV, Pampati S, Rasberay CN, at al.

Association of Children' s Mode of School
Instruction v ith 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; 70:369476. DOI: http:// dx doi.orgl

10. 15585/ mmwrmm7011alexternal icon.

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,
51 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.edgov/documents/
coronavirus/ lost-instructional-time. pdf,
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 households352
so Consumer Financial Protection Bureau,
Housing insecurity and the COVID- 19 pandemic
Continued
4366 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 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 lowincome renters and homeowners are struggling with lost employment and
income and are behind on their housing
payments. 154
Public Comment: Affordable Housing
Outside ofLow -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 lowincome residents faced disproportionate impacts of COVID- 19 and develop
affordable housing targeted to these
households. Such a scenario could
include, for example, affordable projects
March 2020), https://frles. consumerfinance.gov/f/
documents/ cfpb_Housing _insecurity and theCOVID-19_pandemicpdf. 153 joint Center For Housing Studies Of Harvard
University, The State of the Nation' s Housing Qune
2021), https:llw jchsharvard.edu/ sites/ default/
files/ reports/ files/ HarvardJCHS_Se te_ Nations_
Housing_2021. pdf
1s9 Davin Reed and Eileen Divringi, Household
Rental Debt During COVID- 19: Update fox 2021,
Federal Reserve Sank of Philadelphia (2020),
available at: haps: 11w philadelphiafed. org/
community-development/housing- andneighborhoods/ househol d -rental-debt-during-covid19- 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 ( une
2019), available at 1aps:11w jpmorganchase,
com/ con ten t/dam/jpmc/jpmorgonchose-andco/
institute /pdf /institute-tm dingcquity-fory
liquidity.pdf.
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 SURF, 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 SURF 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 SURF 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 lowincome 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 SURF 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
SURF 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
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4367 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 forprofit 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- 19155
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. iss 159
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:11., health
af(airs. org/ dm110. 13771M th aff.2020.00863.
se Scott Broom at al., Employee and Worksite
Perspectives of the Family and Medical Leave Act:

Results from the 2018 Surveys, Abt Associates ( July
2020), https:llw , dol.gov/ sitesldolgov/files/
GASP/evaluation /pdf/WHD_FMLA2018Survey
Resulte_FinalReport_Aug2020pdf
1s 71d.
11- A. P. Bartel et al., Racial and ethnic
disparities in access to and use of paid family and
medicalleave: evidencefromfournationally
representative datasets, U.S. Bureau of Labor
Statistics (BLS) ( Lanuary 2019), https:11www.bls.gov1
opubImIT120191articlelTocial-and-ethnicdispaTities-in-access- to-and- use- of paid familyandmedical-leave htea.

Continued
4368 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations For workers that are also caregivers
for children, seniors, or other family
members, there may be a similar need
for—and benefits of—paid family leave.

For example, some workers may have
struggled during the pandemic to
balance caring for children, as schools
and daycares closed, and working. For
new parents, paid parental leave results
in fewer infant hospitalizations,
lowering parental stress, increasing
parental involvement, and improving
the overall health of parent and child360
COVID- 19 has also increased the levels
of " caregiving intensity" 161 and
caregiving burden" 182 for those
providing care to seniors or older family
members. 163164 When surveyed, more
than half of caregivers reported that
COVID- 19 increased both the amount of
caregiving responsibilities they had as
well as the negative physical and mental
impacts their caregiving responsibilities
had on themselves. 165
Treasury Response: Treasury agrees
that these constitute impacts of the
pandemic, and accordingly, under the
final rule, creating, expanding, or
financially supporting paid sick,
medical, or family leave programs is an
enumerated eligible use of funds to
respond to the negative economic
impacts of the pandemic.

12. Health insurance.

Public Comment: Several commenters
recommended that uses of funds to
expand access to health insurance be
enumerated eligible uses; commenters
believed that the heightened risk of
11s U.S. Bureau of Labor Statistics, Employee
Benefits in the United States (March 2019), haps:/ 1
wwwbls.gov/ ncs/ ebs/ benefits/2019/ ownership/
ci hian/ table31a,pdf.
160 Maya Rossin-Slater at al., Local exposure to
school shootings and youth antidepressant use,
Proceedings of the National Academy of Sciences,
vol 117( 38), pages 23484- 23489 ( 2020), haps://
wwwpnas. org/ content/ 117/ 38/ 23484; And Marek
Pild and Gaetano Basso, Did California Paid Family
Leave Impact Infant Health?, Journal of Policy
Analysis and Management, haps:// oulmeGbmry.
wiley.com/ doi/ abs/ 10.1002/ pam.2210.
461 J. C. Jacobs, A. Laporte, C. H. Van Houtvem P. C.

Coyte, Caregiving intensity and retirement status in
Canada. Social Science & Medicine, 102, 742
2014), https: 11.. sciencedirect.com/ science/
article/ abs/pii/S0277953613006631.

I6z E. Lightfoot, R.P. Moone, Caregiving in times
of uncertainty: Helping adult children of aging
parents find support during the COVID- 19
outbreak, Journal of Gerontological Social Work,
63( 6- 7), 542- 552 ( 2020), htrps:11.. t. ndfon
line.com/ doi/ abs/ 10. 1080/ 01634372.2020. 1769793.
163 Note: " Caregiving intensity" is defined as the
amount and type of care provided by informal
caregivers " Caregiving burden" is defined as the
impacts on physical and mental health, and healthrelated quality of life of informal caregivers. 64 SA Cohen, ZJ Kunicki, MM Droham ML
Greaney, Exploring Changes in Caregiver Burden
and Caregiving Intensity due to COVID- 19,
Gerontology and Geriatric Medicine Qanuary 2021),
doi:10. 1177/ 2333721421999279.
161 Id
illness or hospitalization due to COVID19 had increased the negative economic impacts of lacking health insurance.

