Vallejo City Council
September 12, 2023

5. Offering other programs or services that are evidence based or have a successful track record of enhancing officer wellness.

The Board of State and Community Corrections (BSCC) is administering the program and awarding grant amounts to public safety agencies based on a formula provided by the California Department of Finance. Per this schedule, the City is scheduled to receive $61,783.27. As a recipient of these funds, the City will be required to submit annual reports in December 2023 and 2024, with a final report due December 2025 detailing expenditures and the impact each investment had on officer wellness.

FISCAL IMPACT
If approved, the City will receive one-time funds of $61,783.27 for officer wellness and mental health resources. There is no local match required.

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.

ATTACHMENTS

1. BSCC Wellness Grant Resolution to Accept CAO Stamp

CONTACT
Jason Ta, Interim Chief of Police (707) 648-4540
[email protected]

Approved as to form:

By: for
Veronica Nebb, City Attorney
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO ACCEPTING A

GRANT FROM OFFICER WELLNESS AND MENTAL HEALTH RESOURCES FROM THE BOARD OF STATE AND COMMUNITY CORRECTIONS IN THE AMOUNT OF $61,783.27 AND PROVIDING NOTICE TO THE PUBLIC OF AN INTENT TO AMEND THE 2023/24

BUDGET IN THE AMOUNT OF THE GRANT
WHEREAS, the Board of State and Community Corrections (BSCC) Officer Wellness and Mental Health Grant Program provides grant funding for the purpose of improving officer wellness and expanding mental health resources; and
WHEREAS, the City of Vallejo Police Department has been awarded a grant award totaling $61,783.27 from The Officer Wellness and Mental Health Grant Program; and WHEREAS, the grant does not require a local match; and
WHEREAS, grant funds must be used for the following:

1. Establishing officer wellness units or expanding existing officer wellness units.

2. Establishing peer support units or expanding peer support units.

3. Providing services by a licensed mental health professional, counselor, or other professional that works with law enforcement.

4. Expanding multiagency mutual aid programs focused on officer wellness and mental health.

5. Offering other programs or services that are evidence-based or have a successful track record of enhancing officer wellness.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Vallejo hereby authorizes the City Manager to accept the awarded grant funding in the amount of $61,783.27 from the BSCC for the purpose of improving officer wellness and expanding mental health resources in accordance with Assembly Bill 178; and
BE IT FURTHER RESOLVED that grant funds received hereunder shall not be used to supplant expenditures controlled by this body; and
BE IT FURTHER RESOLVED, that this resolution shall serve as notice to the public that the City Council intends to amend the 2023/24 budget at a future City Council meeting to include the funds received from this grant.

CONSENT CALENDAR 8.K.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Melissa Tigbao, PE, Public Works Director
Dan Sequeira, PE, City Engineer / Assistant Public Works Director SUBJECT: ADOPT A RESOLUTION REJECTING ALL BIDS FOR THE PEDESTRIAN CROSSING IMPROVEMENTS PROJECT (PW9736) AND DIRECTING STAFF TO REBID THE

PROJECT

RECOMMENDATION
Adopt a Resolution rejecting all bids for the Pedestrian Crossing Improvements Project (PW9736) and directing staff to rebid the project.

REASONS FOR RECOMMENDATION
Per the advertised bid documents for this project, prime contractors shall perform at least 50% of the project work. Two of the three firms that submitted bids did not meet that requirement. The bid of the third firm is significantly higher than the others and staff have determined it is in the City's best interest to reject all bids and re-advertise the project.

BACKGROUND AND DISCUSSION
Plans and specifications, prepared and completed under the direction of the City Engineer, were advertised for the Pedestrian Crossing Improvement Project (PW9736) starting on May 23, 2023. The Project would enhance pedestrian safety by installing High-Intensity Activated Crosswalk (HAWK) beacons at five unsignalized intersections:

1. Broadway Street / Hampton Street

2. Broadway Street / Illinois Street

3. Springs Road / Lassen Street

4. Springs Road / Tregakis Avenue

5. Springs Road / Heartwood Avenue

On June 15, 2023, three sealed bids were received, opened, and publicly read by the Deputy City Clerk. The bids, in order from lowest to highest, are as follows:

No. CONTRACTOR TOTAL AMOUNT BID

1. B&M Builders $1,690,867.00

2. Kerex Engineering, Inc. $1,706,677.00

3. St. Francis Electric, LLC $1,941,000.00

Public Contract Code Section 4104(a)(1) provides that the prime contractors shall list each subcontractor that performs work ”in excess of one-half of 1 percent of the prime contractor’s total bid or ten thousand dollars ($10,000), whichever is greater.”

Date: September 12, 2023
Subject: ADOPT A RESOLUTION REJECTING ALL BIDS FOR THE PEDESTRIAN CROSSING IMPROVEMENTS PROJECT (PW9736) AND DIRECTING STAFF TO REBID THE

PROJECT

Additionally, the bid documents provided that the prime contractor shall perform at least 50% of the work. The table below shows B&M Builders (B&M), Kerex Engineering, Inc. (Kerex), and St. Francis Electric, LLC proposed to perform 15.5%, 34.7%, and 78.2% of the work, respectively. Accordingly, staff deemed B&M and Kerex to be nonresponsive.

Staff considered recommending an award to St. Francis Electric, LLC; however, as their bid is substantially higher than the others, staff determined it is in the best interest of the City to reject all bids, revise the bid documents by deleting the 50% requirement, and re-advertise the project pursuant to VMC 3.20.200.A, which provides “After considering the report of the city manager, the city council shall award the contract to the lowest responsible bidder, or reject all bids, and may advertise in its discretion.”

BIDDER SELF PERFORM
AMOUNT

TOTAL AMOUNT BID SELF PERFORM

PERCENT
B&M Builders $262,176.00 $1,690,867.00 15.5%
Kerex Engineering, Inc. $592,177.00 $1,706,677.00 34.7% St. Francis Electric, LLC $1,518,602.00 $1,941,000.00 78.2%

FISCAL IMPACT
There is no fiscal impact with the approval of this item.

ENVIRONMENTAL REVIEW
No environmental review is required when the City Council rejects all bids.

ATTACHMENTS

1. RESO- Reject Bids_CAO Stamp

2. Location Map - HAWK 9-12-23

CONTACT
Melissa Tigbao, PE, Public Works Director (707) 648-4433 [email protected]

RESOLUTION NO. 23-_

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO

REJECTING ALL BIDS FOR THE PEDESTRIAN CROSSING IMPROVEMENTS PROJECT (PW9736)
WHEREAS, the City of Vallejo (City) advertised for and on June 15, 2023, publicly opened bids for the Pedestrian Crossing Improvements Project (PW9736) and received three (3) bids as follows:

1. B&M Builders $1,690,867.00

2.Kerex Engineering, Inc. $1,706,677.00

3.St. Francis Electric, LLC $1,941,000.00
WHEREAS, Public Contract Code Section 4104(a)(1) provides that the prime contractors shall list each subcontractor that performs work ”in excess of one-half of 1 percent of the prime contractor’s total bid or ten thousand dollars ($10,000), whichever is greater.”; and WHEREAS, the bid documents provided that the prime contractor shall perform at least 50% of the work; and
WHEREAS, B&M Builders (B&M), Kerex Engineering, Inc. (Kerex), and St. Francis Electric, LLC proposed to perform 15.5%, 34.7%, and 78.2% of the work, respectively; and WHEREAS, staff has deemed B&M and Kerex to be nonresponsive because they did not comply with the 50% requirement; and
WHEREAS, St. Francis Electric, LLC’s bid is $234,323 higher than the second lowest bid, a substantial amount, and staff determined it is in the City’s best interest to reject all bids, revise the bid documents by deleting the 50% prime contractor work requirement, and re-advertise the project pursuant to VMC 3.20.200.A, which provides “After considering the report of the city manager, the city council shall award the contract to the lowest responsible bidder, or reject all bids, and may advertise in its discretion.”
NOW, THEREFORE, BE IT RESOLVED that it is the opinion of the City Council that it is in the best interest of the City that all bids submitted be rejected.

BE IT FURTHER RESOLVED that all bids for the Pedestrian Crossing Improvements Project (PW9736) are hereby rejected.

BE IT FURTHER RESOLVED that the City Clerk is hereby authorized and directed to give notice of rejection and to return the bids bonds to the bidders.

BE IT FURTHER RESOLVED that Public Works staff is hereby directed to re-advertise the project pursuant to Vallejo Municipal Code Section 3.20.200.A.

Adopted by the City Council of the City of Vallejo at a regular meeting held on September 12, 2023, with the following vote:

AYES:

NOES:

ABSENT:

ROBERT H. McCONNELL, MAYOR
ATTEST:

DAWN G. ABRAHAMSON, CITY CLERK

LOCATION MAP
5 PEDESTRIAN CROSSING IMPROVEMENT W/ HAWK INSTALLATION PROJECT PROJECT NO. PW9736
N
O
R
T
H
LEGEND
HAWK
Installation
SPRINGS RD.

BROADWAY ST.

HAMPSHIRE ST.

ILLINOIS ST.

LASSEN ST.

TREGASKIS AVE.

HEARTWOOD AVE.

CONSENT CALENDAR 8.L.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Melissa Tigbao, PE, Public Works Director
Mark Helmbrecht, Transportation Manager
SUBJECT: ADOPT A RESOLUTION APPROVING A COOPERATIVE AGREEMENT WITH CALTRANS IN THE AMOUNT OF $175,000 TO PROVIDE PROJECT INITIATION

DOCUMENT (PID)SERVICES FOR THE VALLEJO BLUFF TRAIL PROJECT AND

AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

RECOMMENDATION
Adopt a resolution approving a cooperative agreement with Caltrans in the amount of $175,000 to provide Project Initiation Document (PID) services for the Vallejo Bluff Trail project and authorizing the City Manager to execute same.

REASONS FOR RECOMMENDATION
The Vallejo Bluff Trail project alignment runs through the Caltrans I-80 right-of-way. In order for the project to proceed, approval from Caltrans of the Project Initiation Documentation (PID) is needed. Caltrans requires local agencies to pay for its review services to approve project documentation. Caltrans has provided the cooperative agreement (COOP) along with an estimate of its costs for review of $175,000. In order for the project to proceed and get constructed within Caltrans right-of-way, this COOP agreement must be executed and funded.

BACKGROUND AND DISCUSSION
The Bay Trail and the Ridge Trail are continuous multi-use trails along the bay and ridgelines, respectively, circling the San Francisco Bay. They provide a well-known recreational amenity and access to open space for residents and visitors throughout the Bay Area, including Vallejo. In some areas, critical gaps in the trail systems remain. One such gap is an almost 2-mile section shared by the Bay Trail and the Ridge Trail, as well as the Great California Delta Trail on the south side of Vallejo. Referred to as the Vallejo Bluff Trail, it runs from the Vallejo Bluffs, under I-80, to Sonoma Boulevard.

The proposed trail alignment resides almost entirely on property owned by the City of Vallejo and Caltrans.

Over the past several years, City Planning and Public Works staff have worked with a consultant team consisting of Bay Trail, Coastal Conservancy, and Ridge Trail staff, to complete preliminary engineering and environmental compliance work in order to complete and submit Caltrans' Project Initiation Document (PID) and Project Approval and Environment Documentation (PA&ED). This work was funded by two grants from the Bay Trail and the California Coastal Conservancy totaling $250,000, which the Council authorized on August 23, 2016.

On March 3, 2022, staff submitted to Caltrans the Design Engineering and Evaluation Report (DEER) for the project, which is the result of the work to date. In April 2023, Caltrans rejected the City's DEER and directed us to resubmit Project Study Report and Project Development Study (PSR/PDS) documentation, and to execute a Cooperative Agreement (COOP) with Caltrans to facilitate PID approval. Caltrans provided a cost estimate of $175,000 for its review and approval efforts. Following PID approval, all additional Caltrans review and approvals (PA&ED, Plans Specs & Estimates (PS&E), and Encroachment Permit for Construction) will be at

Date: September 12, 2023
Subject: ADOPT A RESOLUTION APPROVING A COOPERATIVE AGREEMENT WITH CALTRANS IN THE AMOUNT OF $175,000 TO PROVIDE PROJECT INITIATION

DOCUMENT (PID)SERVICES FOR THE VALLEJO BLUFF TRAIL PROJECT AND

AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

no further cost to the City.

In 2022, Council authorized staff to pursue grant funding from the Association of Bay Area Governments (ABAG)/Bay Trail to fund the continuing advancement of the Vallejo Bluff Trail project. ABAG awarded the City $366,250 in Bay Trail Grant funding and the City executed a funding agreement for these funds. ABAG has confirmed that $175,000 of these already awarded funds can be used to pay the costs of Caltrans PID review and approval efforts under the proposed COOP Agreement.

FISCAL IMPACT
There is no fiscal impact associated with this action. The $175,000 cost of Vallejo Bluff Trail review efforts by Caltrans will be funded by the Bay Trail Grant from ABAG accepted by the City in 2022.

ENVIRONMENTAL REVIEW
On August 20, 2019, the City approved and filed with the County of Solano and the State Clearinghouse an Initial Study/Mitigated Negative Declaration (IS/MND) for the project. The City may need to complete further environmental review under the National Environmental Policy Act (NEPA) if federal funding is needed and secured for the future construction of the trail. Staff’s engineering consultant scope for the Plans Specs & Estimates (PS&E) work includes NEPA analysis as an optional service should it become necessary.

ATTACHMENTS

1. RESO approving COOP agreement_Caltrans_Bluff Trail_CAO Stamp

2. 04-2947 2W720 PID Coop_CAO Stamp

CONTACT
Melissa Tigbao, PE, Public Works Director, (707) 648-4433 [email protected]

RESOLUTION NO. 23-______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO APPROVING A

COOPERATIVE AGREEMENT WITH CALTRANS TO PROVIDE PROJECT INITIATION DOCUMENT (PID) SERVICES IN THE AMOUNT OF $175,000 AND AUTHORIZING THE CITY

MANAGER TO EXECUTE SAME
WHEREAS, the City desires to implement the Vallejo Bluff Trail project in south Vallejo within the Caltrans ROW to improve pedestrian and bicycle access across the interstate 80 (I80) corridor; and WHEREAS, Public Works staff in conjunction with the City’s consultant design engineer (BKF Engineers) has developed a Project Study Report and Project Development Support (PSR/PDS) document which explains the project details and must be reviewed by Caltrans in order to obtain Project Initiation Documentation (PID) approvals; and
WHEREAS, the required mechanism to contract and pay for Caltrans review and approval of local agency project documents is the Cooperative Agreement (COOP) and Caltrans has estimated its review costs at $175,000; and
WHEREAS, on August 20, 2019, the City approved a IS/MND for the project, which was filed with the County of Solano and the State Clearinghouse.

NOW, THEREFORE BE IT RESOLVED that the City Council approves the Cooperative Agreement between the City of Vallejo and Caltrans in the amount of $175,000, with any modifications recommended by the City Attorney and the City Clerk to attest the signing of that Agreement.

BE IT FURTHER RESOLVED that the City Manager or designee is hereby authorized to execute same, along with future contract change orders not to exceed the remaining available project funding.

ADOPTED BY THE CITY COUNCIL OF THE CITY OF VALLEJO at a regular meeting held on September 12, 2023, with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST
ROBERT H. MCCONNELL, MAYOR
DAWN G. ABRAHAMSON, CITY CLERK
Agreement 04-2947
Project No. 0421000264
EA 2W720
04-SOL-80-.03/1.3
Project Development Agreement 2017-02-17 (Created July 21, 2023)i

COOPERATIVE AGREEMENT
This AGREEMENT, executed on and effective from September 13, 2023, is between the State of California, acting through its Department of Transportation, referred to as CALTRANS, and:

City of Vallejo, a body politic and municipal corporation or chartered city of the State of California, referred to hereinafter as CITY.

An individual signatory agency in this AGREEMENT is referred to as a PARTY. Collectively, the signatory agencies in this AGREEMENT are referred to as PARTIES.

RECITALS

1. PARTIES are authorized to enter into a cooperative agreement for improvements to the State Highway System per California Streets and Highways Code, Sections 114 and 130 and California Government Code, Section 65086.5.

2. For the purpose of this AGREEMENT, a Class I multi-use trail connecting west of I-80 to east of I-80 via an undercrossing at SR 29 and connecting east of I-80 to the existing multi-use path on the Carquinez Bridge will be referred to hereinafter as PROJECT. CITY desires that a Project Initiation Document (PID) be developed for the PROJECT. The Project Initiation Document will be a Project Study Report - Project Development Support (PSR-PDS).

3. All obligations and responsibilities assigned in this AGREEMENT to complete the following PROJECT COMPONENT will be referred to hereinafter as WORK:
•PROJECT INITIATION DOCUMENT (PID)
Each PROJECT COMPONENT is defined in the CALTRANS Workplan Standards Guide as a distinct group of activities/products in the project planning and development process.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)ii

4. The term AGREEMENT, as used herein, includes this document and any attachments, exhibits, and amendments.

This AGREEMENT is separate from and does not modify or replace any other cooperative agreement or memorandum of understanding between the PARTIES regarding the PROJECT.

PARTIES intend this AGREEMENT to be their final expression that supersedes any oral understanding or writings pertaining to the WORK. The requirements of this AGREEMENT will preside over any conflicting requirements in any documents that are made an express part of this AGREEMENT.

If any provisions in this AGREEMENT are found by a court of competent jurisdiction to be, or are in fact, illegal, inoperative, or unenforceable, those provisions do not render any or all other AGREEMENT provisions invalid, inoperative, or unenforceable, and those provisions will be automatically severed from this AGREEMENT.

Except as otherwise provided in the AGREEMENT, PARTIES will execute a written amendment if there are any changes to the terms of this AGREEMENT.

AGREEMENT will terminate 180 days after PID is signed by PARTIES or as mutually agreed by PARTIES in writing. However, all indemnification articles will remain in effect until terminated or modified in writing by mutual agreement.

5. The following work associated with this PROJECT has been completed or is in progress:
•CITY is developing the Project Study Report – Project Development Support (PSR- PDS).

6. In this AGREEMENT capitalized words represent defined terms, initialisms, or acronyms.

7. PARTIES hereby set forth the terms, covenants, and conditions of this AGREEMENT.

RESPONSIBILITIES
Sponsorship

8. A SPONSOR is responsible for establishing the scope of the PROJECT and securing the financial resources to fund the WORK. A SPONSOR is responsible for securing additional funds when necessary or implementing PROJECT changes to ensure the WORK can be completed with the funds committed in this AGREEMENT.