Background: In 2019, prior to the
pandemic, it was estimated that 11
percent of nonelderly adults lacked
health insurance366 By mid -2020, job
loss had resulted in an estimated 3. 3
million people losing their employer
sponsored insurance, resulting in an
additional 2 million uninsured
adults. 187 Participation in Medicaid, the
Children' s Health Insurance Program
CHIP), and the Affordable Care Act
ACA) marketplace played an important
role in minimizing the number of
people who completely lost health
insurance during the early phases of the
pandemic; Medicaid and CHIP
enrollment increased by 9 percent from
February to September 2020168 and 8. 3
million people enrolled in insurance
through the ACA marketplace169
Although the ACA, CHIP, and
Medicaid have significantly reduced the
number of uninsured Americans
through the pandemic and the economic
downturn, adequate coverage and
affordability still remains an issue for
many. In 2020, 21 percent of working -
age adults were inadequately insured,
meaning even if they had insurance,
they incurred a significant amount of
out-of-pocket costs.170 Additionally, 37
percent of adults reported struggling
with medical bills or medical debt and
71 percent of adults who did not
purchase insurance cited affordability as
the main factor.171
166Jennifer Tolbert at al., Key Facts about the
Uninsured Population, Kaiser Family Foundation
November 6, 2020), haps:// www.kff.org/ uninsured/
iss ue- brief/key-facts-about-the- uninsuredpopulation/.

I67Joshua Asians at. al., As the COVID- 19
Recession Extended into the Summer of 2020, More
Than 3 Million Adults Lost Employer -Sponsored
Health Insurance Coverage and 2 Million Became
Uninsured, Urban Institute (September 18, 2020),
https:// www.urban.org/research/ pubhbation/ covid19-recession- extended- summ er-2020-more- 3- million-adul ts-lost-employer-sponsored-healthinsmance-coverage-and-2-million-becam e - uninsured.
163 Centers for Medicare and Medicaid Services,
Medicaid and CHIP Enrollment Trends Snapshot
through September 2020 ( Washington: 2021),
available athttps:// www.medicaidgov/sites/
default/fi'les/ 2021- 01/ septemberrvmedicaidchip
enrollment -trend -snapshotpdf
46s Centers for Medicare and Medicaid Services,
2021 Federal Health Insurance Exchange Weekly
Enrollment Snapshot: Final Snapshot (Lanuary 12,
202 1) available at haps:// www.cros.gov/newsroom/
fact-sheets/ 2021-federal-heal th-insuranceexchange- weekly-enrollment-snapshot-finalsnapshot. 17- Sara R. Collins, Murder Z. Curia, and
Gabriella N. Aboulafia, U.S. Health Insurance
Coverage in 2020: A Looming Crisis in Affordability
New York: Commonwealth Fund, 2020), available
at haps:// www commonwealthfund.org/
publico tions/ iss ue-briefs/ 2020/ aug/ looming-crisishealth-coverage- 2020-biennial.

I n Id.

Treasury Response: Treasury agrees
that loss of health insurance, increased
financial risk from lacking health
insurance, or excessive out-of-pocket
healthcare costs constitute negative
economic impacts of the pandemic.

Under the final rule, programs or
services to expand access to health
insurance coverage are an enumerated
eligible use as assistance to households,
for example, subsidies for health
insurance premiums or expansion of a
recipient' s health insurance plan to
cover additional employees who
currently lack coverage.

13. Services for the unbanked and
underbanked.

Public Comment: One commenter
expressed support for the inclusion of
services to increase banking access as an
allowable expense under SLFRF. The
commenter recommended that states be
encouraged to offer opportunities for
consumers to open safe and affordable
accounts capable of receiving direct
payments. The commenter emphasized
that allowing unbanked and
underbanked households to receive
funds securely through no -fee, direct
deposit will help connect or reconnect
consumers to the mainstream financial
system.

Background: Banking inequities can
make it difficult for unbanked or
underbanked households to access
housing, jobs, and other important
economic opportunities. Being
unbanked or underbanked can also
make it challenging for households to
apply for and receive financial
assistance, including services like
pandemic emergency housing
assistance.

Safe, affordable, and accessible
financial services play a critical role in
assisting households in the United
States in managing income volatility
and cash flow shortages. 172 Currently,
over 5 percent of families, or 7 million
households are " unbanked," meaning
they do not have a bank account. 173
Low-income households, non-white
households, and households with
individuals with disabilities were even
more likely to be unbanked. In 2019, 16
percent of Native American households,
14 percent of Black households, and 12
percent of Hispanic households were
unbanked, compared to 2. 5 percent of
white households. Additionally,
172 Federal Deposit Insurance Corporation, FDIC
National Survey of Unbanked and Underbanked
Households (2015), https:// wwwfdlagov/household
survey/2015/ 2015execsmrr pdf
Ira Federal Deposit Insurance Corporation, How
America Banks: Household Use of Banking and
Financial Services 2019 FDIC Survey, hhps://
www. fdic.gov/ analysis/ household-survey/
2019wpounal,
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4369 underbanked households—those that
have a bank account but rely on
alternative financial services, such as
money orders, payday loans, and check
cashing services— account for 16
percent of all households in the United
States. 174 As a result of the COVID- 19
pandemic, new social distancing
protocols have, in some instances, made
it more difficult to perform financial
transactions with paper instruments,
like banknotes, coinage, paper checks,
or money orders. Households
constrained to these payment methods
may face challenges receiving
government assistance. Additionally,
businesses have transitioned to cashless
payments systems to promote
contactless payments.175 As a result,
unbanked individuals may face
additional challenges conducting
financial transactions.