PROJECT changes, as described in the CALTRANS Project Development Procedures Manual, will be approved by CALTRANS as the owner/operator of the State Highway System.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)iii

9. CITY is the SPONSOR for the WORK in this AGREEMENT.

Implementing Agency

10. The IMPLEMENTING AGENCY is the PARTY responsible for managing the scope, cost, schedule, and quality of the work activities and products of a PROJECT COMPONENT. •CITY is the Project Initiation Document (PID) IMPLEMENTING AGENCY.

The PID identifies the PROJECT need and purpose, stakeholder input, project alternatives, anticipated right-of-way requirements, preliminary environmental analysis, initial cost estimates, and potential funding sources.

11. CITY will provide a Quality Management Plan (QMP) for the WORK in every PROJECT COMPONENT that they are the IMPLEMENTING AGENCY of. The QMP describes the IMPLEMENTING AGENCY’s quality policy and how it will be used. The QMP will include a process for resolving disputes between the PARTIES at the team level. The QMP is subject to CALTRANS review and concurrence.

12. Any PARTY responsible for completing WORK will make its personnel and consultants that prepare WORK available to help resolve WORK-related problems and changes for the entire duration of the PROJECT including PROJECT work that may occur under separate agreements.

Funding

13. CITY is the only PARTY obligating funds in this AGREEMENT and will fund the cost of the WORK in accordance with this AGREEMENT.

If, in the future, CALTRANS is allocated state funds and Personnel Years (PYs) for PID review or development of this PROJECT, PARTIES will agree to amend this AGREEMENT to change the reimbursement arrangement for PID review.

14. Funding sources, PARTIES committing funds, funding amounts, and invoicing/payment details are documented in the Reimbursement Summary section of this AGREEMENT.

PARTIES will amend this AGREEMENT by updating and replacing the Reimbursement Summary, in its entirety, each time the funding details change. Reimbursement Summary replacements will be executed by a legally authorized representative of the respective PARTIES. The most current fully executed Reimbursement Summary supersedes any previous Reimbursement Summary created for this AGREEMENT.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)iv

15. PARTIES will not be reimbursed for costs beyond the funding commitments in this AGREEMENT.

16. Unless otherwise documented in the Reimbursement Summary, overall liability for project costs within a PROJECT COMPONENT, subject to program limitations, will be in proportion to the amount contributed to that PROJECT COMPONENT by each fund type.

17. Unless otherwise documented in the Reimbursement Summary, any savings recognized within a PROJECT COMPONENT will be credited or reimbursed, when allowed by policy or law, in proportion to the amount contributed to that PROJECT COMPONENT by each fund type.

18. WORK costs, except those that are specifically excluded in this AGREEMENT, are to be paid from the funds obligated in the Reimbursement Summary. Costs that are specifically excluded from the funds obligated in this AGREEMENT are to be paid by the PARTY incurring the costs from funds that are independent of this AGREEMENT.

CALTRANS’ Quality Management

19. CALTRANS, as the owner/operator of the State Highway System (SHS), will perform quality management work including Quality Management Assessment (QMA) and owner/operator approvals for the portions of WORK within the existing and proposed SHS right-of-way.

20. CALTRANS’ Quality Management Assessment (QMA) efforts are to ensure that CITY's quality assurance results in WORK that is in accordance with the applicable standards and the PROJECT’s quality management plan (QMP). QMA does not include any efforts necessary to develop or deliver WORK or any validation by verifying or rechecking WORK.

When CALTRANS performs QMA, it does so for its own benefit. No one can assign liability to CALTRANS due to its QMA.

21. CALTRANS, as the owner/operator of the State Highway System, will approve WORK products in accordance with CALTRANS policies and guidance and as indicated in this AGREEMENT.

22. CITY will provide WORK-related products and supporting documentation upon CALTRANS’ request for the purpose of CALTRANS’ quality management work.

Project Initiation Document (PID)

23. As the PID IMPLEMENTING AGENCY, CITY is responsible for all PID WORK except those activities and responsibilities that are assigned to another PARTY in this AGREEMENT and those activities that may be specifically excluded.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)v

24. Should CITY request CALTRANS to perform any portion of PID preparation work, except as otherwise set forth in this AGREEMENT, CITY agrees to reimburse CALTRANS for such work and PARTIES will amend this AGREEMENT.

25. CALTRANS will be responsible for completing the following PID activities:

CALTRANS Work Breakdown Structure Identifier (If Applicable) AGREEMENT Funded Cost
100.05.10.xx Quality Management Yes
150.05.05.xx Review of Existing Reports, Data, Studies, and Mapping Yes 150.25.20 PID Circulation, Review, and Approval Yes

26. CALTRANS will provide relevant existing proprietary information and maps related to:
•Geologic and Geotechnical information
•Utility information
•Environmental constraints
•Traffic modeling/forecasts
•Topographic and Boundary surveys
•As-built centerline and existing right-of-way
Due to the potential for data loss or errors, CALTRANS will not convert the format of existing proprietary information or maps.

27. When required, CALTRANS will perform pre-consultation with appropriate resource agencies in order to reach consensus on need and purpose, avoidance alternatives, and feasible alternatives.

28. CALTRANS will actively participate in the Project Delivery Team meetings.

29. The PID will be signed on behalf of CITY by a Civil Engineer registered in the State of California.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)vi

30. CALTRANS will review and approve the Project Initiation Document (PID) as required by California Government Code, Section 65086.5.

CALTRANS will complete a review of the draft PID and provide its comments to CITY within 60 calendar days from the date CALTRANS received the draft PID from CITY. CITY will address the comments provided by CALTRANS. If any interim reviews are requested of CALTRANS by CITY, CALTRANS will complete those reviews within 30 calendar days from the date CALTRANS received the draft PID from CITY.

After CITY revises the PID to address all of CALTRANS’ comments and submits the revised draft PID and all related attachments and appendices, CALTRANS will complete its review and final determination of the revised draft PID within 30 calendar days from the date CALTRANS received the revised draft PID from CITY. Should CALTRANS require supporting data necessary to defend facts or claims cited in the revised draft PID, CITY will provide all available supporting data in a reasonable time so that CALTRANS may conclude its review. The 30-day CALTRANS review period will be stalled during that time and will continue to run after CITY provides the required data.

No liability will be assigned to CALTRANS, its officers and employees by CITY under the terms of this AGREEMENT or by third parties by reason of CALTRANS’ review and approval of the PID.

Additional Provisions
Standards

31. PARTIES will perform all WORK in accordance with federal and California laws, regulations, and standards; Federal Highway Administration (FHWA) standards; and CALTRANS standards. CALTRANS standards include, but are not limited to, the guidance provided in the:
•CADD Users’ Manual
•CALTRANS policies and directives
•Plans Preparation Manual
•Project Development Procedures Manual (PDPM)
•Workplan Standards Guide
•Encroachment Permits Manual
Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)vii Noncompliant Work

32. CALTRANS retains the right to reject noncompliant WORK. CITY agrees to suspend WORK upon request by CALTRANS for the purpose of protecting public safety, preserving property rights, and ensuring that all WORK is in the best interest of the State Highway System.

Qualifications

33. Each PARTY will ensure that personnel participating in WORK are appropriately qualified or licensed to perform the tasks assigned to them.

Consultant Selection

34. CITY will invite CALTRANS to participate in the selection of any consultants that participate in the WORK.

Encroachment Permits

35. CALTRANS will issue, upon proper application, the encroachment permits required for WORK within State Highway System (SHS) right-of-way. CITY, their contractors, consultants, agents, and utility owners will not work within the SHS right-of-way without an encroachment permit which specifically allows them to do so. CALTRANS will provide encroachment permits to CITY at no cost. CALTRANS will provide encroachment permits to utility owners at no cost. If the encroachment permit and this AGREEMENT conflict, the requirements of this AGREEMENT will prevail.

36. The IMPLEMENTING AGENCY for a PROJECT COMPONENT will coordinate, prepare, obtain, implement, renew, and amend any encroachment permits needed to complete the WORK.

Protected Resources

37. If any PARTY discovers unanticipated cultural, archaeological, paleontological, or other protected resources during WORK, all WORK in that area will stop and that PARTY will notify all PARTIES within 24 hours of discovery. WORK may only resume after a qualified professional has evaluated the nature and significance of the discovery and CALTRANS approves a plan for its removal or protection.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)viii Disclosures

38. PARTIES will hold all administrative drafts and administrative final reports, studies, materials, and documentation relied upon, produced, created, or utilized for the WORK in confidence to the extent permitted by law and where applicable, the provisions of California Government Code, Section 7921.505(c)(5) will protect the confidentiality of such documents in the event that said documents are shared between PARTIES.

PARTIES will not distribute, release, or share said documents with anyone other than employees, agents, and consultants who require access to complete the WORK without the written consent of the PARTY authorized to release them, unless required or authorized to do so by law.

39. If a PARTY receives a public records request pertaining to the WORK, that PARTY will notify PARTIES within five (5) working days of receipt and make PARTIES aware of any disclosed public records.

Hazardous Materials

40. If any hazardous materials, pursuant to Health and Safety Code 25260(d), are found within the PROJECT limits, the discovering PARTY will notify all other PARTIES within twenty-four (24) hours of discovery.

41. PARTIES agree to consider alternatives to PROJECT scope and/or alignment, to the extent practicable, in an effort to avoid any known hazardous materials within the proposed PROJECT limits.

42. If hazardous materials are discovered within PROJECT limits, but outside of State Highway System right-of-way, it is the responsibility of CITY in concert with the local agency having land use jurisdiction over the property, and the property owner, to remedy before CALTRANS will acquire or accept title to such property.

Claims

43. Any PARTY that is responsible for completing WORK may accept, reject, compromise, settle, or litigate claims arising from the WORK without concurrence from the other PARTY.

44. PARTIES will confer on any claim that may affect the WORK or PARTIES’ liability or responsibility under this AGREEMENT in order to retain resolution possibilities for potential future claims. No PARTY will prejudice the rights of another PARTY until after PARTIES confer on the claim.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)ix

45. If the WORK expends state or federal funds, each PARTY will comply with the Federal Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards of 2 CFR, Part 200. PARTIES will ensure that any for-profit consultant hired to participate in the WORK will comply with the requirements in 48 CFR, Chapter 1, Part 31.

When state or federal funds are expended on the WORK these principles and requirements apply to all funding types included in this AGREEMENT.

Accounting and Audits

46. PARTIES will maintain, and will ensure that any consultant hired by PARTIES to participate in WORK will maintain, a financial management system that conforms to Generally Accepted Accounting Principles (GAAP), and that can properly accumulate and segregate incurred PROJECT costs and billings.

47. PARTIES will maintain and make available to each other all WORK-related documents, including financial data, during the term of this AGREEMENT.

PARTIES will retain all WORK-related records for three (3) years after the final voucher.

PARTIES will require that any consultants hired to participate in the WORK will comply with this Article.

48. PARTIES have the right to audit each other in accordance with generally accepted governmental audit standards.

CALTRANS, the State Auditor, FHWA (if the PROJECT utilizes federal funds), and CITY will have access to all WORK -related records of each PARTY, and any consultant hired by a PARTY to participate in WORK, for audit, examination, excerpt, or transcription.

The examination of any records will take place in the offices and locations where said records are generated and/or stored and will be accomplished during reasonable hours of operation.

The auditing PARTY will be permitted to make copies of any WORK-related records needed for the audit.

The audited PARTY will review the draft audit, findings, and recommendations, and provide written comments within thirty (30) calendar days of receipt.

Upon completion of the final audit, PARTIES have forty-five (45) calendar days to refund or invoice as necessary in order to satisfy the obligation of the audit.

Any audit dispute not resolved by PARTIES is subject to mediation. Mediation will follow the process described in the General Conditions section of this AGREEMENT.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)x

49. If the WORK expends state or federal funds, each PARTY will undergo an annual audit in accordance with the Single Audit Act in the Federal Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards as defined in 2 CFR, Part 200.

50. When a PARTY reimburses a consultant for WORK with state or federal funds, the procurement of the consultant and the consultant overhead costs will be in accordance with the Local Assistance Procedures Manual, Chapter 10.

Interruption of Work

51. If WORK stops for any reason, IMPLEMENTING AGENCY will place the PROJECT right- of-way in a safe and operable condition acceptable to CALTRANS.

Penalties, Judgements and Settlements

52. The cost of awards, judgements, fines, interest, penalties, attorney’s fees, and/or settlements generated by the WORK are considered WORK costs.

53. Any PARTY whose action or lack of action causes the levy of fines, interest, or penalties will indemnify and hold all other PARTIES harmless per the terms of this AGREEMENT.

GENERAL CONDITIONS

54. All portions of this AGREEMENT, including the Recitals Section, are enforceable.

Venue

55. PARTIES understand that this AGREEMENT is in accordance with and governed by the Constitution and laws of the State of California. This AGREEMENT will be enforceable in the State of California. Any PARTY initiating legal action arising from this AGREEMENT will file and maintain that legal action in the Superior Court of the county in which the CALTRANS district office that is signatory to this AGREEMENT resides, or in the Superior Court of the county in which the PROJECT is physically located.

Exemptions

56. All CALTRANS’ obligations and commitments under this AGREEMENT are subject to the appropriation of resources by the Legislature, the State Budget Act authority, programming and allocation of funds by the California Transportation Commission (CTC).

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)xi Indemnification

57. Neither CALTRANS nor any of its officers and employees, are responsible for any injury, damage, or liability occurring by reason of anything done or omitted to be done by CITY, its contractors, sub-contractors, and/or its agents under or in connection with any work, authority, or jurisdiction conferred upon CITY under this AGREEMENT. It is understood and agreed that CITY, to the extent permitted by law, will defend, indemnify, and save harmless CALTRANS and all of their officers and employees from all claims, suits, or actions of every name, kind, and description brought forth under, but not limited to, tortious, contractual, inverse condemnation, or other theories and assertions of liability occurring by reason of anything done or omitted to be done by CITY, its contractors, sub-contractors, and/or its agents under this AGREEMENT.

58. Neither CITY nor any of its officers and employees, are responsible for any injury, damage, or liability occurring by reason of anything done or omitted to be done by CALTRANS, its contractors, sub-contractors, and/or its agents under or in connection with any work, authority, or jurisdiction conferred upon CALTRANS under this AGREEMENT. It is understood and agreed that CALTRANS, to the extent permitted by law, will defend, indemnify, and save harmless CITY and all of their officers and employees from all claims, suits, or actions of every name, kind, and description brought forth under, but not limited to, tortious, contractual, inverse condemnation, or other theories and assertions of liability occurring by reason of anything done or omitted to be done by CALTRANS, its contractors, sub-contractors, and/or its agents under this AGREEMENT.

Non-parties

59. PARTIES do not intend this AGREEMENT to create a third-party beneficiary or define duties, obligations, or rights for entities not signatory to this AGREEMENT. PARTIES do not intend this AGREEMENT to affect their legal liability by imposing any standard of care for fulfilling the WORK different from the standards imposed by law.

60. PARTIES will not assign or attempt to assign obligations to entities not signatory to this AGREEMENT without an amendment to this AGREEMENT.

Ambiguity and Performance

61. Neither PARTY will interpret any ambiguity contained in this AGREEMENT against the other PARTY. PARTIES waive the provisions of California Civil Code, Section 1654.

A waiver of a PARTY’s performance under this AGREEMENT will not constitute a continuous waiver of any other provision.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)xii

62. A delay or omission to exercise a right or power due to a default does not negate the use of that right or power in the future when deemed necessary.

Defaults

63. If any PARTY defaults in its performance of the WORK, a non-defaulting PARTY will request in writing that the default be remedied within thirty (30) calendar days. If the defaulting PARTY fails to do so, the non-defaulting PARTY may initiate dispute resolution.

Dispute Resolution

64. PARTIES will first attempt to resolve AGREEMENT disputes at the PROJECT team level as described in the Quality Management Plan. If they cannot resolve the dispute themselves, the CALTRANS District Director and the Executive Officer of CITY will attempt to negotiate a resolution. If PARTIES do not reach a resolution, PARTIES’ legal counsel will initiate mediation. PARTIES agree to participate in mediation in good faith and will share equally in its costs.

Neither the dispute nor the mediation process relieves PARTIES from full and timely performance of the WORK in accordance with the terms of this AGREEMENT. However, if any PARTY stops fulfilling its obligations, any other PARTY may seek equitable relief to ensure that the WORK continues.

Except for equitable relief, no PARTY may file a civil complaint until after mediation, or forty-five (45) calendar days after filing the written mediation request, whichever occurs first.

PARTIES will file any civil complaints in the Superior Court of the county in which the CALTRANS District Office signatory to this AGREEMENT resides or in the Superior Court of the county in which the PROJECT is physically located.

65. PARTIES maintain the ability to pursue alternative or additional dispute remedies if a previously selected remedy does not achieve resolution.

Prevailing Wage

66. When WORK falls within the Labor Code § 1720(a)(1) definition of "public works" in that it is construction, alteration, demolition, installation, or repair; or maintenance work under Labor Code § 1771, PARTIES will conform to the provisions of Labor Code §§ 1720-1815, and all applicable provisions of California Code of Regulations, Title 8, Division 1, Chapter 8, Subchapter 3, Articles 1-7. PARTIES will include prevailing wage requirements in contracts for public work and require contractors to include the same prevailing wage requirements in all subcontracts.

Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)xiii Work performed by a PARTY’s own employees is exempt from the Labor Code's Prevailing Wage requirements.

If WORK is paid for, in whole or part, with federal funds and is of the type of work subject to federal prevailing wage requirements, PARTIES will conform to the provisions of the Davis- Bacon and Related Acts, 40 U.S.C. §§ 3141-3148.

When applicable, PARTIES will include federal prevailing wage requirements in contracts for public works. WORK performed by a PARTY’s employees is exempt from federal prevailing wage requirements.

Contact Information

CALTRANS
Sindhu Kurup, Project Manager
111 Grand Avenue
Oakland, CA 94612
Office Phone: (510) 715-7920
Email: [email protected]

CITY OF VALLEJO
Mark Helmbrecht, Transportation Program Superintendent
555 Santa Clara Street
Vallejo, CA 94590
Office Phone: (707) 645-2601
Email: [email protected]
Cover Sheet AGREEMENT 04-2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023)xiv

SIGNATURES
PARTIES are authorized to enter into this AGREEMENT and have delegated to the undersigned the authority to execute this AGREEMENT on behalf of the respective agencies and hereby covenants to have followed all the necessary legal requirements to validly execute this AGREEMENT. By signing below, the PARTIES each expressly agree to execute this AGREEMENT electronically.

The PARTIES acknowledge that executed copies of this AGREEMENT may be exchanged by facsimile or email, and that such copies shall be deemed to be effective as originals.

STATE OF CALIFORNIA

DEPARTMENT OF TRANSPORTATION
Helena (Lenka) Culik-Caro
Deputy District Director, Design
Verification of funds and authority:

Jeffrey Kuehnel
District Budget Manager
Certified as to financial terms and policies:
_
Nadine Karavan
HQ Accounting Supervisor

CITY OF VALLEJO
Mike Malone
City Manager
Attest:

Dawn Abrahamson
City Clerk
Approved as to form and procedure:

Veronica A. F. Nebb
City Attorney
AGREEMENT 04 - 2947
Project No. 0421000264
EA 2W720
04-SOL-80-.03/1.3
Project Development Agreement 2017-02-17 (Created July 21, 2023) 1 of 2 REIMBURSEMENT SUMMARY NO. 01

FUNDING TABLE
v. 1
PID
Source Party Fund Type Totals
LOCAL CITY Local 175,000
Totals 175,000
SPENDING SUMMARY v 2
PID
Fund Type CALTRANS CITY Totals
Local 175,000 0 175,000
Totals 175,000 0 175,000
REIMBURSEMENT SUMMARY No. 01 AGREEMENT 04 - 2947
Project No. 0421000264
Project Development Agreement 2017-02-17 (Created July 21, 2023) 2 of 2 Funding

1. Per the State Budget Act of 2012, Chapter 603, amending item 2660-001-0042 of Section

2.00, the cost of any engineering support performed by CALTRANS towards any local government agency-sponsored PID project will only include direct costs. Indirect or overhead costs will not be applied during the development of the PID document.

Invoicing and Payment

2. PARTIES will invoice for funds where the SPENDING SUMMARY shows that one PARTY provides funds for use by another PARTY. PARTIES will pay invoices within forty-five (45) calendar days of receipt of invoice when not paying with Electronic Funds Transfer (EFT). When paying with EFT, CITY will pay invoices within five (5) calendar days of receipt of invoice.

3. If CITY has received EFT certification from CALTRANS then CITY will use the EFT mechanism and follow all EFT procedures to pay all invoices issued from CALTRANS.

4. When a PARTY is reimbursed for actual cost, invoices will be submitted each month for the prior month's expenditures. After all PROJECT COMPONENT WORK is complete, PARTIES will submit a final accounting of all PROJECT COMPONENT costs. Based on the final accounting, PARTIES will invoice or refund as necessary to satisfy the financial commitments of this AGREEMENT.

Project Initiation Document (PID)

5. CALTRANS will invoice CITY for a $25,000 initial deposit after execution of this AGREEMENT and forty-five (45) working days prior to the commencement of PID expenditures. This deposit represents two (2) months’ estimated costs.

Thereafter, CALTRANS will invoice and CITY will reimburse for actual costs incurred and paid.

CONSENT CALENDAR 8.M.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Gillian Hayes, Assistant City Manager
Natalie Peterson, Assistant to the City Manager
SUBJECT: ADOPT A RESOLUTION AUTHORIZING THE CITY MANAGER TO APPLY FOR A

COMMUNITY RESILIENCE CENTER PLANNING GRANT FROM THE CALIFORNIA

STRATEGIC GROWTH COUNCIL

RECOMMENDATION
Adopt a resolution authorizing the City Manager to submit an application from the City of Vallejo to the California Strategic Growth Council for the Community Resiliency Program.

REASONS FOR RECOMMENDATION
The CRC planning grant will allow the City of Vallejo to advance its ability to identify, vision, research, and design a Resilience Center that will serve all residents of Vallejo.

BACKGROUND AND DISCUSSION
Background
The California Strategic Growth Council (SGC) recently announced the availability of funding for Round 1 of the Community Resilience Centers (CRC) Program. SGC anticipates that approximately $5 million in Planning Grant funding, approximately $9.6 million in Project Development Grant funding, and approximately $84 million in Implementation Grant funding will be available for competitive awards in Round 1.

Created by Senate Bill (SB) 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021), the CRC program will provide “funding…for the construction or retrofit of facilities to serve as community resilience centers that mitigate the public health impacts of extreme heat and other emergency situations exacerbated by climate change.” Assembly Bill (AB) 211 (Committee on Budget and Fiscal Review, Chapter 574, Statutes of 2022) directs the program to ensure applicants demonstrate collaboration with community members; involvement with community-based organizations and local residents in governance and decision- making; multistakeholder partnerships; and accessible CRCs providing eligible services and amenities year- round to community residents. AB 211 also authorizes SGC to provide advance payment to specific grantees and directs CRC program staff to prioritize projects in and benefitting under-resourced communities and to ensure statewide geographic diversity.

Administered by SGC, the CRC Program will fund planning, development, construction, and upgrades of local facilities to serve as Community Resilience Centers, providing shelter and resources during climate and other emergencies, including extreme heat events and poor air quality days. The program will also fund ongoing year-round community services and programs, such as information and resource distribution and workforce development training, that build overall community resilience. Community-serving locations may include schools, libraries, community and youth centers, health clinics, places of worship, independent living centers, and more. SGC’s CRC program will fund planning, pre-development, and implementation activities.

Funding for CRC Program Round 1 is through the General Fund’s Climate Budget. Funds available include a total of approximately $5 million for Planning Grants, $9.6 million for Project Development Grants, and $84

Date: September 12, 2023
Subject: ADOPT A RESOLUTION AUTHORIZING THE CITY MANAGER TO APPLY FOR A

COMMUNITY RESILIENCE CENTER PLANNING GRANT FROM THE CALIFORNIA

STRATEGIC GROWTH COUNCIL

million for Implementation Grants, totaling approximately $98.6 million in total CRC Round 1 awards across the 3 CRC grant types.

The deadline to apply for a CRC Planning Grant, Project Development Grant, or Implementation Grant, closes at 11:59:59 p.m. PST on Tuesday, September 5, 2023.

Discussion
CRC Planning Grants are intended to help communities in the initial stages of CRC project development by funding planning and pre-development, community engagement and coordination, site preparation, and other activities necessary to prepare for future CRC rounds of funding and other related funding opportunities. Planning Grant awards will range from $100,000 to $500,000 each, with a grant term of approximately two (2) years, with the option to extend on a case-by-case basis.

The City of Vallejo aims to use the planning grant to advance its ability to identify, vision, research, and design a Resilience Center that will serve all residents of Vallejo. The City aims to ensure that the Center is prepared to handle emergencies, and accessible (physically, culturally, and linguistically) to all community members during and after emergencies. Additionally, the Center will serve as a dedicated overnight or daytime Extreme Weather Center when the City experiences extreme weather, as dictated by the National Weather Service.

When not in use for emergencies or as a cooling/warming center, the center will provide other ongoing services to build, strengthen and sustain community resilience. The exact services will be decided based on CSS and community input. In order to get to this phase, the City plans to utilize the planning grant to understand the pros/cons of potential locations and wants to ensure that community input is taken into account from design to implementation, including which types of programs should be prioritized at the center.

FISCAL IMPACT
There is no fiscal impact associated with this item. Should the City be awarded grant funds, Staff will bring an item to Council to accept the grant and amend the Fiscal Year 2023-2024 budget.

ENVIRONMENTAL REVIEW
Pursuant to the provisions of the California Environmental Quality Act of 1970, together with state and local implementation guidelines and regulations, the action taken would be exempt from CEQA on the grounds that it is a grant application with no commitment or obligation to enter into an agreement at the time of application.

ATTACHMENTS

1. CRC Reso - CAO Stamp

2. CRC_R1_NOFA

CONTACT
Gillian Hayes, Assistant City Manager (707) 648-4163
[email protected]

RESOLUTION NO. ________
A RESOLUTION AUTHORIZING THE CITY MANAGER OR THE CITY MANAGER’S

DESIGNEE TO APPLY FOR AND ACCEPT GRANT FUNDS FROM THE CALIFORNIA

STRATEGIC GROWTH COUNCIL FOR THE TRANSFORMATIVE CLIMATE COMMUNITIES

PLANNING GRANT AND NEGOTIATE AND EXECUTE ANY RELATED DOCUMENTS

NECESSARY TO ACCEPT THESE GRANT FUNDS
WHEREAS, the Transformative Climate Communities (TCC) Program is part of the State’s Climate Budget and funds measures to build climate adaptation and resilience through planning, and this opportunity uniquely aligns with both the City of Vallejo (City) equity and climate-smart goals; and
WHEREAS, procedures established by the California Strategic Growth Council require a resolution certifying the approval of application(s) by the Applicant’s governing board before submission of this application to the State; and
WHEREAS, the City desires to apply for, accept, negotiate, and execute any related documents necessary to enter into an agreement with the California Strategic Growth Council; and WHEREAS, pursuant to the provisions of the California Environmental Quality Act of 1970, together with state and local implementation guidelines and regulations, the action taken would be exempt from CEQA on the grounds that it is a grant application with no commitment or obligation to enter into an agreement at the time of application.

NOW, THEREFORE, BE IT RESOLVED, The City and its City Manager’s Office are authorized to apply for, accept, and implement a Transformative Climate Communities Planning Grant; and BE IT FURTHER RESOLVED, the City Manager or his designee, is authorized to apply for, accept, negotiate, and execute all related documents to receive and implement a grant from the California Strategic Growth Council for the Transformative Climate Communities Planning Grant.

Adopted by the Council of the City of Vallejo at a special meeting held on September 12, 2024 with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_________________________________________
ROBERT H. MCCONNELL, MAYOR
ATTEST: _________________________________________
DAWN G. ABRAHAMSON, CITY CLERK

NOTICE OF FUNDING AVAILABILITY
Community Resilience Centers Program
FY 2022-2023 FUNDING ROUND
DATE: May 26, 2023
TO: All Potential Applicants
FROM: CRC Program Staff, Strategic Growth Council
SUBJECT:

COMMUNITY RESILIENCE CENTERS (CRC) NOTICE OF FUNDING AVAILABILITY (ROUND 1)

The California Strategic Growth Council (SGC) is pleased to announce the availability of funding for Round 1 of the Community Resilience Centers (CRC) Program through this Notice of Funding Availability (NOFA). SGC anticipates that approximately $5 million in Planning Grant funding, approximately $9.6 million in Project Development Grant funding, and approximately $84 million in Implementation Grant funding will be available for competitive awards in Round 1.

SGC retains the right to make partial awards and to reallocate funds between CRC grant types based on program needs and considerations.

Created by Senate Bill (SB) 155 (Committee on Budget and Fiscal Review, Chapter 258, Statutes of 2021), the CRC program will provide “funding…for the construction or retrofit of facilities to serve as community resilience centers that mitigate the public health impacts of extreme heat and other emergency situations exacerbated by climate change.” Assembly Bill (AB) 211 (Committee on Budget and Fiscal Review, Chapter 574, Statutes of 2022) directs the program to ensure applicants demonstrate collaboration with community members; involvement with community-based organizations and local residents in governance and decision-making; multi- stakeholder partnerships; and accessible CRCs providing eligible services and amenities year- round to community residents. AB 211 also authorizes SGC to provide advance payment to specific grantees and directs CRC program staff to prioritize projects in and benefitting under- resourced communities and to ensure statewide geographic diversity. Funding for CRC Program Round 1 is through the General Fund’s Climate Budget.

Funds available include a total of approximately $5 million for Planning Grants, $9.6 million for Project Development Grants, and $84 million for Implementation Grants, totally approximately $98.6 million in total CRC Round 1 awards across the 3 CRC grant types.

To demonstrate interest in applying for a CRC Planning Grant, Project Development Grant, or Implementation Grant, all prospective applicants are strongly encouraged to submit an Intent to Apply Survey as early as possible. This form closes at 11:59:59 p.m. PST on Tuesday, September 5, 2023. Survey responses will help CRC program staff design tailored outreach, plan staffing and support, prepare technical assistance providers, and better support Round 1 applicants of this new climate infrastructure program. Applicants are not held to any information provided in the Intent to Apply Survey; survey responses will not be scored and responses will not impact applications, either pre-proposals or full applications.

Applicants intending to apply for a CRC Planning Grant or Project Development Grant may request application technical assistance (TA) through the CRC Application TA Request Form by no later than 11:59:59 p.m. PST on Friday, June 16, 2023. Please review Section 4 for further detail.

To be considered for a CRC Implementation Grant award, interested applicants must complete an Implementation Grant Pre-Proposal, which includes a request for application technical assistance. Implementation Grant Pre-Proposals must be submitted no later than 11:59:59 p.m. PST on Friday, June 16, 2023. Please review Section 3 for further detail.

Full CRC Planning, Project Development, and Implementation Grant Applications must be submitted no later than 11:59:59 p.m. PST on Tuesday, September 5, 2023, according to the terms of this NOFA.

SECTION 1. PROGRAM SUMMARY
Administered by SGC, the CRC Program will fund planning, development, construction, and upgrades of local facilities to serve as Community Resilience Centers, providing shelter and resources during climate and other emergencies, including extreme heat events and poor air quality days. The program will also fund ongoing year-round community services and programs, such as information and resource distribution and workforce development trainings, that build overall community resilience. Community-serving locations may include schools, libraries, community and youth centers, health clinics, places of worship, independent living centers, and more. SGC’s CRC program will fund planning, pre-development, and implementation activities.

CRC Planning Grants are intended to help communities in initial stages of CRC project development by funding planning and pre-development, community engagement and coordination, site preparation, and other activities necessary to prepare for future CRC rounds of funding and other related funding opportunities. Planning Grant awards will range from $100,000 to $500,000 each, with a grant term of approximately two (2) years, with the option to extend on a case-by-case basis.

CRC Project Development Grants are intended to bridge support for communities developing shovel-ready projects. Project Development Grants will fund pre-development and basic infrastructure activities that advance community-serving facilities’ capability to serve as a future Community Resilience Center and prepare grantees for future CRC rounds of funding and other related funding opportunities. Project Development Grants will prioritize applicants from Disadvantaged Unincorporated Communities, Tribal Communities, and Rural Communities.

Project Development Grant awards will range from $500,000 to $5 million each, with a grant term of approximately two (2) years, with the option to extend on a case-by-case basis.

CRC Implementation Grants are intended to fund new construction and upgrades of neighborhood-scale facilities as Community Resilience Centers, bridging physical and social infrastructure investments to build climate and community resilience. Implementation Grant activities include pre-development, community engagement, construction, services and programs, and evaluation. Implementation Grants will range from $1 million to $10 million each, with a grant term of approximately five (5) years, inclusive of a four (4) year project completion period and a one (1) year performance period.

SECTION 2. ELIGIBILITY
Eligible applicants for CRC Planning Grants, Project Development Grants, and Implementation Grants must be based in California and include but are not limited to:
• California Native American Tribes
• Coalitions or associations of nonprofit organizations • Community-based organizations, faith-based organizations, and non-governmental organizations (NGOs)
• Community development finance institutions or community development corporations • Emergency management, response, preparedness and recovery service providers and organizations
• Philanthropic organizations and foundations, private or nonprofit • Private sector and consultants
• Public entities, including:
o Schools and public libraries
o California incorporated cities
o California counties, including unincorporated communities o Local, regional public agencies, and districts at the county level including community-choice aggregators, special districts, joint powers authorities, councils of governments, and other forms of local government • Small businesses
Each CRC Grant application must include a Collaborative Stakeholder Structure (CSS). The intent of this structure is to formalize localized, place-based partnerships to ensure consistent buy-in and support; shared values and governance; and alleviation of existing power imbalances that may skew input and decisions, especially under time and resource constraints or emergency conditions. Statute (AB 211) requires applicants to demonstrate involvement of community-based organizations (CBOs) and community residents within governance and decision-making processes, including selection and planning of the Project and all subsequent phases of the Project. Applications will be evaluated on the degree to which they incorporate community leadership, especially in decisions like site selection, proposal development, and project design, implementation, and evaluation.

One Lead Applicant will submit an application on behalf of their CSS, alongside Co-Applicants.

The CSS should also include residents and community-nominated members such as CBOs that are not Co-Applicants.

CRC applications may include multiple sites if all sites share the same owner and each site can demonstrate ability to meet CRC grant requirements by the end of the relevant CRC grant term.

Planning Grants
For CRC Planning Grant applications, applicants must include at least one proposed site per application by time of application submission. Applicants will propose partners for a future CSS in their application and, if awarded, use the grant term to finalize the CSS.

Project Development Grants
For CRC Project Development Grants applications, applicants must include an existing facility for proposed retrofits. At least one proposed site or facility is required per application.

Applicants will submit a draft Partnership Agreement and/or Memorandum of Understanding to demonstrate their proposed CSS upon application and, if awarded, must finalize the Partnership Agreement and/or Memorandum of Understanding by grant agreement stage.

Implementation Grants
For CRC Implementation Grants, applicants must include at least one proposed site and/or facility per application. Applicants can propose existing facilities or new construction projects.

Applicants will submit a draft Partnership Agreement and/or Memorandum of Understanding to demonstrate their proposed CSS upon application and, if awarded, must finalize the Partnership Agreement and/or Memorandum of Understanding by grant agreement stage.

Please note that applicants who apply for an Implementation Grant may be considered for a Project Development Grant if CRC program staff determine that their application is not competitive as an Implementation Grant proposal.

SECTION 3. APPLICATION PROCESS
All CRC Planning, Project Development, and Implementation Grant applicants must submit CRC Application materials via Submittable by 11:59:59 p.m. PST on Tuesday, September 5, 2023. No late applications or application revisions will be accepted after the application submittal deadline. No hard copies, facsimiles, electronic transmissions via email, hand- delivered copies, or any other method of submitting complete applications will be accepted.

CRC program staff will provide information on SGC’s website on how to navigate and apply through Submittable.

All applications will be reviewed by CRC program staff to ensure that all required documentation is submitted and that the application is complete. Applicants that may be missing application information will be notified by CRC program staff. If applicants are contacted because of missing information, the application will be deemed incomplete if the applicant does not provide the missing information within two (2) business days.

Applications must meet all eligibility requirements upon submission. Applications having material inconsistencies will not be rated and ranked. Modification of the application by the applicant after submission is prohibited. After a check for completeness, SGC staff will conduct a threshold review of applications for the relevant CRC grant type (Section 9.3 “Program Thresholds” of the CRC Round 1 Final Guidelines). Applications that meet all thresholds will advance to an interagency review panel of partnering State agencies. The interagency review panel and CRC program staff will evaluate applications according to the scoring criteria for the relevant CRC grant type (Section 9.4 “Scoring Criteria” of the CRC Round 1 Final Guidelines).