Treasury Response: Recognizing these
challenges, Treasury is clarifying that
recipients may use SLFRF funds to
provide financial services that facilitate
the delivery of federal, state, or local
benefits (e. g., Child Tax Credit, Earned
Income Tax Credit, tax refunds, or
emergency housing or food assistance
funds). The following includes a non -
exhaustive list of uses to provide
financial services to unbanked and
underbanked households:

Provide low or no cost financial
services, including in conjunction with
administration of benefits, such as prepaid debit cards, e. g., via Economic Impact Payment or General Purpose
Reloadable pre -paid cards or for the
development of public banking
infrastructure that can support benefit
delivery.

Provide transitional services to
facilitate long-term access to banking
and financial services.

Provide financial literacy programs
and conduct community outreach and
deploy engagement resources to
increase awareness about low-cost, no -
overdraft fee accounts, pilot new
strategies and approaches that help
overcome barriers to banking access and
support the gathering and sharing of
information in ways that improve
equity, such as community meetings,
partnerships with community-based
organizations, online surveys, focus
groups, human -centered design
14 Board of the Govemors of the Federal Reserve
System, Report on the Economic WellBeingof U.S.

Households in 2018May2019, haps:llwwwfedeml
reserve gov/publications/ 2019-economic-well-beingof-us-households m-2018- banking-ond-cTeddh an, 11 Zaheer Allam The Forceful Reevaluation of
Cash -Based Transactions by COVID- 19 and Its
Opportunities to Transition to Cashless Systems in
Digital Urban Networks. Surveying the Covid-19
Pandemic and its Implications ( 2020): 107- 117.
doi:10. 1016/ B978- 0- 12- 824313. 00008- 5.
activities, and other community
engagement activities.

Assistance to Unemployed and
Underemployed Workers
The interim final rule included
assistance to unemployed workers as an
enumerated eligible use, including
services like job training to accelerate
rehiring of unemployed workers."
Treasury provided further guidance,
based on recipient questions after the
interim final rule, that eligible uses
under this section also include " other
efforts to accelerate rehiring and thus
reduce unemployment, such as
childcare assistance, assistance with
transportation to and from a jobsite or
interview, and incentives for newly
employed workers[,]" as well as
assistance to unemployed workers
seeking to start small businesses.

Finally, further guidance also provided
that " public jobs programs, subsidized
employment, combined education and
on-the-job training programs, or job
training to accelerate rehiring or address
negative economic or public health
impacts experienced due to a worker' s
occupation or level of training" are all
enumerated eligible uses as assistance to
unemployed or underemployed
workers.

The interim final rule defined eligible
beneficiaries of assistance as
individuals who want and are
available for work, including those who
have looked for work sometime in the
past 12 months or who are employed
part time but who want and are
available for full-time work." This
definition is based on definitions used
by the Bureau of Labor Statistics to
define individuals currently
unemployed, as well as persons
marginally attached to the labor force
and working part-time for economic
reasons. 176 The latter two classifications
are types of labor underutilization, or
underemployed" workers.177 Finally,
the interim final rule specified that
assistance to unemployed workers
included both workers who lost their
job during the pandemic and resulting
recession and workers unemployed
when the pandemic began who saw
further deterioration of their economic
prospects due to the pandemic.

Public Comment: Commenters
generally supported the inclusion of this
enumerated eligible use. One
commenter recommended including
assistance for underemployed workers
who took jobs due to the pandemic that
w Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:

Concepts and Definitions, https:11w , bls.gov/ cps/
definitions hho (last visited November 9, 2021).
117ld.
did not fully utilize their skillset or did
not provide the hours, wages, or job
quality desired. Treasury has also
received recipient questions on whether
job fairs or grants to businesses to hire
underserved workers are eligible uses
under this category. Another commenter
recommended flexibility in eligible
workforce development programs,
arguing that rural areas may face
particular challenges.

Treasury Response: Treasury is
maintaining this eligible use in the final
rule, including the enumerated eligible
services in the interim final rule and
subsequent guidance. Treasury is also
confirming that job fairs or grants to
businesses to hire underserved workers
are eligible uses under this section.

Treasury is also enumerating that job
and workforce training centers are
eligible capital expenditures, so long as
they adhere to the standards and
presumptions detailed in the section
Capital Expenditures in General
Provisions: Other.

The final rule maintains the definition
of eligible beneficiaries, which is
aligned with the Bureau of Labor
Statistics' definitions of unemployed
workers and other labor
underutilization, using a common,
widely known definition that
incorporates a broad group of
individuals both unemployed or whose
skills are otherwise underutilized in the
labor market.

In addition, recognizing that the
pandemic has generated broad
workforce disruption, in the final rule,
Treasury is making clear that recipients
may provide job training or other
enumerated types of assistance to
individuals that are currently employed
but are seeking to move to a job that
provides better opportunities for
economic advancement, such as higher
wages or more opportunities for career
advancement.

Recipient Unemployment Insurance
Trust Funds and Related Expenses
Under the interim final rule, a
recipient may use funds to make
deposits into its account of the
Unemployment Trust Fund established
under section 904 of the Social Security
Act (42 U.S. C. 1104) up to the level
needed to restore the pre -pandemic
balance of such account as of January
27, 2020 or to pay back advances
received under Title XII of the Social
Security Act (42 U.S. C. 1321) for the
payment of benefits between January 27,
2020 and May 17, 2021. These costs
support the solvency of the
unemployment insurance system and,
ultimately, unemployment insurance
benefits provided to unemployed
4370 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations workers during the pandemic. 17a The
interim final rule also posed the
question of what, if any, conditions
should be considered to ensure that
funds used under this eligible use
category repair economic impacts of the
pandemic and strengthen
unemployment insurance systems.