CRC program staff may invite top-scoring applicants to virtual interviews.

It is the applicant’s responsibility to ensure that the application is clear, complete, and accurate.

After the application deadline and interviews, CRC program staff may request clarifying information or inquire as to where the application-specific information is located provided that such information does not affect the competitive rating of the application. No information, whether written or oral, will be solicited or accepted if this information would result in a competitive advantage to an applicant or a competitive disadvantage to other applicants.

Based on the interagency review of the applications and interviews, CRC program staff will finalize and prepare award recommendations to present to SGC Council Members for final approval. CRC program staff will contact applicants recommended for funding. Staff recommendations will be posted for public review ten (10) days prior to the SGC public meeting. Final funding decisions will be subject to programmatic considerations including diversity of project types and geographic locations, including but not limited to variety of climate impacts, representation from rural and urban, incorporated and unincorporated communities. SGC will make final CRC Round 1 awards at a Council meeting, currently anticipated for December 2023. The Council decision is final.

For further detail on application review process, components, and scoring criteria, please reference Section 9 “Application” of the CRC Round 1 Final Guidelines.

Intent to Apply Form (All CRC Grant Types)
All prospective applicants for any CRC grant type are strongly encouraged to submit an Intent to Apply Survey as early as possible. This form closes at 11:59:59 p.m. PST on Tuesday, September 5, 2023. Survey responses will help CRC program staff design tailored outreach, plan staffing and support, prepare technical assistance providers, and better support Round 1 applicants of this new climate infrastructure program. Applicants are not held to any information provided in the Intent to Apply survey; survey responses will not be scored and responses will not impact applications, either pre-proposals or full applications.

Implementation Grant Pre-Proposal (CRC Implementation Grants Only) All applicants interested in applying for a CRC Implementation Grant must complete the Implementation Grant Pre-Proposal in Microsoft Forms no later than 11:59:59 p.m. PST on Friday, June 16, 2023. CRC program staff and the third-party technical assistance (TA) provider will review Pre-Proposals to provide consistent, unscored feedback to applicants to help inform applicants’ decisions to advance to the CRC Implementation Grant Full Application.

Implementation Pre-Proposals include questions on application TA; CRC program staff will use Pre-Proposal submissions to select which applicants receive what types of application TA from the TA provider. The Pre-Proposal stage is also intended to ensure applicants understand the deadlines and requirements for Implementation Grant thresholds and Full Applications.

Full CRC Applications (All CRC Grant Types)
Full CRC Planning, Project Development, and Implementation Grant Applications must be submitted via Submittable no later than 11:59:59 p.m. PST on Tuesday, September 5, 2023.

Applicants that submitted an Implementation Grant Pre-Proposal must submit an Implementation Grant Full Application for Round 1 award consideration. Please email questions to CRC program staff at: [email protected].

Materials and Resources for Applicants (All CRC Grant Types) CRC program staff will record and publicly post a series of webinars providing an overview of available CRC grants including program objectives, program thresholds and requirements, application process, and grant administration for each of the 3 CRC grant types (Planning, Project Development, Implementation Grants).

CRC program staff will host virtual office hours, tentatively scheduled for the following times:
• July 18, 3:00-4:00 p.m. PST | All
• July 20, 4:00-5:00 p.m. PST | Tribal Communities (attendance limited to tribes and tribal- serving organizations)
• July 25, 10:00-11:00 a.m. PST | Rural Communities
• July 25, 3:00-4:00 p.m. PST | All
• July 26, 3:00-4:00 p.m. PST | All
• August 1, 11:00-12:00 p.m. PST | All
• August 10, 1:00-2:00 p.m. PST | Tribal Communities (attendance limited to tribes and tribal-serving organizations)
• August 17, 11:00-12:00 p.m. PST | Rural Communities
• August 22, 2:00-3:00 p.m. PST | All
• August 29, 3:00-5:00 p.m. PST | All
• August 31, 2:00-4:00 p.m. PST | All
For more information and to register for these sessions, please reference the CRC program webpage and sign-up for the CRC email listserv. Staff will also develop application materials, including case studies, application templates, sample language, and additional support.

SECTION 4. TECHNICAL ASSISTANCE
To support the development of competitive CRC Round 1 applications, SGC has secured a third- party contractor to provide no-cost application technical assistance (TA) to selected CRC applicants for CRC Planning, Project Development, and Implementation Grants. Application TA activities from the TA provider may include, but are not limited to, the following:
• Review of application responses
• Application coordination
• Financial analysis and budget development
• Assessment of project readiness
Application Technical Assistance Request Form (Planning and Project Development Grants Only)
Applicants intending to apply for a CRC Planning Grant or Project Development Grant may request application TA through the CRC Application TA Request Form by no later than 11:59:59 p.m. PST on Friday, June 16, 2023. Completion of the CRC Application TA Request Form does not guarantee application TA; please note that TA resources are limited and will be awarded on a competitive basis. CRC program staff will review requests, select TA recipients for each grant type, and connect TA recipients with the TA provider. CRC program staff will prioritize applicants from priority communities for application TA.

For further detail on priority communities, please reference Section 2.3 “Priority Communities” in the CRC Round 1 Final Guidelines.

Application Technical Assistance Request (Implementation Grants Only) Applicants intending to apply for a CRC Implementation Grant must submit an Implementation Grant Pre-Proposal by no later than 11:59:59 p.m. PST on Friday, June 16, 2023.

Implementation Pre-Proposals include questions to request application TA; CRC program staff will use Pre-Proposal submissions to select which applicants receive what types of application TA from the third-party TA provider. Implementation Grant applicants do not need to complete the Application Technical Assistance Request Form described above: relevant questions are included in the Pre-Proposal.

For further detail on technical assistance, please reference Section 11.1 “Application Technical Assistance” in the CRC Round 1 Final Guidelines.

SECTION 5. SCORING
Applications will be evaluated according to the process and scoring criteria set forth in Section

9.4 “Application: Scoring Criteria” of the CRC Round 1 Final Guidelines. The top scoring applicants will be recommended to the California Strategic Growth Council to receive CRC Planning, Project Development, and Implementation Grants.

SECTION 6. APPEALS
Basis of Appeals

1. Upon receipt of a notice that an application has been determined to be ineligible, fails threshold review, or not awarded based on final scores, CRC Implementation Grant Applicants under this NOFA may appeal such decision(s) to SGC pursuant to this section.

2. No Applicant shall have the right to appeal a decision of SGC relating to another Applicant’s eligibility, point score, aware, denial of award, or any other matter related thereto.

3. The appeal process provided herein applies solely to the decision of SGC made in this program NOFA and does not apply to any decisions made with respect to any previously issued NOFAs or decisions to be made pursuant to future program NOFAs.

Appeal Process and Deadlines

1. Process: To file an appeal, CRC Implementation Grant Applicants must submit to SGC, by the deadline set forth below (see 2. Filing Deadline), a written appeal, which states all relevant facts, arguments, and evidence upon which the appeal is based. Furthermore, the Applicant must provide a detailed reference to the area or areas of the application that provide clarification and substantiation for the basis of the appeal. No new or additional information will be considered if this information would result in a competitive advantage to an Applicant. Once the written appeal is submitted to SGC, no information of materials will be accepted or considered thereafter. Appeals submitted to SGC at [email protected] according to the deadline set forth in SGC review letters.

2. Filing deadline: Appeals must be received by SGC no later than five (5) business days from the date of SGC’s threshold review or score letters, representing SGC’s decision made in response to the application.

Appeal Decision
Any requests to appeal to SGC’s decision regarding an Implementation Grant application shall be reviewed for compliance with the CRC Round 1 Final Guidelines and this NOFA. All decisions rendered shall be final, binding, and conclusive, and shall constitute the final action of SGC.

SECTION 7. OTHER TERMS AND CONDITIONS
State Prevailing Wages
Program funds awarded under this NOFA are subject to State prevailing wage law, as set forth in Labor Code Section 1720 et seq., and require the payment of prevailing wages unless the project meets one of the exceptions of Labor Code 1720 (c) as determined by the Department of Industrial Relations. Applicants are urged to seek professional advice as to how to comply with State prevailing wage law. Please reference Section 10.6 “Prevailing Wage Requirements” in the CRC Round 1 Final Guidelines.

Disclosure Application of Information
Information provided in the CRC Planning, Project Development, and Implementation Grant applications will become a public record available for review pursuant to the Public Records Act. As such, any materials provided will be disclosable to any person making a public records request. Applicants should use discretion in providing information that is not specifically requested, including, but not limited to bank account numbers, personal phone numbers, and home addresses. By providing this information in an application, the applicant waives any claim of confidentiality and consents to the public disclosure of all submitted material. Awarded applications will be available through the SGC website.

Right to Modify or Suspend
SGC reserves the right, at its sole discretion, to suspend, amend, or modify the provisions of this NOFA at any time, including without limitation, the amount of funds available hereunder. If such an action occurs, CRC program staff will notify all interested parties via email and will post the revisions to the CRC Program website.

Conflict
In the event of any conflict between the terms of this NOFA and either applicable state or federal law regulation, the terms of the applicable state or federal law or regulation shall control. In the event of a conflict between the terms of this NOFA and the CRC Round 1 Final Program Guidelines, guideline terms shall control.

SECTION 8. RESOURCES AND QUESTIONS
Information about the CRC Program, including Program Guidelines, application and communications materials, technical assistance, and other resources can be found on the CRC program webpage. Please email questions to CRC program staff at: [email protected].

CONSENT CALENDAR 8.N.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Gillian Hayes, Assistant City Manager
SUBJECT: ADOPT A RESOLUTION APPROVING A 120-DAY EXTENSION TO LESSEE, YOCHE DE HE WINTUN NATION, DUE DILIGENCE PERIOD (WITH A POTENTIAL ADDITIONAL 60-DAY EXTENSION) PURSUANT TO SECTION 3.3 OF THE LEASE AGREEMENT FOR 285 MARE ISLAND WAY, FINDING THE

ACTION EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO CEQA GUIDELINES SECTION 15306 INFORMATION GATHERING AND SECTION 15309 INSPECTIONS,

AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

RECOMMENDATION
Adopt a Resolution approving a 120-day extension to Lessee’s due diligence period pursuant to Section 3.3 of the Lease Agreement for 285 Mare Island Way, finding the action exempt under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15306 Information Gathering and 15309 Inspections, and authorizing the City Manager to execute same.

REASONS FOR RECOMMENDATION
The extension has been requested by the Lessee, the Yocha Dehe Wintun Nation, to complete its due diligence of the project site for the proposed development at 285 Mare Island Way and at the adjacent Waterfront Historic Park. The extension of the due diligence period is permitted under the lease upon mutual agreement of both parties. Staff is recommending that the extension be approved so that this project, which will play an important role in activating the waterfront, can move forward.

BACKGROUND AND DISCUSSION

A key goal for the City is to stimulate development in key target areas, such as Mare Island Causeway, the area near the central waterfront and the Ferry Building, the downtown corridor and the southern and central waterfront sites. The lease entered into with the Yocha Dehe Wintun Nation helps support these goals of economic stimulation and activation of the central waterfront.

A lease for 285 Mare Island Way with Yocha Dehe Wintun Nation was entered into on December 20, 2022.

The lease stipulates an initial 120-day period for the Yocha Dehe Wintun Nation Tribe to perform its due diligence, which was initially set to expire on April 20, 2023. Section 3.3 of the Lease indicates that the Lessee shall be entitled to conduct studies to determine whether it is satisfied in all respects with the Premises. This includes physical (environmental conditions), conditions of title to the premises and its suitability for Lessee’s use and development. The Lease allows the Lessee to elect, prior to the expiration of the due diligence period, to terminate the Lease or to extend the due diligence period, up to an additional 60-day period, or longer, upon the mutual agreement of the parties.

During the Council meeting on April 25, 2023, Council approved a 60-day extension to the due diligence period with an additional 60-day staff extension, allowing extension through August 20, 2023. The Tribe made use of the first 60-day extension and requested the second 60-day staff extension. The City Manager approved the second 60 day staff extension. This additional 120-day extension would allow the due diligence period to continue retroactively from August 20 through December 20, 2023.

Date: September 12, 2023
Subject:

ADOPT A RESOLUTION APPROVING A 120-DAY EXTENSION TO LESSEE, YOCHE DE HE WINTUN NATION, DUE DILIGENCE PERIOD (WITH A POTENTIAL ADDITIONAL 60-DAY EXTENSION) PURSUANT TO SECTION 3.3 OF THE LEASE AGREEMENT FOR 285 MARE ISLAND WAY, FINDING THE ACTION EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO CEQA GUIDELINES SECTION 15306 INFORMATION GATHERING AND SECTION 15309 INSPECTIONS, AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

The Tribe has informed us they have lost key staff and are trying to hire additional technical staff. City staff are also aware of the delays the Tribe has experienced in obtaining site-related documents and investigations.

Given these challenges, City staff recommends that Council grant the additional time for Yocha Dehe Wintun Nation to complete its due diligence and continue to move forward with the development project, as proposed.

Key Provisions of the Lease
• 35-year lease term with four 5-year extension options for a total of 55 years. • Fair Market rent based on the appraisal of approximately $114,000 per year. • In return for paying Park design and development costs up to $10 Million, the Tribe will receive rent offsets in the actual amount contributed to the Park up to $10 Million over the life of the lease. • The ability of the City to retrieve control of the site if governmental uses of the site become a priority. This would include a buyback of the deprecated value of the improvements installed by the Tribe.
• Park naming approval in partnership with the City. Both the City Council and the Tribal Council will hold approval authority on the overall Waterfront History Park Patwin translation name and the internal park phased area names. Signage throughout the Park will contain both Patwin and English translations. • The Park will retain the elements of the overall history of the waterfront from first Native American use through today, including all cultures that have participated on the waterfront throughout history. • The City and the Tribe will provide a reciprocal use of event space for up to 6 events per year. • The Tribe will maintain the premises and surrounding areas, including sidewalks and landscaping, instead of paying the Common Area Maintenance fees to the City for City maintenance. • The Tribe will submit entitlement applications within 12 months of the executed lease document. • The City will provide up to 200 parking spaces throughout City parking areas for special events to be determined at the time of Entitlement approval through a License Agreement. • The Tribe will have Right of First Offer and Right of First Refusal for the site. • The Lessee will maintain the premises and surrounding areas, including sidewalks and landscaping.

To date, a Maintenance Agreement has been executed for the premises and surrounding common areas between the Yocha Dehe Wintun Nation and the City, as specified in the Lease. Entitlements will still need to be submitted within the 1-year period, including park entitlements. Park design will continue alongside the Tribe’s proposed project design, and the public and Council will continue to have ongoing opportunities to engage on the progress of the project through public meetings and entitlement hearings.

FISCAL IMPACT
The fiscal impact of the proposed Lease will not result in General Fund expenditures for the period of the lease. Long term, the City will benefit from the development of the site and will own all Tribe installed improvements at the end of the 55-year Lease term.

Date: September 12, 2023
Subject:

ADOPT A RESOLUTION APPROVING A 120-DAY EXTENSION TO LESSEE, YOCHE DE HE WINTUN NATION, DUE DILIGENCE PERIOD (WITH A POTENTIAL ADDITIONAL 60-DAY EXTENSION) PURSUANT TO SECTION 3.3 OF THE LEASE AGREEMENT FOR 285 MARE ISLAND WAY, FINDING THE ACTION EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO CEQA GUIDELINES SECTION 15306 INFORMATION GATHERING AND SECTION 15309 INSPECTIONS, AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

ENVIRONMENTAL REVIEW
This action is exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15306 Information Collection and Section 15309 Inspections.

ATTACHMENTS

1. Reso Lease for 285 Mare Island Way Lessee Due Diligence Extension of 120 Days_CAO Stamp

CONTACT
Gillian Hayes, Assistant City Manager (707) 648-4163
[email protected]
Michal Nimon, Economic Development Director (707) 648-4109 [email protected]

RESOLUTION NO. 23-_______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO APPROVING A 120-DAY EXTENSION TO LESSEE YOCHE DEHE WINTUN NATION, DUE DILIGENCE PERIOD (WITH A POTENTIAL ADDITIONAL 60-DAY EXTENSION) PURSUANT TO SECTION 3.3 OF THE LEASE AGREEMENT OF 285 MARE ISLAND

WAY, FINDING THE ACTION EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO CEQA GUIDELINES SECTION 15306 INFORMATION GATHERING AND SECTION 15309 INSPECTIONS, AND

AUTHORIZING THE CITY MANAGER TO EXECUTE SAME
WHEREAS, on December 20, 2022, the City of Vallejo City Council approved a lease between City of Vallejo and the Yocha Dehe Wintun Nation of 285 Mare Island Way (Lease) for a proposed development project to include a Waterfront Historic Park, cultural center, restaurant and other site improvements; and
WHEREAS, the lease of 285 Mare Island Way to the Yocha Dehe Wintun Nation (Lessee) will provide economic stimulation and activation of the central waterfront; and WHEREAS, the Lease allows the Lessee, prior to the expiration of the due diligence period, to terminate the lease or to extend the due diligence period, up to an additional 60-day period or longer, upon the mutual agreement of the parties; and WHEREAS, the Lessee has utilized previously approved due diligence extensions, ending on August 20, 2023, and is now requesting an additional 120-day period to complete its due diligence, which would expire on December 20, 2023; and WHEREAS, City staff has been kept appraised of the progress and challenges Lessee has encountered to complete its due diligence and finds the extension request to be reasonable; and
WHEREAS, to continue to keep the development project moving forward to support the City of Vallejo’s goal to stimulate development in key target areas, it is necessary that Lessee completes the necessary due diligence to fully assess the conditions of the site before the project can advance into its next phase.

NOW, THEREFORE, BE IT RESOLVED that the City Council hereby finds that the approval of an additional 120-day extension to Lessee’s due diligence period is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15306, Information Gathering, and 15309, Inspections, because it is limited entirely to information gathering and to inspections by the Lessee to check the quality, health, and safety of a proposed project.

BE IT FURTHER RESOLVED that Lessee’s due diligence period is hereby extended by an additional 120 days.

BE IT FURTHER RESOLVED that the City Manager is hereby authorized to extend the due diligence period for an additional 60-day period in his discretion, with notice to the Council.

BE IT FURTHER RESOLVED that the City Manager is authorized to execute the foregoing extension(s).

PASSED AND ADOPTED by the City Council of the City of Vallejo at a regular meeting thereof held on September 12, 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:

Mayor Robert H. McConnell
ATTEST:

Dawn Abrahamson, City Clerk
APPROVED AS TO FORM:

Veronica A.F. Nebb, City Attorney
CONSENT CALENDAR 8.O.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Naveed Ashraf, Chief Innovation Officer & IT Director SUBJECT: ADOPT A RESOLUTION APPROVING A CONTRACT WITH SMART FIBER NETWORK IN AN AMOUNT NOT TO EXCEED $153,537.33 TO INSTALL PUBLIC WI-FI IN VALLEJO

DOWNTOWN, WATERFRONT & FERRY BUILDING, BLUE ROCK SPRINGS PARK, AND

DAN FOLEY PARK, AND AUTHORIZING THE CITY MANAGER TO EXECUTE SAME

RECOMMENDATION
Adopt a resolution authorizing the City Manager to execute a contract with Smart Fiber Network in an amount not to exceed $153,537.33 to install public wi-fi in Vallejo Downtown, Waterfront & Ferry building, Blue Rock Springs Park, and Dan Foley Park.

REASONS FOR RECOMMENDATION
On June 24, 2022, the City of Vallejo published an RFP to solicit broadband vendors to manage the city's fiber infrastructure and expand the city-owned municipal fiber network.

On November 1, 2022, the Information Technology Director presented the results of the RFP to the City Council and recommended Smart Fiber Networks, Inc. as the city's new broadband partner/contractor. The City Council approved the selection. The City of Vallejo and its selected partner are well underway in executing several broadband expansion projects identified in the Broadband & Digital Equity Strategy. One of the projects is to provide free public wi-fi in several locations in the city. More details are given below in the background and discussion section of this staff report.

BACKGROUND AND DISCUSSION
Deployment of free public WIFI is one of the broadband expansion projects identified in the adopted Broadband & Equity Strategy 2022 and will have many benefits for the City. Free public WIFI contributes to a better connected society and enhanced interaction between citizens and businesses. Nowadays, public WIFI systems are becoming ubiquitous and play a major role in how people connect with each other. The City of Vallejo has several high-profile areas where festivals, tourist activities, and many public events take place.By installing free public WIFI in these areas, the City of Vallejo will play a major role in increasing people's quality of life. Public WIFI will be installed in the following four locations in the city:

1. Downtown Vallejo

2. Waterfront Park and the Ferry Terminal

3. Blue Rock Springs Park

4. Dan Foley Park

Hundreds of citizens and tourists visit downtown Vallejo and the Waterfront on a monthly basis. Installing public WIFI will be a huge benefit for these locations. The proposed public WIFI project will cover approximately 2 square miles surrounding the downtown neighborhood, expanding to the Transit Center on York Street and the Ferry Terminal and the Waterfront Park. The proposed public WIFI project will be capable of supporting 2000 simultaneous users in the area.

Date: September 12, 2023
Subject: ADOPT A RESOLUTION APPROVING A CONTRACT WITH SMART FIBER NETWORK IN AN AMOUNT NOT TO EXCEED $153,537.33 TO INSTALL PUBLIC WI-FI IN

VALLEJO DOWNTOWN, WATERFRONT & FERRY BUILDING, BLUE ROCK

SPRINGS PARK, AND DAN FOLEY PARK, AND AUTHORIZING THE CITY

MANAGER TO EXECUTE SAME

Blue Rock Springs Park remains a popular park for the City of Vallejo. The park offers a peaceful, clean, and safe environment for the citizens of Vallejo to take their families and enjoy a nice picnic. Public WIFI will greatly enhance the experience of our citizens visiting the park. The public WIFI will also be able to support the point of sale (POS) system operated by the GVRD personnel. The proposed engineering design for the park is to cover over 5000 square feet around major picnic areas to support over 1500 simultaneous users in the park.

Dan Foley Park is another popular area for Vallejo citizens to gather and enjoy a nice park environment. The proposed WIFI project will cover over 3600 square feet of WIFI coverage around major picnic areas to support over 1500 simultaneous users in the park.

The above proposed projects are expected to be completed by the vendor in 6 months from the contract execution date. The priority of the projects will be as follows:

First priority: Downtown Vallejo and Water Front.

Second priority: Blue Rock Springs Park.

Third priority: Dan Foley Park.

The cost of each project, including labor, is as follows:

1. Downtown Vallejo & Water Front: $106,642.17

2. Blue Rock Springs Park: $23,447.58

3. Dan Foley Park: $23,447.58

Total project not to exceed $153,537.33

For more details, please refer to the scope of work section of the contract.

FISCAL IMPACT
There is no fiscal impact on the general fund, as all proposed projects are funded through ARPA (American Rescue Plan Act).

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15303 because it consists of installing thirty-five access points and associated small mounting equipment on existing City facilities to provide public wi-fi.

ATTACHMENTS

1. RESO- Smart Fiber Network Public-WIFI_CAO Stamp

2. Short Form Const Contract - Installation of Public Wifi_Smart Fiber Networks_CAO Stamp (3)

3. Proposed Wireless Access Point Specification Sheet

4. Blue Rock Springs Park Heat Map

5. Dan Foley Park Heat Map

6. Downtown & Waterfront Heat Map

7. Project Time Line
Date: September 12, 2023
Subject: ADOPT A RESOLUTION APPROVING A CONTRACT WITH SMART FIBER NETWORK IN AN AMOUNT NOT TO EXCEED $153,537.33 TO INSTALL PUBLIC WI-FI IN

VALLEJO DOWNTOWN, WATERFRONT & FERRY BUILDING, BLUE ROCK

SPRINGS PARK, AND DAN FOLEY PARK, AND AUTHORIZING THE CITY

MANAGER TO EXECUTE SAME

CONTACT
Naveed Ashraf, Chief Innovation Officer & IT Director (707) 648-5200 [email protected]

RESOLUTION NO. 23-_____________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO APPROVING A CONSTRUCTION CONTRACT WITH SMART FIBER NETWORKS, INC. IN AN AMOUNT NOT TO EXCEED $153,537.33 FOR THE INSTALLATION OF PUBLIC WIFI IN DOWNTOWN

VALLEJO, WATERFRONT PARK, BLUE ROCK SPRINGS PARK, AND DAN FOLEY PARK

AUTHORIZING THE CITY MANAGER TO EXECUTE SAME
WHEREAS, on June 24, 2022, the City of Vallejo published an RFP to solicit broadband vendors to manage, build, and expand City-owned municipal fiber network, also known as VallejoNet; and WHEREAS, Smart Fiber Networks, Inc. was the only respondent that submitted a complete response to the RFP; and
WHEREAS, on November 1, 2022, the Director of Information Technology presented the RFP results to the City Council recommending awarding the Internet Service Provider (ISP) contract to Smart Fiber Networks Inc.; and
WHEREAS, on November 1, 2022, the City Council as per staff recommendation approved the ISP contract with Smart Fiber Networks, Inc.; and
WHEREAS, on January 4, 2023, the City Council as per staff recommendation approved the Design Services Agreement with Smart Fiber Networks, Inc.; and WHEREAS, the remaining work identified in the RFP requires the design professional services of an outside consultant to provide the City with complete design and engineering plans to complete construction work packages for the following 4 projects: 1) public Wi-Fi (Downtown Vallejo, Waterfront Park, Bluerock Springs Park, and Dan Foley Cultural Center); 2) connecting several municipal buildings to the broadband fiber network; 3) building a resilient fiber loop; and 4) fiber to premises in Vallejo neighborhoods; and

WHEREAS, as per the design contract, the public WIFI project design and engineering plan is complete; and
WHEREAS, the Director of Information Technology recommends awarding the contract for the installation of public WIFI to Smart Fiber Networks, Inc. for an amount not to exceed the sum of $153,537.33; and
WHEREAS, there are numerous economic, digital equity, and digital divide benefits to the City of Vallejo by the expansion of its City-owned municipal fiber network and free public WIFI.

NOW, THEREFORE, BE IT RESOLVED that the City Council hereby approves a construction contract with Smart Fiber Networks, Inc. to install public WIFI in the Downtown Vallejo, Waterfront Park, Blue Rock Springs Park, and Dan Foley Park in an amount not to exceed $153,537.33.

BE IT FURTHER RESOLVED that the City Council authorizes the City Manager to execute the contract.

Adopted by the City Council of the City of Vallejo at a regular meeting held on August 29, 2023, with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________________
ROBERT H. MCCONNELL, MAYOR
ATTEST:
_________________________________________
DAWN G. ABRAHAMSON, CITY CLERK
City of Vallejo – Short Form Contract Page 1 of 40
CONTRACT WITH SMART FIBER NETWORKS, INC. FOR

PUBLIC WI-FI INSTALLATION FOR DOWNTOWN VALLEJO AND CITY PARKS THIS CONTRACT, made and entered into this 29th day of August, 2023 between City of Vallejo, a municipal corporation, hereinafter referred to as City, and Smart Fiber Networks, Inc., a California corporation, hereinafter referred to as Contractor;
WITNESSETH:

WHEREAS, on June 24, 2022, the City issued an RFP to solicit broadband vendors to expand the City’s municipal fiber network; and
WHEREAS, Contractor, in response to such solicitation, submitted to the City a quote for the performance of such work; and
WHEREAS, City and Contractor now desire to enter into a Contract for the performance of said work.

NOW, THEREFORE, in consideration of the above, it is mutually agreed between the parties hereto as follows, to wit:

1. SCOPE OF WORK
Contractor to complete work as specified Exhibit A of this agreement.

Contractor shall provide all labor, tools, and materials for a complete and working project in conformance with the Contract Documents.

The following documents constitute the Contract Documents:
(a) This Contract;
(b) Exhibit A, Scope of Work and Technical Specifications; (c) Exhibit B, Compensation;
(d) Exhibit C, Project Maps;
(e) City of Vallejo Short Form General Conditions;
(f) Change Orders thereto, approved by the IT Director; (g) Any other documents identified as such in the Contract Documents.

2. TERMS AND CONDITIONS
This Contract consists of the Contract Documents identified as such, all of which are incorporated herein by reference as though set forth in full, and all of which are part of this Contract, and Contractor and City agree to comply with and fulfill all obligations, promises, covenants and conditions imposed upon each of them in the Contract Documents. All of said work done under this Contract shall be performed to the satisfaction of the Information Technology Director, or his/her representative, who shall have the right to reject any and all materials and supplies furnished by Contractor which do not strictly comply with the Contract Documents, together with the right to require Contractor to replace any and all work furnished by Contractor that is not, either in workmanship or material, in strict accordance

City of Vallejo – Short Form Contract Page 2 of 40
with the Contract Documents.

Upon the condition the Contractor faithfully performs its obligations herein, City shall pay Contractor the sums set forth in Exhibit B - Compensation, in accordance with all of the terms and conditions of the Contract Documents.

Work shall begin within ten (10) business days of Contractor’s receipt of City’s Notice to Proceed and shall be completed by December 31, 2023.
[SIGNATURES ON FOLLOWING PAGE]
City of Vallejo – Short Form Contract Page 3 of 40
IN WITNESS WHEREOF, City and Contractor have caused this Contract to be signed as of the day and year first above written.

SMART FIBER NETWORKS, INC.,
A California corporation
By:

Title: ____________________________
Date: ____________________________
(City Seal)

CITY OF VALLEJO,
a municipal corporation
By:

Michael Malone, City Manager
Date: ____________________________
Attest:

By:

Dawn G. Abrahamson, City Clerk
Approved as to Content:

By:

Naveed Ashraf, IT Director
Approved as to Form:

By:

Veronica A.F. Nebb, City Attorney
Approved as to Insurance:

By:

Armond Sarkis, Risk Manager
City of Vallejo – Short Form Contract Page 4 of 40

CITY OF VALLEJO

SHORT FORM GENERAL CONDITIONS

1. BASIC DEFINITIONS:

A. "Change Order" shall refer to a written agreement on the City’s form, modifying the Contract. The Contract may not be modified, and the Contract Sum or Contract Time may not be increased, excepting by Change Order, excepting that if Exhibit B-Cost of the Work, sets forth unit quantity prices in contrast to a single lump-sum price, then the Contract Sum may be increased or decreased by the City directing the Contractor to perform more or less units of work.

B. "Construction Change Directive" (C.C.D.) shall refer to a written directive, signed by City, directing Contractor to perform and/or omit certain work as specified within the Construction Change Directive. The Contractor shall promptly comply with the Construction Change Directive and promptly perform and/or omit the work specified in the Construction Change Directive.

C. "Contract Sum" means the total compensation specified in Exhibit B-Cost of the Work, to be paid to Contractor.

D. "Contract Time" means the number of days within which the full completion of all of Contractor's work must be achieved.

E. The term "Contractor" means the person or firm identified as such in the Contract, or its authorized representative.

F. The term "day" means calendar day unless otherwise specified.

G. The term "City" or “Owner” means the City of Vallejo.

2. DIFFERING SITE CONDITIONS: After award of the Contract, the Contractor shall promptly, and before the following conditions are disturbed, notify the City in writing, of any:
(a) Material that the contractor believes may be material that is hazardous waste, defined in section 25117 of the Health and Safety Code, that is required to be removed to a Class I, Class II, or Class III disposal site in accordance with provisions of existing law. (b) Unknown physical conditions at the site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract.

The City shall promptly investigate the conditions, and if it finds that the conditions do materially so differ, or do involve hazardous waste, and cause a decrease or increase in the Contractor’s cost of, or the time required for, performance of any part of the work shall issue a Change Order under the procedures described in the Contract Documents.

In the event that a dispute arises between the City and the Contractor whether the conditions materially differ, or involve hazardous waste, or cause a decrease or increase in the Contractor’s cost of, or time required for, performance of any part of the work, the Contractor shall not be excused from any scheduled completion date provided for by the Contract, but shall proceed with all work to be performed under the Contract. The Contractor shall retain any and all rights provided either by Contract or by law which pertain to the resolution of disputes and protests between the contracting parties.

5. PAYMENT AND PERFORMANCE BONDS: Within ten (10) days of Contractor's receipt of Contract from City, the Contractor shall furnish corporate surety bonds to the benefit of the City, City of Vallejo – Short Form Contract Page 5 of 40
on the forms provided by City, issued by a surety company acceptable to the City and authorized and admitted to do business in the State of California, as follows:

A. Faithful Performance Bond -- In a sum not less than one hundred percent (100%) of the total contract price as set forth in the Contract to guarantee the Contractor's faithful performance of all covenants and stipulations of the Contract. The bond shall contain a provision that the surety thereon waives the provisions of sections 2819 and 2845 of the Civil Code of the State of California.

B. Payment Bond -- In a sum not less than one hundred percent (100%) of the total contract price as set forth in the Contract to guarantee the payment of wage, and bills contracted for materials, supplies, or equipment used in the performance of the Contract. The bond shall be in accordance with the provisions of sections 3225, 3226, and 3247 to 3252, inclusive, of the Civil Code of the State of California, and Section 13020 of the Unemployment Insurance Code of the State of California. Said bond shall also contain a provision that the surety thereon waives the provisions of sections 2819 and 2845 of the Civil Code of the State of California.

The surety companies shall familiarize themselves with all provisions and conditions of the Contract Documents. It is understood and agreed that the surety or sureties waive the right of special notification of any modifications or alterations, omissions or reductions, extra or additional work, extensions of time, or any other act or acts by the City or its authorized agents under the terms of the Contract; and failure to so notify the surety companies of such changes shall in no way relieve the surety or sureties of their obligations under this Contract. The surety expressly waives the provisions of sections 2819 and 2845 of the Civil Code of the State of California.

6. INSURANCE: Insurance shall conform to the following requirements: The Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Contractor, his/her agents, representatives, employees or subcontractors. Such insurance shall not be construed to relieve the Contractor of any liability in excess of such coverage.

A. Minimum Scope of Insurance Coverage shall be at least as broad as:

1. Insurance Services Office form number GL 0002 (Ed. 1/73) covering Comprehensive General Liability and Insurance Services Office from number GL 0404 covering Broad Form Comprehensive General Liability; or Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001).

2. Insurance Services Office form number CA 0001 (Ed. 1/78) covering Automobile Liability, code 1 "any auto" and endorsement CA 0025.

3. Workers' Compensation insurance as required by the Labor Code of the State of California and Employers Liability insurance.

B. Minimum Limits of Insurance
City of Vallejo – Short Form Contract Page 6 of 40
Contractor shall maintain limits no less than:

1. General Liability: $2,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury and property damage.

3. Workers' Compensation and Employers Liability: Workers' compensation limits as required by the Labor Code of the State of California and Employers Liability limits of $1,000,000 per accident.

C. Deductibles and Self - Insured Retention
Any deductibles or self - insured retention must be declared to and accepted by the City.

At the option of the City, either: the insurer shall reduce or eliminate such deductibles or self - insured retention as respects the City, its officers, officials, employees and volunteers; or the Contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses.

D. Other Insurance Provisions
The policies are to contain, or be endorsed to contain the following provisions:

1. General Liability and Automobile Liability Coverage
a. The City, its officers, officials, employees and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of the Contractor, including the insured's general supervision of the Contractor; products and completed operations of the Contractor, premises owned, occupied or used by the Contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers and the Engineer, its officers, directors, employees and subcontractors.
b. The Contractor's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, and volunteers. Any insurance or self - insurance maintained by the City, its officers, officials, employees or volunteers and the Engineer, its officers, directors, employees and subcontractors shall be excess of the Contractor's insurance and shall not contribute with it.
c. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its officers, officials, employees or volunteers and the Engineer, its officers, directors, employees and subcontractors. d. The Contractor's coverage applies separately to each insured against City of Vallejo – Short Form Contract Page 7 of 40
whom claim is made or suit is brought, except with respect to the limits of the insurer's liability.

2. Workers' Compensation and Employers Liability Coverage The insurer shall agree to waive all rights of subrogation against the City, its officers, officials, employees and volunteers for losses arising from work performed by the Contractor for the City and the Engineer, its officers, directors, employees and subcontractors.

3. All Coverage
Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice has been given to the City.

E. Acceptability of Insurers
Insurance is to be placed with insurers with a Best's rating of no less than A.

F. Verification of Coverage
Contractor shall furnish the City with certificates of insurance and with original endorsements effecting coverage required by this section. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are to be received and accepted by the City before work commences. The City reserves the right to require complete, certified copies of all required insurance policies, at any time.