Public Comment: Inclusion as an
Eligible Use and Conditions:

Commenters expressed mixed
perspectives on this eligible use
category. Some commenters supported
its inclusion, arguing that
unemployment insurance systems have
faced significant costs to support
unemployed workers during the
pandemic and that this constitutes a
negative economic impact that SURF
funds should be able to address. Other
commenters opposed this eligible use
category, arguing that funds used under
this category may not ultimately support
unemployed workers. Some
commenters noted that unemployment
insurance taxes on businesses
automatically increase when trust fund
balances are low and suggested that
permitting the deposit of funds into
unemployment insurance trust funds
prevents a tax increase on businesses,
some of which may not have faced
negative economic impacts from the
pandemic, rather than providing
assistance to unemployed workers.

Other comments suggested that deposits
are better thought of as savings for
future needs than assistance to
unemployed workers in the near term.

Responding to the interim final rule' s
question, several commenters suggested
that, if Treasury maintains this eligible
use, the final rule should require
detailed reporting on funds used under
this category or place conditions on this
category to increase the likelihood that
funds ultimately support unemployed
workers. For example, some
commenters suggested that recipients
that deposit SURF funds into their trust
fund should be barred from cutting
unemployment insurance benefits for
workers during the period of
performance or from erecting new
barriers to accessing benefits (e. g.,
through the application process and
ongoing requirements to receive
benefits). One commenter, noting that
unemployment insurance benefits often
provide low rates of wage replacement
and do not cover some types of
unemployed workers, argued that
recipients should not be permitted to
deposit funds into the trust fund unless
Note that, while the economic harm being
addressed accrued before March 3, 2021, the cost
incurred to address the harm occurs after March 3,
2021 and provides assistance to unemployed
workers, an eligible use of SLFRF funds.
the recipient concurrently expands
benefits. Finally, one commenter
suggested a cap on the amount of funds
that can be used for this purpose.

Treasury Response: Inclusion as an
Eligible Use and Conditions: In the final
rule, Treasury is maintaining the
inclusion of this eligible use category.

Because unemployment insurance trust
funds directly fund benefits to
unemployed workers, maintaining the
solvency of the trust fund is critical to
the continued provision of assistance to
unemployed workers. Further, funds
deposited into the trust fund must be
used as assistance to unemployed
workers, an eligible use of SURF funds.

Finally, while, in the absence of the
SURF, trust fund deposits would likely
be funded through increases on
employer payroll taxes, the eligibility of
uses of SURF funds does not depend
on how obligations would otherwise be
satisfied if the SURF were not available
for this use.

While deposits to unemployment
insurance trust funds generally serve as
assistance to unemployed workers,
recipients that make deposits but also
cut unemployment insurance benefits to
workers substantially decrease the
likelihood that the deposited funds will
assist unemployed workers. In other
words, SURF funds deposited into an
unemployment insurance trust fund
generally serve as assistance to
unemployed workers, unless recipients
take policy actions that substantially
decrease the extent to which SURF
funds would flow to unemployed
workers. As such, through December 31,
2024, recipients that deposit SURF
funds into an unemployment insurance
trust fund or use SURF funds to repay
principal on Title XII advances, may not
take action to reduce benefits available
to unemployed workers by changing the
computation method governing regular
unemployment compensation in away
that results in a reduction of average
weekly benefit amounts or the number
of weeks of benefits payable ( i.e., the
maximum benefit entitlement).

Finally, until the final rule becomes
effective on April 1, 2022, the interim
final rule remains binding and
effective. 179 These requirements were
not in effect under the interim final rule
and do not apply to funds used (i.e.,
obligated or expended) under the
interim final rule while it is in effect. In
addition, recognizing that some
recipients have taken significant steps
I See, e. g., U.S. Department of the Treasury,
More Information on the Conclusion of the Public
Comment Period and the Interim Final Rule on the
Coronavirus State and Local Fiscal Recovery Funds,
httpe:llhome, treasury.gov/ syaeralfilee/ 13611FRE,yoLone, yalf toward making a trust fund deposit or
repaying principal on Title XII advances
under the interim final rule, such as the
legislative appropriation of funds for
this purpose, even if a formal obligation
has not occurred, Treasury will exercise
enforcement discretion to not pursue
violations of this final rule provision
i.e., the requirement not to reduce
benefits) for recipients that have
appropriated funds for this purpose
prior to the date of adoption of the final
rule consistent with the laws and
procedures in their jurisdiction.

Recipients should refer to Treasury' s
Statement Regarding Compliance with
the Coronavirus State and Local Fiscal
Recovery Funds Interim Final Rule and
Final Rule, which provides additional
detail on these issues.

Public Comment and Treasury
Response: Technical Corrections and
Amendments: Following the interim
final rule, Treasury received recipient
questions on whether paying interest on
advances received under Title XII of the
Social Security Act (42 U.S. C. 1321) is
an eligible use of SURF funds; Treasury
is clarifying that such use is
permissible, consistent with Treasury' s
treatment of the eligibility of interest on
Title XII advances under the
Coronavirus Relief Fund.

Treasury is further clarifying that
recipients may only use SURF funds
for contributions to unemployment
insurance trust funds and repayment of
the principal amount due on advances
received under Title XII of the Social
Security Act up to an amount equal to
i) the difference between the balance in
the recipient' s unemployment insurance
trust fund as ofJanuary 27, 2020 and the
balance of such account as of May 17,
2021, plus (ii) the principal amount
outstanding as of May 17, 2021 on any
advances received under Title XII of the
Social Security Act between January 27,
2020 and May 17, 2021. Further,
recipients may use SURF funds for the
payment of any interest due on such
Title XII advances. In other words,
excluding interest due on Title XII
advances, the magnitude of the decrease
of the balance in the unemployment
insurance trust fund plus the principal
outstanding on any Title XII borrowings
made from the beginning of the public
health emergency to the date of
publication of the SURF interim final
rule sets a cap on the amount of SURF
funds a recipient may use for trust fund
contributions and repayment of
principal on Title XII advances. Further,
a recipient that deposits SURF funds
into its unemployment insurance trust
fund to fully restore the pre -pandemic
balance may not draw down that
Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4371 balance and deposit more SLFRF funds,
back up to the pre -pandemic balance.

Enumerated Eligible Uses for
Disproportionately Impacted
Households
Background
The COVID- 19 pandemic has had
disproportionally negative impacts on
many households and communities that
were already experiencing inequality
related to race, gender, age, or income
before the pandemic. People of color,
low-income workers, and women
disproportionately lost their jobs during
the COVID- 19 pandemic and
experienced disproportionate rates of
negative health outcomes. iso 181
These disproportionate negative
impacts experienced by systemically
underserved communities are not novel
to the COVID- 19 pandemic and the
economic downturn. Research shows
that historically underserved
communities that are experiencing
economic and social disparities
typically experience disproportionate
impacts of economic downturns and
natural disastersl82 This pattern held
true for the effects of COVID- 19 and the
economic downturn: Historically
undeserved groups experienced
amplified negative impacts, further
widening inequality.183
Many communities facing systemic
barriers had not yet recovered from the
impact of the Great Recession before
experiencing the impacts of COVID- 19
and the economic downturn. For
example, in 2009, at the end of the Great
Recession, households without a high
school diploma had an average annual
income of $32, 300 ( measured in 2018
dollars). By 2018, nine years into the
economic recovery, those same
households saw their average income
increase by $600. During that same time
period, households with a bachelor' s
degree saw an increase in their average
U.S. Department of Health and Human
Services, COVID- 19 and Economic Opportunity:

Inequities in the Employment Crisis, April 2021.

Retrieved from https:// aspe.hhs. gov/ sites/ default/
files/ migm ted—legacy—files// 199901 /covideconomic-equi ty-brief.pdf. 1a1 Ad. 11. Simmons at al., Health disparities by
race and ethnicity during the COVID- 19 pandemic:

Current evidence and policy approaches. U.S.

Department of Health and Human Services https://
aspe.hhs.gov/ sites/ defaul t/fi'les/ migrated—legacy—
files// 199516/ covid-equi ty-iss ue-brief.pdf.
1a2 Perry Break., Brian Aronson, and Bernice A.

P. scosolido, Pandemic precarity: COVID- 19 is
exposing and exacerbating inequalities in the
American heartland, National Academy of Sciences
Febuary 2021), https:11, ovupnas.org/ content/ 118/
8/ e2020685118.
1x21d,
household income of $6, 100 ( measured
in 2018 dollars).184
The impact pre-existing inequalities
have on a household or community' s
ability to recover is intersectional.

Research shows that pre-existing racial
and gender disparities exacerbated the
disproportionate economic and health
impact COVID- 19 and the economic
downturn had on workers of color, and
specifically, women of colorlas Another
study found that during the first six
months of the pandemic counties that
were both high -poverty and majority
non-white experienced COVID- 19
infection rates eight times higher than
high -poverty, majority white
counties.' aa Many residents in these
communities are still coping with the
negative health and economic impacts.

Summary of the Interim Final Rule and
Final Rule Structure
As described previously, the interim
final rule provided a broader list of
enumerated eligible uses to respond to
the pandemic in disproportionately
impacted communities, in recognition
that pre-existing health, economic, and
social disparities contributed to
disproportionate pandemic impacts in
certain communities and that
addressing the root causes of those
disparities constitutes responding to the
public health and negative economic
impacts of the pandemic. The interim
final rule described eligible uses in
disproportionately impacted
communities in four categories, spread
across public health and negative
economic impacts: ( 1) Addressing
disparities in public health outcomes,
2) building stronger communities
through investments in housing and
neighborhoods, ( 3) addressing
educational disparities, and (4)
promoting healthy childhood
environments. As described above,
Treasury has moved eligible uses related
to community violence intervention,
assistance accessing or applying to
public benefits and services, affordable
housing development, healthy
childhood environments, and
addressing lost instructional time in K -
1a4 Jesse Sennet & Rakesh Kocbhar, Two
Recessions, Two Recoveries, Pew Research Center
December 13, 2019), https:// www.pewresearch.org/
social-trends/ 2019/ 12/ 13/ two-recessions-t o -
recoveries -2/
las Derrick Hamilton at al., Building an Equitable
Recovery: The role of Race, Labor Markets, and
Education, The New School' s Institute on Race and
Political Economy (February 2021).
ae Adbikavi S, Pantsl. o NP, Feldman )M,
Ogedegbe O, Thorpe L, Troxel AB. Assessment of
Community -Level Disparities in Coronavirus
Disease 2019 ( COVID- 19) Infections and Deaths in
Large US Metropolitan Areas. ) AMA Note, Open.
2020;3( 7):. 2016938. doi:10. 1001/
jam metworkop. n.2020. 16938.
12 schools into the category " assistance
to impacted households," recognizing
that these pandemic impacts were
widely shared across the country.

This section discusses enumerated
eligible uses to address health
disparities, to build stronger
communities through investments in
neighborhoods, to address educational
disparities, to provide rental assistance
vouchers or assistance relocating to
areas of greater economic opportunity,
and additional eligible uses to respond
to negative economic impacts in
disproportionately impacted
communities. While many of these
services impact both health and
economic outcomes, Treasury has
consolidated them into a single section
for simplicity and clarity and to reflect
the intertwined nature of these issues.