G. Subcontractors
Contractor shall include all subcontractors as insured under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverage for subcontractors shall be subject to all of the requirements stated herein.

H. Exclusions
This insurance does not cover tools owned by mechanics, any tools, equipment, scaffolding, staging, towers, and forms rented or owned by the Contractor, the capital value of which is not included in the cost of the work or any shanties or other structures erected for the sole convenience of the workers.

7. INTENT OF DRAWINGS AND SPECIFICATIONS: It is the intent of the Contract that the Contractor’s work performed under the Contract shall result in a complete operating system in satisfactory working condition with respect to the functional purposes of the installation, and no extra compensation will be allowed Contractor for anything omitted but fairly implied. The prices paid to Contractor for the various items in the proposal shall include full compensation for furnishing all labor, materials, tools, equipment, overhead, profit, incidentals, and doing all work necessary to complete the finished product as provided in the Contract Documents. All City of Vallejo – Short Form Contract Page 8 of 40
workmanship and materials shall be to the highest possible standards.

The specifications and drawings (if any) are intended to be explanatory of each other. Any work shown on the drawings, and not in the specifications, or vice versa, is to be treated as if indicated in both. In the case of conflict or inconsistency, the Supplemental Conditions (if any) shall control over the General Conditions, and the specifications shall control over the drawings. Figured dimensions shall control over scaled measurements. In all cases, the more costly or expensive interpretation is deemed to control and be the interpretation incorporated into the Contract Documents and Contract Sum.

Contractor is responsible for design of systems and fabrications needed to meet performance criterion described in the Contract Documents. Contractor shall also assume responsibility for temporary structures used to implement construction.

8. CONFORMANCE WITH CODES AND STANDARDS: All of Contractor’s work and materials shall be in full accordance with the latest adopted standards and regulations of the State Fire Marshal; the California Building Code; Title 24 of the California Code of Regulations; the California Electrical Code; the California Plumbing Code; Americans With Disabilities Act; and all other applicable present and future codes, laws, or regulations. Nothing in these Contract Documents is to be construed to permit work not conforming to these requirements. Should Contractor discover work within the Contract Documents not in conformance with these requirements, Contractor agrees to immediately notify City in writing of said nonconformance, and to not proceed with nonconforming work. When the work detailed in the Contract Documents differs from governing codes, it is understood and agreed that the Contract Sum is based upon the more costly or expensive standard of the two.

9. PERSONAL ATTENTION AND SUPERINTENDENCE: The Contractor shall give Contractor's personal attention to, and shall supervise the work to the end that it shall be faithfully prosecuted.

Contractor shall keep on the work at all times throughout its progress, a competent superintendent who shall represent the Contractor in Contractor's absence, and shall have complete authority to represent and act for the Contractor. Whenever the Contractor or Contractor's superintendent is not present on a particular part of the work, the City may stop the work until the Contractor or Contractor's superintendent arrives.

10. BEGINNING OF WORK: The Notice to Proceed shall constitute authority for the Contractor to enter upon the site of the work and to begin operations, upon condition that the Contractor has strictly complied with all requirements of these Contract Documents, including but not limited to, furnishing all required documentation, bonds and certificates of insurance. If Contractor has not provided City with all documents required by these Contract Documents as of the date of the City’s written notice to proceed, Contractor shall not be allowed on the site of the work or allowed to start work. The Contract Time shall begin on the date of the City’s written notice to proceed, whether or not Contractor is allowed on the work site due to Contractor's failure to furnish City with all documentation required by these Contract Documents.

11. RESPONSIBILITY FOR ACCURACY: The Contractor shall obtain all necessary measurements for and from the work, and shall check dimensions, elevations, and grades for all layout and construction work and shall supervise such work, the accuracy for all of which Contractor shall be responsible. Each subcontractor shall adjust, correct, and coordinate Contractor's work with the work of others so that no discrepancies will result in the whole work. Contractor is responsible for verifying that all information and data contained and set forth in all of Contractor's submittals City of Vallejo – Short Form Contract Page 9 of 40
that may be required by the Contract Documents, strictly comply in all respects with the Contract Documents.

12. INSPECTION: All work done and all materials and equipment furnished under this Contract shall be subject to inspection and acceptance of the City, who shall at all times have access to the work during its construction, and shall be furnished with every reasonable facility and assistance for ascertaining that the materials and workmanship are in accordance with the requirements and intent of the Contract Documents. Any work constructed without inspection as provided above, except with the specific written consent of the City, must, if requested by the City, be uncovered for examination and properly restored at the Contractor's expense.

The inspection of the work by City, the City's inspector(s), an architect, engineer or their consultants, or anyone else, does not relieve the Contractor of any of Contractor's obligation to fulfill the Contract as prescribed. Any work, materials, or equipment not meeting the requirements of the Contract Documents shall be rejected, and unsuitable work or materials shall be made good, notwithstanding the fact that such work or materials may have previously been inspected or accepted and payment therefor may have been made. If nonconforming work, materials, or equipment not meeting the requirements of the Contract Documents is discovered, and the Contractor fails to remedy the nonconforming work, materials, or equipment, or the City agrees in writing to accept the nonconforming work, materials, or equipment, Contractor agrees to pay City a sum equal to the cost to remedy the nonconforming work, materials, or equipment.

It is expressly understood and agreed that the City will be entitled to recover from Contractor the full cost of remedying nonconforming work, materials, or equipment, and that diminution in value will not be considered as a method for valuing the City's damages for nonconforming work, materials, or equipment, and further that the doctrine of economic waste will not be a defense to the City's recovery from Contractor the full and complete cost and expense of correcting nonconforming work, materials, or equipment.

Re-examination of any work may be ordered by the City, and such work must be uncovered by the Contractor. The Contractor shall pay the entire cost of such uncovering, re-examination, and replacement if the work does not conform to the Contract Documents.

Neither the inspection by an inspector, the City or its agents, nor any measurement, approved modification, accepted submittal, shop drawing, order, or certificate, nor acceptance of any part or whole of the work, or payment of money, nor any possession or use by the City or its agents, operate as a waiver of any provisions of the Contract Documents or of any power or authority reserved therein, or of any right to damages thereunder; nor shall the waiver of any breach of the Contract Documents be held to be a waiver of any subsequent or other breach.

The Contractor shall, upon request and without delay, remove from the site of the work, all rejected or condemned materials of any kind brought to, or incorporated in, the work. No such rejected or condemned materials shall again be offered for use in any work under the Contract.

All work which has been rejected shall be remedied, or removed and replaced, by the Contractor in an acceptable manner at Contractor's expense. Upon failure of the Contractor to comply within forty-eight (48) hours with any written order of the City made under this Section, or to make satisfactory progress in so doing, the City may cause such rejected materials to be removed, or such rejected work to be remedied, or removed and replaced, and Contractor shall pay City for doing so.

13. USE OF COMPLETED PORTIONS: The City shall have the right at any time to take over and City of Vallejo – Short Form Contract Page 10 of 40
place in service any completed or partially completed portion of the work, notwithstanding the time for completion of the entire work or such portions which may not have expired; but such taking possession thereof shall not be deemed an acceptance of any of the work, nor work on those portions not completed in accordance with the Contract Documents.

14. MEANS AND METHODS: City will not have control over, be in charge of, nor be responsible for construction means, methods, techniques, sequences, or procedures, or for the safety precautions and programs in connection with the work, since these are solely Contractor's responsibility, unless otherwise required by the Contract Documents.

15. CHANGES IN THE WORK: The City reserves the right to make changes to the work. Changes in the work made by the City may or may not involve a change to the Contract Sum or the Contract Time. Changes in the work by City may only be made in a writing signed by a representative of the City authorized to make the specific change identified in the writing.

16. PAYMENTS: See Exhibit B – Compensation.

17. COST AND PRICING DATA: All cost and pricing data submitted by the Contractor to the City with respect to any change, prospective or completed, or any claim for extra compensation shall be a true, complete, accurate, and current representation of actual cost and pricing of the work.

18. PROCEED WITH WORK: Notwithstanding the making of any claim or the existence of any dispute between Contractor and City, Contractor shall not cause any delay, cessation, or termination in or of Contractor's performance of the work but shall diligently proceed with performance of the work in accordance with the Contract Documents.

19. ACCESS TO RECORDS: The City, or their authorized representatives, shall have unconditional access, upon reasonable notice, during normal business hours, to Contractor and subcontractors' books, documents and accounting records, including but not limited to, bid worksheets, bids, subcontractor bids and proposals, estimates, cost accounting data, accounting records, payroll records, time sheets, canceled checks, profit and loss statements, balance sheets, project correspondence including but not limited to all correspondence between Contractor and its sureties and subcontractors/vendors, project files, scheduling information, and other records of the Contractor and all subcontractors directly or indirectly pertinent to the work, original as well as change and claimed extra work, to verify and evaluate the accuracy of cost and pricing data submitted with any Change Order, prospective or completed, or any claim for which additional compensation has been requested. Such access shall include the right to examine and audit such records, and make excerpts, transcriptions, and photocopies at City's cost.

21. DISMISSAL OF UNSATISFACTORY EMPLOYEES AND SUBCONTRACTS: If any person employed by the Contractor, or any subcontractor, shall fail or refuse to carry out the directions of the City; or, in the opinion of the City, is incompetent, unfaithful, intemperate, or disorderly; uses threatening or abusive language to any person representing the City on the work; or is otherwise unsatisfactory, he or she shall be removed from the work immediately, and shall not again be employed on the work. When any portion of the work which has been subcontracted by the Contractor is not being prosecuted in a satisfactory manner, the subcontract for such work shall be terminated immediately by the Contractor upon written notice from the City, and the subcontractor shall not again be employed on the type of work in which his or her performance was unsatisfactory.

City of Vallejo – Short Form Contract Page 11 of 40

22. TEMPORARY SUSPENSION OF WORK: The City shall have the authority to suspend the work wholly or in part for such period as it may deem necessary, due to unsuitable weather, or to any other conditions it considers unfavorable for the suitable prosecution of the work, or for such time as it may deem necessary, due to the failure on the part of the Contractor to carry out orders given or to perform any provisions of the Contract, or for any other reason. The Contractor shall immediately comply with such written order of the City to suspend the work wholly or in part. The suspended work shall be resumed only when conditions are favorable or methods are corrected, as ordered or approved in writing by the City. Except as may be provided elsewhere in the Contract Documents, Contractor shall not be entitled to any damages or compensation on account of such suspension or delay.

The City reserves the right to terminate the work for its convenience upon written notice to Contractor. In such event, the Contractor shall be paid its reasonable costs for that portion of the work performed to the date of termination, reasonable costs associated with demobilization, plus fifteen percent (15%) of all such costs for overhead and profit, which shall be full compensation to the Contractor and all subcontractors regardless of tier, and material suppliers, for any and all damages arising from City’s termination.

23. CLEANING UP: Throughout the construction period, the Contractor shall keep the site of the work in a presentable condition, dispose of any surplus materials, clean out all drainage ditches and structures, and repair any fences or other property damaged during the progress of the work, to the satisfaction of the City. Upon completion of the work, and prior to requesting final inspection, the Contractor shall thoroughly clean the site of the work of all rubbish, excess material, and equipment, and all portions of the work shall be left in a neat and orderly condition.

The final inspection may not be made until this has been accomplished. If Contractor fails or refuses to fulfill these obligations to the City's satisfaction, City may, at its option, undertake these obligations, and withhold the cost of performing these obligations, plus an additional fee of twenty-five percent (25%) for administrative costs, from payments to Contractor.

24. COMPLIANCE WITH LAWS AND REGULATIONS: The Contract Sum includes full compensation to Contractor for compliance with all current and future laws, rules, regulations, orders or decrees, affecting the work and Contractor’s performance thereof. The Contractor shall keep itself fully informed of, and shall observe and comply with, and shall cause any and all persons, firms, or corporations employed by Contractor or under it, to observe and comply with all State and national laws, and County and municipal ordinances, regulations, orders, and decrees which in any manner affect those engaged or employed in the work, or the materials used in the work, or which in any way affect the conduct of the work. Particular attention is called to the following:

A. HOURS OF LABOR - Eight hours of labor shall constitute a legal days' work, and the Contractor or any subcontractor under it, in the performance of the Contract, shall not require more than eight hours of labor in any calendar day, and forty hours of labor in any calendar week, from any person employed by Contractor in the performance of the work under this Contract, except as permitted under the provisions of section 1815 of the Labor Code of the State of California. The Contractor shall forfeit, as penalty to the City, Fifty Dollars ($50.00) for each workman employed by Contractor or any subcontractor under Contractor in the performance of the Contract for each calendar day during which any workman is required or permitted to labor more than eight hours and for each calendar week during which any workman is required or permitted to labor more than forty hours, City of Vallejo – Short Form Contract Page 12 of 40
in violation of the provisions of such Labor Code.

B. PREVAILING WAGE - Pursuant to section 1770, and following, of the California Labor Code, the Contractor shall pay not less than the prevailing rate of per diem wages as determined by the Director of the California Department of Industrial Relations.

The Contractor shall forfeit, as penalty to the City, Fifty Dollars ($50.00) for each calendar day or portion thereof, for each workman paid less than the stipulated prevailing rates for any work done under the Contract by Contractor or by any subcontractor under it, in violation of the provisions of such Labor Code.

C. LABOR DISCRIMINATION - Contractor shall comply with Section 1735 of the Labor Code of the State of California, which prohibits discrimination in the employment of persons upon public works because of the race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, or sex of such persons.

D. APPRENTICES - Attention is directed to section 1777.5 of the Labor Code of the State of California concerning employment of apprentices, and the Contractor is required to comply with the provisions of said section.

E. TRAVEL AND SUBSISTENCE PAYMENTS - Attention is directed to the requirements of section 1773.8 of the Labor Code of the State of California. The Contractor shall make travel and subsistence payments to each workman needed to complete the work in accordance with the requirements in said section 1773.8.

F. WORKERS' COMPENSATION - Pursuant to the requirements of section 1860 of the Labor Code, the Contractor is required to secure the payment of Workers' Compensation to Contractor's employees in accordance with the provisions of section 3700 of the Labor Code.

By signing the Contract, Contractor certifies the following:
"I am aware of the provisions of Section 3700 of the Labor Code, which requires every employer to be insured against liability for Workers' Compensation, or to undertake self-insurance in accordance with the provisions of that Code, and I will comply with such provisions before commencing the performance of the work of this Contract." Said certification is included in the Contract, and signature and return of the Contract as provided in Paragraph 16 of these General Conditions, "Signing of Contract," shall constitute signing and filing of the said certificate.

G. Intentionally deleted.

H. PAYROLL RECORDS - Attention is directed to the requirements in Labor Code section 1776, a portion of which is quoted below. Regulations implementing Labor Code section 1776 are located in sections 16016 through 16019 and sections 16207.10 through 16207.19 of Title 8, California Code of Regulations.

All contractors and subcontractors must furnish electronic certified payroll records directly to the Labor Commissioner (aka Division of Labor Standards Enforcement). Payrolls shall contain the full name, City of Vallejo – Short Form Contract Page 13 of 40
address and social security number of each employee, the employee's correct classification, rate of pay, daily and weekly number.

A. Each Contractor and subcontractor shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by him or her in connection with the public work. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following:

1. The information contained in the payroll record is true and correct.

2. The employer has complied with the requirements of sections 1771, 1811, and 1815 for any work performed by his or her employees on the public works project.

B. The payroll records enumerated under subdivision (a) shall be certified and shall be available for inspection at all reasonable hours at the principal office of the Contractor on the following basis:

1. A certified copy of an employee's payroll record shall be made available for inspection or furnished to the employee or his or her authorized representative on request.

2. A certified copy of all payroll records enumerated in subdivision (a) shall be made available for inspection or furnished upon request to the Division of Labor Standards Enforcement, and the Division of Apprenticeship Standards of the Department of Industrial Relations. In addition, a certified copy of all payroll records enumerated in subdivision (a) shall be furnished by the Contractor to the City in a format acceptable to City.

3. A certified copy of all payroll records enumerated in subdivision (a) shall be made available upon request by the public for inspection or for copies thereof. However, a request by the public shall be made through either the body awarding the Contract, the Division of Apprenticeship Standards, or the Division of Labor Standards Enforcement. If the requested payroll records have not been provided pursuant to paragraph (2), the requesting party shall, prior to being provided the records, reimburse the costs of preparation by the Contractor, subcontractors, and the entity through which the request was made. The public shall not be given access to the records at the principal office of the Contractor.

C. The certified payroll records shall be on forms provided by the Division of Labor Standards Enforcement or shall contain the same information as the forms provided by the division.

D. A Contractor or subcontractor shall file a certified copy of the records enumerated in subdivision (a) with the entity that requested the records within 10 days after receipt of a written request.

E. Any copy of records made available for inspection as copies and furnished upon request to the public or any public agency by the awarding body, the Division of Apprenticeship Standards, or the Division of Labor Standards Enforcement shall be marked or obliterated City of Vallejo – Short Form Contract Page 14 of 40
in a manner so as to prevent disclosure of an individual's name, address and social security number. The name and address of the Contractor awarded the Contract or the subcontractor performing the Contract shall not be marked or obliterated.

F. The Contractor shall inform the body awarding the Contract of the location of the records enumerated under subdivision (a), including the street address, city and county, and shall, within five working days, provide a notice of a change of location and address.

G. The Contractor or subcontractor shall have 10 days in which to comply subsequent to receipt of a written notice requesting the records enumerated in subdivision (a). In the event that the Contractor or subcontractor fails to comply within the 10-day period, he or she shall, as a penalty to the state or political subdivision on whose behalf the Contract is made or awarded, forfeit twenty-five dollars ($25) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Upon the request of the Division of Apprenticeship Standards or the Division of Labor Standards Enforcement, these penalties shall be withheld from progress payments then due. A Contractor is not subject to a penalty assessment pursuant to this section due to the failure of a subcontractor to comply with this section."
H. The penalties specified in subdivision (g) of Labor Code section 1776 for noncompliance with the requirements in Section 1776 may be deducted from any moneys due or which may become due to the Contractor of hours worked, itemized deductions made and actual wages paid. They shall also indicate apprentices and ratio of apprentices to journeymen.

The employee's address and social security number need only appear on the first payroll on which that name appears. The payroll shall be accompanied by a "Statement of Compliance" signed by the employer or the employer's agent indicating that the payrolls are correct and complete and that the wage rates contained therein are not less than those required by the Contract. The "Statement of Compliance" shall be on forms furnished by the City of Vallejo or on any form with identical wording. The Contractor shall be responsible for the submission of copies of payrolls of all subcontractors.