As a reminder, recipients can
presume these uses are eligible when
provided in a OCT, to families and
individuals living in QCTs, by Tribal or
territorial governments, or to lowincome households or communities. As provided in section Standards:

Designating Other Disproportionately
Impacted Classes, recipients can also
provide these services to other
populations, households, or geographic
areas disproportionately impacted by
the pandemic. Recipients may also
identify additional disproportionate
impacts of the pandemic and design an
appropriate response to address that
harm. For details on eligibility
standards and presumed eligible
populations, see section General
Provisions: Structure and Standards.

Enumerated Eligible Uses for
Disproportionately Impacted
Households

1. Addressing health disparities.

Public Comment: General: In general,
commenters supported eligible uses to
address health disparities and support
health equity; several commenters
highlighted the disparities faced by
communities of color and low-income
populations, as well as the importance
of community engagement in
developing effective programs to serve
disproportionately impacted
communities. Many commenters
recommended additional enumerated
eligible uses to address health
disparities; these are discussed further
below in this section.

Treasury Response: In line with
commenters' recommendations, the
final rule maintains several enumerated
eligible uses to address health
disparities, specifically:
a. Communityhealth workers.

Treasury received few comments on
community health workers, though one
4372 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations requested further clarification on their
role. 187 Treasury is maintaining this
eligible use in the final rule.
b. Remediation of lead paint or other
lead hazards. The interim final rule
included remediation of lead paint or
other lead hazards as an enumerated
eligible use to address health
disparities.

Public Comment: Treasury received
several comments asking for
clarification on the eligibility of a
particular use that would indirectly
address lead pollution. For example, a
commenter requested the ability to fund
remedial actions, such as filtration and
plumbing procedures to help address
lead pollution. One commenter
requested that private wells be eligible
for funding to address contamination
with substances such as lead. Other
commenters requested that Treasury
allow replacement of lead pipes as an
eligible use of funds.

Treasury Response: Recipients may
make a broad range of water
infrastructure investments under section
602( c)( 1)( d) and 603( c)( 1)( d), which can
include lead service line replacement
and other activities to identify and
remediate lead in water. These uses are
discussed in greater detail in section
Water and Sewer Infrastructure of this
Supplemental Information.

Treasury has further determined that
several of the services identified by
commenters are appropriate responses
to address health disparities in
disproportionately impacted
households. These services were eligible
under the interim final rule and
continue to be so under the final rule.

These services include remediation to
address lead-based public health risk
factors, outside of lead in water,
including evaluation and remediation of
lead paint, dust, or soil hazards; testing
for blood lead levels; public outreach
and education; and emergency
protection measures, like bottled water
and water filters, in areas with an action
level exceedance for lead in water in
accordance with the Environmental
Protection Agency' s Lead and Copper
Rule. 188
Further, Treasury had determined that
certain capital expenditures, including
improvements to existing facilities to
remediate lead contaminants ( e.g.,
removal of lead paint), are eligible
responses, although this does not
1 a7 See, e g., Centers for Disease Control and
Prevention, Community Health Worker (CHW)
Toolkit tWps:llw , cdc.govldhdsp/ pubslt olkit I
clue toolkithtm (last visited November 9, 2021).
1 -- Environmental Protection Agency, 40 CFR
141. 80(a)( 1), https:llro , ecfr.govlcurrentltitle401
choptervl/ subchopter D/part-141/ subpart-1/ section141. 80, include construction of new facilities
for the purpose of lead remediation.

Recipients should make sure that all
capital expenditures adhere to the
standards and presumptions detailed in
section Capital Expenditures in General
Provisions: Other.
c. Medical facilities. Treasury
received a few comments from
recipients seeking to use SURF funds
to build new medical facilities, such as
hospitals or public health clinics, to
serve disproportionately impacted
communities. Given the central role of
access to high-quality medical care in
reducing health disparities and
addressing the root causes that led to
disproportionate impact COVID- 19
health impacts in certain communities,
the final rule recognizes that medical
equipment and facilities designed to
address disparities in public health
outcomes are eligible capital
expenditures. This includes primary
care clinics, hospitals, or integrations of
health services into other settings.

Recipients should make sure that all
capital expenditures adhere to the
standards and presumptions detailed in
section Capital Expenditures in General
Provisions: Other.

2. Housing vouchers and assistance
relocating. In addition to other housing
services, the interim final rule permitted
a variety of rental assistance approaches
to support low-income households in
securing stable, long-term housing,
including housing vouchers, residential
counseling, or housing navigation
assistance to facilitate household moves
to neighborhoods with high levels of
economic opportunity and mobility for
low-income residents. Examples could
include SLFRF- funded analogues to
Section 8 Housing Choice vouchers;
other kinds of rent subsidies, including
shallow subsidies; and programs to help
residents move to areas with higher
levels of economic mobility189 Treasury
did not receive public comments on
these enumerated eligible uses.

Treasury Response: Treasury
maintains the eligibility of vouchers and
relocation assistance in the final rule.

3. Building strong, healthy
communities through investments in
neighborhoods. While the interim final
rule included a category of enumerated
eligible uses for " building stronger
communities through investments in
housing and neighborhoods," the
examples of services provided generally
focused on housing uses. In response to
questions following release of the
interim final rule, Treasury issued
a9 See, e. g., Opportunity Insights, Creating Moves
To Opportunity (August 2019), haps:11
opportuni tyinsigh te. orglpolicy/cm to/
further guidance clarifying that
investments in parks, public plazas,
and other public outdoor recreation
spaces may be responsive to the needs
of disproportionately impacted
communities by promoting healthier
living environments."
Public Comment: General: A
significant theme across many public
comments was the importance of
neighborhood environment to health
and economic outcomes and the
potential connections between
residence in an underserved
neighborhood and disproportionate
impacts from the pandemic. Many
commenters highlighted the connection
between neighborhoods and health
outcomes, including citing public health
research linking neighborhood traits to
health outcomes. For example, the CDC
states that " neighborhoods people live
in have a major impact on their health
and well-being." 190 As such, CDC
identifies " neighborhoods and built
environment" as one of five key social
determinants of health 191 and includes
creatling] neighborhoods and
environments that promote health and
safety" as one of the agency' s goals for
social determinants of health outcomes.
a. Neighborhood features that
promote improved health and safety
outcomes.

Public Comment: Commenters argued
that neighborhoods impact physical
health outcomes in several ways. First,
some commenters reasoned that the
physical environment and amenities in
a community 192 influence a person' s
level of physical activity, with features
like parks, recreation facilities, and safe
sidewalks promoting increased physical
activity that improves health outcomes.

Conversely, commenters argued that a
lack of these features in a neighborhood
could dampen physical activity and
contribute to health conditions like
obesity that are risk factors for more
severe COVID- 19 health outcomes.

Second, some commenters also
suggested that access to healthy food in
a neighborhood impacts health
outcomes. These commenters reasoned
190U. S. Department of Health and Human
Services, Neighborhood and Built Environment,
h ttps: Ilhealth.gov/healthypeoplelobjectives- anddatn/ browse- objectiveslneighborhood-ond-builtem,um ment#citl (last visited November 9, 2021). 191 Social determinants of health are " the
conditions in the places where people live, loam,
work, and play that affect a wide range of health
risks and outcomes." Centers for Disease Control
and Prevention, About Social Determinants of
Health( SDOH), hops:11w , cdcgov/ social
determinantslsbouthtml (last visited November 9,
2021).
192 In public health, this is referred to as " built
environment," or the man-made physical aspects of
a community (, g, homes, buildings, streets, open
spaces, and infrastructure).

Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations 4373 that lacking adequate access to
affordable, healthy food or living in a
food desert" may contribute to
disparities in diet that influence health
outcomes, including contributing to preexisting conditions that increased risk for severe COVID- 19 outcomes. These
commenters cited public health research
finding " clear evidence for disparities in
food access in the United States by
income and race." 193
Some commenters also suggested that
neighborhood environment is connected
to other public health outcomes, like
mental health and public safety. For
example, some research suggests that
living in neighborhoods with green
space and tree cover correlates with
improved mental health outcomes. 194
Finally, some commenters argued that
activities like installing streetlights,
greening or cleanup of public spaces or
land, and other efforts to revitalize
public spaces would support improved
public safety. 195196
These commenters recommended that
Treasury include as an enumerated
eligible use in disproportionately
impacted communities projects to
develop neighborhood features that
promote improved health and safety
outcomes, such as parks, green spaces,
recreational facilities, sidewalks,
pedestrian safety features like
crosswalks, projects that increase access
to healthy foods, streetlights,
neighborhood cleanup, and other
projects to revitalize public spaces.

Background: Investments in
neighborhood features, including parks,
recreation facilities, sidewalks, and
healthy food access, can work to
improve physical and mental health
outcomes. Allowing people access to
nature, including parks, has been
connected to decreased levels of
193J Beatific, E Kristjans son, S Cummins, A
systematic review of food deserts, 1966- 2007, Prov
Chronic Die 2009;6( 3): A105, http:// www.cdagov/
pcd/issues/ 2009/ju1108- 0163 hem.
4 See, e g., Yijun Zhang et al. The Association
between Green Space and Adolescents' Mental
Well -Being: A Systematic Review. International
journal of environmental research and public health
vol. 17,18 6640 ( Sep. 11 2020), doi:10.3390/
ijerph17186640; EC South, BC Hotel, MC Ka' JM
MacDonald, CC Ensues, Effect of Greening Vacant
Land on Mental Health of Community Dwelling
Adults: A Cluster Randomized Trial, JAMA Note,
Open. 2018; 1( 3): e180298 ( 2018), available at:
doi:10. 1001/jamanetworkopen. 2018.0298.
ss See, e g., Yanqing Xu, Cong Fu, Eugene
Kennedy, Shanhe Jiang, Samuel Owum-Agyemang,
The impact of streetlights on spatial -temporal
patterns of crime in Detroit, Michigan, Cities,
Volume 79, Pages 45- 52, ISSN 0264- 2751 ( 2018),
h ttps: //doi.org/ 10.10161j.cities. 2018.02. 021.
se A. Chaffin, B. Hansen, J. Lemer at aL,
Reducing Crime Through Environmental Design:

Evidence from a Randomized Experiment of Street
Lighting in New York City, Journal of Quantitative
Criminology ( 2021), hHps:// doi.org1101007/ s10940-
020-09490-6.
mortality and illness and increased
well-being.197 Urban park use during
the COVID- 19 pandemic may have
declined among lower-income
individuals. 19e Encouraging physical
activity can also play a role in health
outcomes, as a sedentary lifestyle is a
risk factor for chronic diseases and more
severe COVID- 19 outcomes? 99 Parks,
recreation facilities, and sidewalks can
promote healthier living environments
by allowing for safe and socially
distanced recreation during the COVID19 pandemic.

Additionally, food insecurity rates,
which are higher among lower-income
households and households of color,
doubled among all households and
tripled among households with children
during the onset of COVID- 19 from
February 2020 to May 2020. 200
Improving healthy food access supports
public health, particularly among lowerincome households and households of color that face disproportionate
outcomes.

Treasury Response: Treasury
recognizes the connection between
neighborhood built environment and
physical health outcomes as discussed
in the research and analysis provided by
commenters, including risk factors that
may have contributed to
disproportionate COVID- 19 health
impacts in low-income communities.