If by the 15th of the month, the Contractor has not submitted payrolls for itself and all subcontractors, in full compliance with all requirements of the Labor Code and these Contract Documents, for all work performed during the monthly period ending on or before the 1st of that month, the City of Vallejo may retain an amount equal to 10 percent of the estimated value of the work performed (exclusive of Mobilization) during the month from the next monthly estimate, except that this retention shall not exceed $10,000 nor be less than $1,000. Retentions for failure to submit satisfactory payrolls shall be additional to all other retentions provided for in the Contract. The retention for failure to submit payrolls for any monthly period will be released for payment on the monthly estimate for partial payments next following the date that all the satisfactory payrolls for which the retention was made are submitted.

The Contractor and each subcontractor shall preserve their payroll records for a period of 3 years from the date of completion of the Contract.

REPORTING REQUIREMENTS AND SANCTIONS - Failure to deliver to City specific information, records, reports, certifications, or any other documents required for compliance with these Contract Documents shall be considered noncompliance.

Contractors found by the City to be in noncompliance are to be advised of the specific City of Vallejo – Short Form Contract Page 15 of 40
deficiencies and urged to make immediate corrections. They should also be advised that monetary deductions may be made for failure to effect corrections or delinquencies.

25. RESPONSIBILITY OF THE CONTRACTOR: The Contractor shall do all of the work and furnish all labor, materials, tools, equipment, and appliances, except as otherwise herein expressly stipulated, necessary, or proper for performing and completing the work herein required within the time specified.

26. INDEMNIFICATION: To the maximum extent allowed by law, Contractor shall defend, indemnify, and save harmless City (including its inspectors, project managers, trustees, officers, agents, members, employees, volunteers, affiliates, consultants, subconsultants, and representatives), and each of them, of and from any and all claims, demands, suits, causes of action, damages, costs, expenses, attorneys' fees, losses, or liability, in law or in equity, of every kind and nature whatsoever arising out of, or in connection with, Contractor's operations to be performed under this Contract, including, but not limited to:

A. Personal injury (including, but not limited to, bodily injury, emotional injury or distress, sickness, or disease) or death to persons, including, but not limited to, any employees or agents of Contractor, City, or any subcontractor, or damage to property of anyone including the work itself (including loss of use thereof), caused or alleged to be caused in whole or in part by any negligent act or omission of Contractor, Contractor’s subcontractors or material suppliers, City, or anyone directly or indirectly employed by them, or anyone for whose acts they may be liable;
B. Penalties threatened, sought, or imposed on account of the violation of any law, order, citation, rule, regulation, standard, ordinance, or statute, caused by the action or inaction of Contractor;
C. Alleged infringement of any patent rights which may be brought arising out of Contractor's work;
D. Claims and liens for labor performed or materials used or furnished to be used on the job, including all incidental or consequential damages from such claims or liens; E. Contractor's failure to fulfill any of the covenants set forth in these Contract Documents; and
F. Any violation or infraction by Contractor of any law, order, citation, rule, regulation, standard, ordinance, or statute in any way relating to the occupational, health, or safety of employees.

The indemnities set forth in these Contract Documents shall not be limited by the insurance requirements set forth in these Contract Documents and shall survive any termination of this Contract or Contractor’s loss of control over the work.

Contractor's indemnification of City will not include indemnification for claims which arise as the result of the active negligence of City, or the sole negligence or willful misconduct of City, its agents, servants or independent contractors who are directly responsible to City, or for defects in design furnished by such persons.

City of Vallejo – Short Form Contract Page 16 of 40

27. PERMITS AND LICENSES: The Contractor shall procure all permits and licenses necessary for the normal conduct of its business and construction operations, and all costs associated therewith shall be paid by Contractor.

The Environmental Quality Act of 1970 may be applicable to permits, licenses, and other authorizations which the Contractor must obtain from local agencies in connection with performing the work of the Contract. The Contractor shall comply with the provisions of said statutes in obtaining such permits, licenses, and other authorizations, and they shall be obtained in sufficient time to prevent delays to the work.

In the event that the City has obtained permits, licenses, or other authorizations applicable to the work in conformance with the requirements in said Environmental Quality Act of 1970, the Contractor shall comply with the provisions of said permits, licenses, and other authorizations.

28. PROTECTION OF WORKERS: The Contractor shall conform to the rules and regulations pertaining to safety established by the California Division of Industrial Safety and any other governing body having jurisdiction over the work. The Contractor shall immediately replace or repair any unsafe ladder, scaffolding, shoring, or bracing, or correct any other dangerous or hazardous situation that may exist. Failure of the City to suspend the work or notify the Contractor of the inadequacy of the safety precautions or noncompliance with the law shall not relieve the Contractor of this responsibility.

29. PROTECTION OF MATERIALS AND EQUIPMENT: The Contractor shall protect all of the work, materials, and equipment from damage due to the nature of the work, the action of the elements, trespassers, or other causes until the project is accepted by the City. The Contractor shall properly store materials and equipment, and erect such temporary structures as are required to protect them from damage, including, but not limited to, construction fencing.

30. SANITARY PROVISIONS: The necessary sanitary conveniences for the use of the workers on the project, properly obscured from public observance, shall be furnished and maintained by the Contractor.

31. EXISTING UTILITIES: Contractor is solely responsible for determining the actual location of all utilities on the site of the work or that may be affected by Contractor’s operations or the work, before Contractor begins its operations on the project, which risk and cost the Contractor included in its proposal and is included in the Contract Sum. Contractor agrees that its failure to determine the actual location of all utilities on the site of the work before it begins its operations on the project is a breach of this Contract and constitutes a failure by the Contractor to exercise reasonable care.

It is recognized by the Contractor that the location of existing utility facilities as shown on Contract drawings and specifications (if any) are approximate, may be incomplete and their exact location is unknown. There may be additional utilities existing on the property unknown to City. Location of utilities as shown on drawings and specifications represent information obtainable from utility maps and other information furnished by the various agencies involved.

The City warrants neither the accuracy nor the extent of actual installations as shown on the drawings and specifications.

The Contractor shall coordinate and fully cooperate with the City and utility owners for the location, relocation, and protection of utilities. The Contractor's attention is directed to the City of Vallejo – Short Form Contract Page 17 of 40
existence of utilities, underground and overhead, necessary for normal house and commercial service for all buildings along the line of work. The Contractor shall make arrangements with utility owners for the location of house and commercial services lines in advance of the actual construction and for the relocation of such facilities, if necessary, by the utility owner or the Contractor.

In accordance with section 4215 of the Government Code of the State of California, the City shall make provisions to compensate the Contractor for the costs of repairing damage not due to the failure of the Contractor to exercise reasonable care, and removing or relocating main and trunk line utility facilities not indicated in the drawings and specifications with reasonable accuracy, and for equipment on the project necessarily idled during such work. In the event the Contractor discovers utilities not identified in the Contract Documents, the Contractor shall immediately notify the City and the utility owner by the most expeditious means available and later confirm in writing.

32. COOPERATION WITH OTHERS: The City or adjacent property owners may perform other work adjacent to or within the project area, concurrent with the Contractor's operations. The Contractor shall cooperate fully with City in all operations which coincide with other work being performed, and provide City with such scheduling and other information as may be required by City to perform such other work. The Contractor shall conduct operations to minimize interference with the work of other forces or contractors performing such work. This work performed by a second contractor may include work which is incomplete or in dispute with the Contractor.

Any disputes or conflicts which may arise between the Contractor and any other forces or contractors retained by the City, causing delays or hindrance to each other, shall be referred to the City for resolution.

If the work of the Contractor is delayed because of any acts or omissions of any other forces or contractor, the Contractor shall on that account have no claim against the City other than for an extension of time.

33. POLLUTION CONTROL: The Contractor shall comply with all air pollution control rules, regulations, ordinances, and statutes which apply to any work performed pursuant to the Contract, including any air pollution control rules, regulations, ordinances, and statutes specified in Section 11017 of the California Government Code. Unless otherwise provided in the Contract Documents, material to be disposed of shall not be burned.

The Contractor shall comply with all rules, regulations, ordinances, and statues which apply to water pollution, including but not limited to, erosion control and Section 7-1.G of the State specifications.

34. SOUND CONTROL REQUIREMENTS: The Contractor shall comply with all sound control and noise level rules, regulations, and ordinances which apply to any work performed pursuant to the Contract.

35. WEEKEND, HOLIDAY, AND NIGHT WORK: No work shall be done between the hours of 7:00PM and 7:00AM, or on Saturdays, Sundays or legal holidays, except with written permission of the City. Requests to work between 7:00PM and 7:00AM, or on Sundays or legal holidays, must be submitted in writing at least two work days in advance of the intended work. In case of City of Vallejo – Short Form Contract Page 18 of 40
an emergency, the Contractor will be allowed to work at night or on Sundays or legal holidays, but must notify the City in writing immediately. An emergency shall be considered an unforeseen event that poses a danger to the public or to the uncompleted work.

It is understood, however, that two or three shift operations may be established as a regular procedure by the Contractor if Contractor first obtains written permission from the City. Such permission may be revoked by the City at any time, without cause, or if the Contractor fails to maintain adequate force and equipment for reasonable prosecution and to justify inspection of the work, or fails to provide sufficient artificial light to permit the work to be carried on properly and safely and to permit proper inspection.

Contractor shall reimburse City for all costs and expenses incurred by either, including but not limited to, overtime pay, when Contractor works more than one eight hour shift each day, or works on weekends or holidays.

36. OVERLOADING: The Contractor shall determine safe loading capacities and shall not overload any structure beyond its safe capacity during construction. In addition to assuming full responsibility for all property damage and bodily injury resulting from any such overloading, the Contractor shall repair to the City's satisfaction or reimburse the City for the costs of repairing damage resulting therefrom.

37. GUARANTEE: Should any failure of the work occur within a period of one year after recordation of the notice of completion of the project or portions thereof, which can be attributed to faulty materials, poor workmanship, or defective equipment, the Contractor shall promptly make the needed repairs at Contractor's expense. The City may make such repairs if the Contractor fails to make or undertake with due diligence the aforesaid repairs within ten (10) days after Contractor is given notice of such failure and without notice to the surety provided, however, that in case of emergency where, in the opinion of the City, delay would cause serious loss or damages, or a hazard to the public, the repairs may be made or lights, signs, and barricades erected, without prior notice to the Contractor or surety, and the Contractor shall pay the entire costs thereof.

38. ASSIGNMENT OF ANTITRUST ACTIONS: Pursuant to section 4552 of the Government Code of the State of California, the following provisions shall be a part of this Contract:

In entering into a public works contract or a subcontract to supply goods, services, or materials pursuant to a public works contract, the contractor or subcontractor offers and agrees to assign to the awarding body all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. 15), or under Cartwright Act (Chapter 2, commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services, or materials pursuant to the public works contract or the subcontract. This assignment shall be made and become effective at the time the awarding body tenders final payment to the contractor without further acknowledgment by the parties.

39. MATERIALS OR EQUIPMENT SPECIFIED BY NAME: When any materials or equipment is indicated or specified by patent or proprietary name or by the name and catalogue number of the manufacturer, it shall be considered as used for convenience in describing the material or equipment desired. The use of an alternative material or equipment which is of equal quality and of the required characteristics for the purpose intended may be permitted. Request for such substitution shall be made in writing by the Contractor within ten (10) days of the Notice to City of Vallejo – Short Form Contract Page 19 of 40
Proceed. Failure by the Contractor to request substitution within ten (10) days of the Notice to Proceed constitutes an agreement by Contractor to furnish only the materials or equipment listed in the Contract Documents and Contractor agrees no other materials or equipment other than that listed in the Contract Documents shall be incorporated into any submittal or the project.

40. MISCELLANEOUS PROVISIONS: This Contract shall bind and inure to the heirs, devisees, assignees, and successors in interest of Contractor, and to the successors in interest of City, in the same manner as if such parties had been expressly named herein.

Neither the City, nor its’ officers, employees, agents, or representatives of the City, nor any of them, shall be responsible for any liability arising under this Contract, except such obligations as are specifically set forth herein.

The right of general supervision shall not make the Contractor an agent of the City, and the liability of the Contractor for all damages to persons or to public or private property arising from the performance of the work shall not be lessened because of such general supervision.

This Contract shall be governed by the laws of the State of California. If any one or more of the provisions contained in the Contract should be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

This Contract constitutes the full and complete agreement of the parties, and supersedes any previous agreements or understandings, oral or written, with respect to the subject matter hereof.

No amendment, modification or waiver of any of the terms of this Contract is valid unless contained in a written Change Order, signed by both parties, expressly agreeing to such amendment, modification or waiver.

Contractor hereby assigns to City all its first-tier subcontracts now or hereafter entered into by Contractor for performance of any part of the work. The assignment will be effective upon acceptance by City in writing, and only as to those subcontracts which City designates in writing.

Such assignment is part of the consideration to City for entering into the Contract with Contractor, and may not be withdrawn.

PUBLIC CONTRACT CODE SECTION 9204: Said provisions are incorporated herein by reference as though set forth in full.

PUBLIC CONTRACT CODE SECTION 20104, ET SEQ. AND 20104.5, ET SEQ.: Said provisions are incorporated herein by reference as though set forth in full.

City of Vallejo – Short Form Contract Page 20 of 40
Bond Number: _____________
Premium: _________________

FAITHFUL PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS, THAT WHEREAS the City of Vallejo, State of California, hereinafter designated as the "Obligee," has on _______________, awarded to Smart Fiber Networks, Inc., hereinafter designated as the "Principal," a contract for the installation of public wifi in Downtown Vallejo and City Parks, and
WHEREAS said Principal is required, under the terms of the Contract, to furnish a bond for the faithful performance of said Contract:

NOW, THEREFORE, We, the Principal, and _______________________________ as Surety, are held and firmly bound unto the Obligee in the penal sum of ________________________ Dollars ($______________) lawful money of the United States for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents.

THE CONDITION OF THIS OBLIGATION IS SUCH that, if the above bounden Principal, his or its heirs, executors, administrators, successors, or assigns shall in all things stand to and abide by, and well and truly keep and faithfully perform the covenants, conditions, and agreement in the said Contract, and any alterations made as therein provided, on his or their part to be kept and performed at the time and in the manner therein specified, and in all respects according to their true intent and meaning, and shall indemnify and save harmless the Obligee, its officers and agents as therein stipulated, then this obligation shall become null and void; otherwise it shall be and remain in full force and virtue, and Principal and Surety, in the event suit is brought on this bond, will pay to the Obligee such reasonable attorneys' fees as may be fixed by the Court.

As a condition precedent to the satisfactory completion of the said Contract, the above obligation in said amount shall hold good for a period of one (1) year after the completion and acceptance of the said work, during which time if the above bounden Principal, his or its heirs, executors, administrators, successors, or assigns shall fail to make full, complete, and satisfactory repair and replacements or totally protect the said Obligee from loss or damage made evident during said period of one (1) year from the date of acceptance of the work, and resulting from or caused by defective materials or faulty workmanship in the prosecution of the work done, the above obligation in the said sum shall remain in full force and effect. However, anything in this paragraph to the contrary notwithstanding, the obligation of the Surety hereunder shall continue so long as any obligation of the Principal remains.

The said Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the Contract, or to the work to be performed thereunder, or the specifications accompanying the same, shall, in any way, affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration, or addition to the terms of the Contract, or to the work or to the specifications. Said Surety hereby waives the provisions of section 2819 and 2845 of the Civil Code of the State of California.

City of Vallejo – Short Form Contract Page 21 of 40
IN WITNESS WHEREOF, the above bounden parties have signed this instrument under their seals this ____________ day of _______________, 2023. The name and corporate seal of each corporate party being hereto affixed, and these presents duly signed by its undersigned representative, pursuant to authority of its governing body.
(SEAL)
Principal
Signature for Principal
Title of Signatory
(SEAL) Surety
Signature of Surety
Title of Signatory
(The signature of the Attorney-In-Fact for the Surety must be acknowledged by a Notary Public, and this bond must be accompanied by a current Power of Attorney appointing such Attorney-In-Fact. This bond must be submitted in sets of four, each bearing original signatures.) City of Vallejo – Short Form Contract

Bond Number: ___________________
Premium: _______________________

PAYMENT BOND
KNOW ALL MEN BY THESE PRESENTS, THAT WHEREAS the City of Vallejo, State of California, hereinafter designated as the "Obligee," has on ______________________, awarded to Elizalde Construction, Inc., hereinafter designated as the "Principal," a contract for the installation of public wifi in Downtown Vallejo and City Parks; and
WHEREAS, said Principal is required to furnish a bond in connection and with said contract, providing that if said Principal, or any of his or its subcontractors, shall fail to pay for any materials, provisions, or other supplies used in, upon, for, or about the performance of the work contracted to be done, or for any work or labor done thereon of any kind, the Surety on this bond will pay the same to the extent hereinafter set forth:

NOW, THEREFORE, We, , the
Principal, and as Surety, are held and
firmly bound unto the Obligee in the penal sum of _______________________ Dollars ($________________) lawful money of the United States for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents.

THE CONDITION OF THIS OBLIGATION IS SUCH that if said Principal, or any of his or its subcontractors, shall fail to pay any of the persons named in Section 3181 of the Civil Code of the State of California, or any amounts due under the Unemployment Insurance Code with respect to such work or labor performed under the contract, or for any amounts required to be deducted, withheld, and paid over to the Employment Development Department of the State of California, from the wages of employees of the Principal and subcontractors pursuant to section 13020 of the Unemployment Insurance Code of the State of California with respect to such work or labor, as required by the provisions of section 3225 and following of the Civil Code of the State of California, then said Surety will pay the same in, or to an amount not exceeding the amount, hereinabove set forth, and also will pay, in case suit is brought upon this bond, reasonable attorneys' fees to such claimant and to the Obligee as shall be fixed by the Court.

This bond is issued pursuant to Civil Code sections 3247 through 3252, inclusive, of the State of California, and shall inure to the benefit of any and all persons, companies, and corporations named in section 3181 of said Civil Code so as to give a right of action to them or their assigns in any suit brought upon this bond.

The said Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the Contract, or to the work to be performed thereunder, or the specifications accompanying the same shall, in any way, affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration, or addition to the terms of the Contract, or to the work or to the specifications. Said Surety hereby waives the provisions of sections 2819 and 2845 of the Civil Code of the State of California.