The final rule also recognizes that the
public health impacts of the pandemic
are broader than just the COVID- 19
disease itself and include substantial
impacts on mental health and public
safety challenges like rates of violent
crime, which are correlated with a
neighborhood' s built environment and
features. As such, neighborhood features
that promote improved health and
safety outcomes respond to the preexisting disparities that contributed to COVID- 19' s disproportionate impacts
on low-income communities.
197 See, e. g., American Public Health Association,
Improving Health and Wellness through Access to
Nature (November 5, 2013), https:// www apha.org/
policies- and-advocacy/public-heal th-policysedemenks/ pohcy-database/ 2014/07/ 08/ 09/ 18/ improving -health- and-wellness-through- access- tonature. s3 LR Larson at al., Urban Park Use During the COVID- 19 Pandemic: Are Socially Vulnerable
Communities Disproportionately Impacted?, Front.

Sustain. Cities 3: 710243 ( 2021), https:// d x,org/

10. 3389/ frsc.2021. 710243.
199JP Despres, Severe COVID- 19 outcomes— the
role of physical activity. Nat Rev Endocrinol 17,
451- 452 ( 2021). https:// dm, org/ 10. 1038/ s41574-
021- 00521- 1.
on Caroline George and Adie Tomer, Beyond
food deserts': America needs a new approach to
mapping food, Brookings Institution (August 17,
2021), https:// wwwbrooldngs.edu/research/ beyondfood-deoute-americe-needs -a -new -approach -to - mapping-food-insecurity/.

The final rule includes enumerated
eligible uses in disproportionately
impacted communities for developing
neighborhood features that promote
improved health and safety outcomes,
such as parks, green spaces, recreational
facilities, sidewalks, pedestrian safety
features like crosswalks, 201 projects that
increase access to healthy foods,
streetlights, neighborhood cleanup, and
other projects to revitalize public
spaces. Recipients seeking to use funds
for capital expenditures should refer to
the section Capital Expenditures in
General Provisions: Other, which
describes additional eligibility
standards that apply to uses of funds for
capital expenditures.
b. Vacant or abandoned properties.

As discussed above, the interim final
rule included enumerated eligible uses
for building stronger communities
through investments in housing and
neighborhoods in disproportionately
impacted communities. The interim
final rule also posed a question of
whether other potential uses in this
category, specifically " rehabilitation of
blighted properties or demolition of
abandoned or vacant properties,"
address the public health or economic
impacts of the pandemic.

Public Comment: Several commenters
argued that programs or services to
address vacant or abandoned property
would respond to the public health and
negative economic impacts of the
pandemic in disproportionately
impacted communities. Some
commenters cited research suggesting
that living near such property is
correlated with worse physical health
and mental health outcomes, noted that
such properties pose an environmental
hazard, or argued that such properties
present a barrier to economic recovery.

These commenters suggested that
renovation or demolition of vacant or
abandoned property could benefit
community health and raise property
values. Other commenters
recommended that Treasury include an
enumerated eligible use for the
operation of land banks that redevelop
or renew vacant properties and land.

Treasury Response: As noted
throughout the final rule, the pandemic
underscored the importance of safe,
affordable housing and healthy
2m However, Treasury cautions recipients that
general infrastructure development, including street
or road construction, remains a generally ineligible
use of funds under the final it.. Sidewalks and
pedestrian safety should be the predominant
component of uses of funds in this category. While
projects may include ancillary construction needed
to execute the predominant component, a project
that predominantly involves street construction or
repair to benefit vehicular traffic would be
ineligible.
4374 Federal Register/ Vol. 87, No. 18/ Thursday, January 27, 2022/ Rules and Regulations neighborhood environments to public
health and economic outcomes.

Treasury agrees with commenters that
high rates of vacant or abandoned
properties in a neighborhood may
exacerbate public health disparities, for
example through environmental
contaminants that contribute to poor
health outcomes or by contributing to
higher rates of crime. As such, certain
services for vacant or abandoned
properties are eligible to address the
public health and negative economic
impacts of the pandemic on
disproportionately impacted households
or communities. Eligible activities
include:

Rehabilitation, renovation,
maintenance, or costs to secure vacant
or abandoned properties to reduce their
negative impact
Costs associated with acquiring and
securing legal title of vacant or
abandoned properties and other costs to
position the property for current or
future productive use
Removal and remediation of
environmental contaminants or hazards
from vacant or abandoned properties,
when conducted in compliance with
applicable environmental laws or
regulations
Demolition or deconstruction of
vacant or abandoned buildings
including residential, commercial, or
industrial buildings) paired with
greening or other lot improvement as
part of a strategy for neighborhood
revitalization
Greening or cleanup of vacant lots,
as well as other efforts to make vacant
lots safer for the surrounding
community
Conversion of vacant or abandoned
properties to affordable housing
Inspection fees and other
administrative costs incurred to ensure
compliance with applicable
environmental laws and regulations for
demolition, greening, or other
remediation activities
Vacant or abandoned properties are
generally those that have been
unoccupied for an extended period of
time or have no active owner.202 Such
oz A state or locality may use its existing
classifications of what is considered vacant or
abandoned property under state law and local
ordinances, as well as any corresponding processes
for demolition, for these eligible uses. A recipient
without a definition of vacant or abandoned
property may refer to definitions used in the
Department of Housing and Urban Development' s
Neighborhood Stabilization Program (available at
the citations below); however, recipients should be
aware that other federal, state, or local requirements
may apply such as compliance with the Uniform
Relocation Act ( see U.S. Department of Housing and
Urban Development, Real Estate Acquisition and
Relocation Overview in HUD Programs, heps:11
wwwhudexchange info/programs/ relocation/
properties may be in significant
disrepair (e. g., major structural defects;
lack of weather tight conditions; or lack
of useable plumbing, kitchen facilities,
electricity, or heating infrastructure (not
to include utilities currently out of
service or disconnected but able to be
reconnected and used)), or may be
declared unfit for inhabitants by a
government authority.