City of Vallejo – Short Form Contract

IN WITNESS WHEREOF, the above bounden parties have signed this instrument under their seals this _____________ day of _______________, 2023, the name and corporate seal of each corporate party being hereto affixed, and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. (SEAL)
Principal
Signature for Principal
Title of Signatory
(SEAL) Surety
Signature of Surety
Title of Signatory
(The signature of the Attorney-In-Fact for the Surety must be acknowledged by a Notary Public, and this bond must be accompanied by a current Power of Attorney appointing such Attorney-In-Fact. This bond must be submitted in sets of four, each bearing original signatures.)
City of Vallejo – Short Form Contract

EXHIBIT A
Public Wi-Fi Design And Build
Proposal
Scope of Work
Project Summary:

The City seeks the development of public Wi-Fi in specific locations in the City to support services such as point-of-sales services during festivals and farmers' markets and other daily functions to support general online connectivity for residents’ use in public spaces. The City’s wireless network could be a revenue source with localized splash pages and marketing opportunities. Smart Fiber Networks Design and Construction plans contained herein cover the responsibility of the construction, operations, management, and marketing of the wireless network.

Smart Fiber Networks’ Public Wi-Fi designs are for the following four regional locations:

Location 1: Downtown Vallejo
Location 2: Waterfront Park
Location 3: Blue Rock Springs
Location 4: Dan Foley Park
Note: due to proximity, Downtown Vallejo and The Waterfront Park regions have been combined into a single design.

1. Project Technical Specifications:

Smart Fiber Networks shall procure and install up to thirty-five Access Points, capable of a throughput of at least 100 MBps up to 1GBps, Wireless Access Points (WAP) and all mounting hardware devices on the City of Vallejo’s facilities, as listed under each project region section.

The Access Points shall be mounted and cabled in central locations, consisting of up to thirty-five installations. Additionally, Smart Fiber Networks shall be responsible for the installation of low-voltage cable drops to support the Wireless Access Points. Upon successful installation, Smart Fiber Networks shall also City of Vallejo – Short Form Contract

configure the system security to accommodate access for City access requirements (e.g., full-time employees, contractors, and guest users).

During the installation, Smart Fiber Networks shall distribute Wireless Access Points throughout the site locations. A Wireless LAN Controller shall also be installed to automatically maintain security, adjust power settings, and load balance between Access Points. The City of Vallejo will supply a building diagram to accompany Smart Fiber Networks’s install team(s) with suggested locations for each Access Point. Exact Wireless Access Points locations will be determined at the time of installation. A diagram showing the suggested locations will accompany each job folder.

One additional fiber drop will be installed in the general location of the Wireless Access Point and will be pulled back to the nearest distribution location. All Wireless Access Point drops will be installed on signal light poles where possible.

Each Wireless Access Point shall come with a power supply that will be installed at the distribution point. This will eliminate the need for power at each location or the purchase of new switches that supply power. The Access Points come with integrated Antennas ( 2.4 GHz, 5.0 GHz, and 6.0 GHz).

Smart Fiber Networks shall install the Wireless LAN Controller in the distribution frame designated by the City of Vallejo. Where possible, the network switches will be configured for a separate VLAN to segment the wireless authentication data from the main network. The Access Points will also be configured for Wireless Protected Access 2 (WPA2) authentication in accordance with the Institute of Electrical and Electronics Engineers (IEEE) 802.11i standard.

Access points and network design account for installation to cover enough access and capacity to support locations with a user density of 255 devices per Access Point.

Project Equipment Details:

Smart Fiber Networks shall procure and install up to 35 Access Points capable of a throughput of at least Wi-fi 6. Wireless Access Points (WAP) and all mounting hardware devices will be located on the City of Vallejo’s facilities, as listed under each project-specific SOW.

Proposed Wi-Fi Management Solution:

Wi-Fi Management would be via Cambium Networks’ platform cnMaestro X, as it allows an operator to monitor the network, report on performance, update software and update specific parameters on a per-AP or group-of-AP basis. Most large Wi- Fi networks are managed by a Wi-Fi controller, which can be deployed either in a city or operator data center or in the Cloud. The key requirements for cities are to have clear reporting on network usage and performance and to have easy access to this information via a web-based interface. Some Key highlights of this platform City of Vallejo – Short Form Contract

include:
●Comprehensive cloud and on-premises management for all wireless devices
●Zero-touch provisioning: The ability to create, provision, monitor and manage the entire network of wireless and wired devices from a single dashboard login with key performance metrics, alarms and alerts. ●With centralized visibility and control for Cambium Networks' wireless and wired products, network administrators can quickly and easily deploy networks. Administrators have access to information needed to enforce policies and optimize performance. Remote support capability is integrated into the architecture, along with powerful help desk tools to debug remote issues. Troubleshooting tools such as ping, traceroute, throughput, and live packet captures are included, dramatically reducing resolution times and enabling.
●Deployment flexibility and TCO: Choice of public cloud, private cloud, or on-premises deployment with best TCO. cnMaestro X does not require Wi- Fi controllers, thereby reducing the complexity and cost of deploying Wi-Fi networks.
●Built for scale and security at all levels: Devices connect to cnMaestro X cloud using SSL-enabling deployments without changes to the firewall configuration. Cambium Intelligent edge architecture enables fault-tolerant networks where the network continues to operate even when the cloud is unreachable due to a WAN outage. With cnMaestro X network administrators can manage networks with up to thousands of sites and up to 10,000 devices.
●cnMaestro X offers tailored views for Enterprise, Access and Backhaul, and IIoT: The Access and Backhaul view provides visualization and control of devices from tower to edge. This includes PTP and PMP devices. ●cnMaestro X supports network hierarchy, enableing easy configuration, monitoring, and debugging at network nodes and reduces operational costs.
●Provides a bird’s-eye view of network health with insights on performance, connectivity and client experience. Administrators can quickly identify potential trouble spots and drill down from network to client-level details. ●Long-term historical data: 2-year data retention for FWB and 1-year data retention for Enterprise and IIoT devices
●Advanced captive portal capabilities: Payment gateway, 500 portals, 30,000 max vouchers, 1-year client login history
●Application visibility and control for 2400+ apps at the Wi-Fi and WAN edge ●Customizable service provider dashboard with ability to create different brands with multi-tier customizations including guest portals ●Consolidated service provider tenant statistics with ability to drill down to manage a specific tenant without impacting data from others. Support for up to 200 managed tenants.Restful APIs and Webhooks for integration with existing OSS/BSS systems and event monitoring
●Assists security audit to identify potential vulnerabilities in network infrastructure and troubleshoot issues
●RADIUS, TACACS+, LDAP, and AD Login for user administration City of Vallejo – Short Form Contract

●Advanced cnMatrix switch features including QinQ, Auto Device Recovery (ADR) and cable diagnostics.

Proposed Customer Interface Highlights:
●Public users will be able to log onto the public Wi-Fi via a custom VIP branded splash page, by connecting and accepting terms of use (see below)
●Users will have a single SSID among all covered areas. ●After a specified amount of time connected, the user connections can be throttled for the remainder of the 24-hour period to prohibit overuse of public bandwidth, as well as to encourage regular users to subscribe to a monthly account.
●Frequent users will have the ability to purchase a subscription allowing for longer connection and priority speed routing. This will be advertised on the custom splash page as well.
●Frequent subscriptions will be able to use their same login at any of the City provided public Wi-Fi locations
●City employees will also be provided their own logins with priority routing and unlimited time connections
Proposed Public Wi-Fi Terms of Use:

Below is a sample Terms of Use based on similar terms adopted in other municipality-provided public Wi-Fi Networks. This wording will be displayed to users when they log into the public Wi-Fi
Terms of Use
By accepting this agreement and accessing the wireless network, you acknowledge that you are of legal age, you have read and understood, and you agree to be bound by this agreement.

The wireless network service is provided by the property owners, the City of Vallejo, and is completely at their discretion. Your access to the network may be blocked, suspended, or terminated at any time for any reason.

You agree not to use the wireless network for any purpose that is unlawful or otherwise prohibited and you are fully responsible for your use.

The wireless network is provided "as is" without warranties of any kind, either expressed or implied.

This wireless network is powered by Syber Fiber and VIP.

City of Vallejo – Short Form Contract

Public Wi-Fi Project Installation Timeline:

The overall Public Wi-Fi project is expected to take a total of 110 days to complete from proposal submission to project closing. The Proposal Submission and Approval phase from City officials is estimated to take approximately 32 days, after which the Procurement Phase begins. Material is estimated to be in stock and available to ship ASAP, with an estimated arrival of within 30 days as well. Once all materials are obtained and labor has been scheduled, the construction process will begin. The Waterfront and Downtown Vallejo region will take priority, with an estimated timeline of 20 days to complete. Both the Blue Rock Springs and Dan Foley Park locations are estimated to take 3 days each, followed by full network testing. The entire Construction and Installation phase is estimated to take 49 days. Once completed, the project will move through an inspection phase before closing out.

2. City of Vallejo – Short Form Contract

3. Individual Location-Specific Details:

Public Wi-Fi Deployment- Downtown Vallejo and Waterfront:

The proposed design includes Wi-Fi coverage for the downtown neighborhood of Vallejo centered around Georgia and Sacramento Streets, extending to Mare Island Way to Sutter St and Florida St to Maine St. and MLK Park. The wireless coverage shall be sufficient to accommodate a minimum of 255 users per access point, simultaneously supporting 2000 users in the area. ●Coverage Area: Approximately 2 square miles surrounding the downtown neighborhood, expanding to the Transit Center on York St and the Ferry Terminal and Waterfront Park.
●Streets Involved:
○Mare Island Way, Georgia St, Santa Clara St, Sacramento St, Marin St, Sonoma St, Sutter St, Maine St, York St, Indian Alley, Virginia St, Jeffery Alley, Capitol St, Kissel Alley, Carolina St, Lozier Alley, and Florida St
Location Install Details:
●555 Santa Clara St (City Hall):
○Electrical receptacle to be installed by city personnel ○ISP Installer will place new PoE switch in the existing wall mounted cabinet and connect to existing fiber
○ISP Installer will place new CAT6 to access point mounting location(s) on the rooftop of the building
○ISP Installer will place new wall mounts and install two (2) access points
○ISP Installer will work with network operations team to turn up and test units.
●505 Santa Clara St (Vallejo Public Library):
○Electrical receptacle to be installed by city personnel ○ISP Installer a new wall-mounted cabinet
○ISP Installer will place new PoE switch in the aforementioned cabinet
○ISP Installer will place new CAT6 to access point mounting location(s) on the rooftop of the building
○ISP Installer will place new wall mounts and install two (2) access points
○ISP Installer will work with network operations team to turn up and test units.
●Santa Clara and Georgia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
City of Vallejo – Short Form Contract

○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit.
●301 Mare Island Way (Ferry Terminal Building):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations on the rooftop of the building
○ISP installer will place new wall mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●295 Mare Island Way (Ferry Terminal Building):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations on the rooftop of the building
○ISP installer will place new wall mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●121 Mare Island Way (Waterfront Park Building):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations on the rooftop of the building
○ISP installer will place new wall mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●311 Sacramento St (Soltrans Bus Terminal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations on the rooftop of the building
○ISP installer will place new wall mount and install two (2) access points
○ISP Installer will work with network operations team to turn up and test units
City of Vallejo – Short Form Contract

●Sacramento and York St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Sacramento and Georgia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit.
●Sacramento and Virginia St (Traffic Signal):
○ISP installer will use existing electrical receptacle, ○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●330 Virginia St (Empress Theater) :
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Marin St and Virginia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
City of Vallejo – Short Form Contract

○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Marin St and Georgia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Marin St and York St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Sonoma Blvd and Maine St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Sonoma Blvd and York St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
City of Vallejo – Short Form Contract

○ISP Installer will work with network operations team to turn up and test unit
●Sonoma Blvd and Georgia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Sonoma Blvd and Virginia St (Traffic Signal):
○ISP installer will use existing electrical receptacle
○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit
●Georgia St and Sutter St (Traffic Signal) :
○ISP installer will use existing electrical receptacle, ○ISP installer will place new PoE switch in the existing cabinet and connect to existing fiber
○ISP installer will place new CAT6 to access point mounting locations
○ISP installer will place new pole mount and install one (1) access point
○ISP Installer will work with network operations team to turn up and test unit.

Public Wi-Fi Deployment- Blue Rock Springs:

The proposed design includes Wi-Fi coverage for the Blue Rock Springs corridor Park off of Columbus Parkway. The public Wi-Fi coverage shall be sufficient to accommodate a minimum of 255 users per access point, covering over 1,500 users simultaneously.
●Coverage Area: approx 4,450 sq. ft
●Number of AP Devices:6
●Streets Involved:
○COLUMBUS ST, BLUE ROCK SPRINGS PARKING LOT
Location Install SOW:

City of Vallejo – Short Form Contract

●For all of the following installations:
○ISP Installer will use existing electrical receptacle
○Installer will place new PoE switch in new wall mounted cabinet ○Installer will place new CAT6 to access point mounting location(s) ○Installer will place new pole mounted bracket
○Installer to place 1 access point at each of the locations below ○Installer will work with Network operations to turn up and test unit.

See locations below:
●Access Point #1 38°07'34.1"N 122°11'27.6"W
●Access Point #2 38°07'35.4"N 122°11'23.0"W
● Access Point #3 38° 7'37.42"N 122°11'26.60"W
● Access Point #4 38° 7'32.77"N 122°11'21.13"W
● Access Point #5 38° 7'29.81"N 122°11'23.65"W
● Access Point #6 38° 7'28.69"N 122°11'18.08"W

END OF SECTION
City of Vallejo – Short Form Contract

EXHIBIT B - COMPENSATION

1. Contractor’s Compensation.

A. Services: City agrees to pay Contractor for services set forth in Exhibit A of this Agreement and for all authorized reimbursable expenses, for a total not to exceed One Hundred and Fifty Three thousand five hundred and thirty seven dollars and thirty three cents ($153,537.33), upon satisfactory completion of the services and delivery of the work product.

B. Additional Services:

1. Additional Services are those services related to the Scope of Work of Contractor as set forth in Exhibit A but not anticipated at the time of execution of this Agreement. Additional Services shall be provided only when a Supplemental Agreement authorizing such Additional Services is approved by the City Manager, or his or her designee. City reserves the right to perform any Additional Services with its own staff or to retain other Contractors to perform said Additional Services.

2. Contractor’s compensation for Additional Services shall be based on the total number of hours spent on Additional Services multiplied by the employees' appropriate billable hourly rate. City, at its option, may negotiate a fixed fee for some or all Additional Services as the need arises. Where a fixed fee for Additional Services is established by mutual Agreement between City and Contractor, compensation to Contractor shall not exceed the fixed fee amount.

2. Contractor’s Reimbursable Expenses. Reimbursable Expenses shall be limited to actual reasonable expenditures of Contractor for expenses that are necessary for the proper completion of the Services and shall only be payable if specifically authorized in advance by City.

3. Payments to Contractor.

A. Payments to Contractor shall be made within a reasonable time after receipt of Contractor’s invoice, said payments to be made in proportion to services performed. Contractor shall be responsible for the cost of supplying all documentation necessary to verify billings to the satisfaction of City.

B. All invoices submitted by Contractor shall contain the following information:

1. Description of services billed under this invoice

2. Date of Invoice Issuance

3. Sequential Invoice Number

4. City’s Purchase Order Number (if issued)

5. Social Security Number or Taxpayer Identification Number

6. Amount of this Invoice (Itemize all Reimbursable Expenses”)

7. Total Billed to Date
City of Vallejo – Short Form Contract

C. Items shall be separated into Services and Reimbursable Expenses. Billings that do not conform to the format outlined above shall be returned to Contractor for correction. City shall not be responsible for delays in payment to Contractor resulting from Contractor’s failure to comply with the invoice format described above.

D. Invoices, statements, and payment inquiries shall be emailed to:

[email protected]
E. Payment of all, or any part, of an application for payment may be withheld, a certificate of payment may be withheld, all or part of a previous certificate for payment may be nullified and that amount withheld from a current certificate for payment, or the City may withhold from City's certificate for payment, on account of any of the following:
(a) Defective work not remedied;
(b) Third-party claims against Contractor or City arising from the acts or omissions of Contractor or subcontractors;
(c) Stop notices;
(d) Failure of Contractor to make timely payments due to subcontractors for material or labor;
(e) A reasonable doubt that the work can be completed for the balance of the Contract Sum then unpaid;
(f) Damage to the City or others for which Contractor is responsible; (g) Reasonable evidence that the work cannot be completed within the Contract Time, and the unpaid balance of the Contract Sum would not be adequate to complete the work and cover City's damages for the anticipated delay;
(h) Failure of Contractor to maintain, update, and submit records and documents;
(i) Failure of Contractor to submit schedules or schedule updates as required by the Contract Documents;
(j) Performance of the work by Contractor without properly processed shop drawings;
(k) Liquidated damages assessed;
(l) Any other failure of Contractor to perform its obligations under the Contract Documents.

4. Accounting Records of Contractor.

A. Contractor shall maintain for three (3) years after completion of all services hereunder, all records under this Agreement, including, but not limited to, records of Contractor’s direct salary costs for all Services and Additional Services performed under this Agreement and records of Contractor’s Reimbursable Expenses, in accordance with generally accepted accounting practices. Contractor shall keep such records available for audit, inspection and copying by representatives of the City’s Finance Department or other Commented [LZ1]: Naveed, please fill in with applicable email address if this isn't correct.

City of Vallejo – Short Form Contract

government agencies during regular business hours upon twenty four (24) hours’ notice.

B. If requested by the City, Contractor shall provide a summary showing payments to be made and/or already made to subcontractors covered by such application, and unconditional waivers and releases of claims and stop notices, from Contractor and each subcontractor listed in the preceding application for payment covering sums disbursed pursuant to that preceding application for payment.

C. The obligations of Contractor under this section shall survive this Agreement.

6. Taxes. Contractor shall pay, when and as due, any and all taxes incurred as a result of Contractor’s compensation hereunder, including estimated taxes, and shall provide City with proof of such payments upon request.

7. Taxpayer Identification Number. Contractor shall provide City with Contractor’s complete Request for Taxpayer Identification Number and Certification, Form W-9, as issued by the Internal Revenue Service, and any other State or local tax identification number requested by City.

City of Vallejo – Short Form Contract

EXHIBIT C – PROJECT MAPS
Project Maps:

Downtown Vallejo and Waterfront
City of Vallejo – Short Form Contract

Dan Foley Park

City of Vallejo – Short Form Contract

Blue Rock Springs

DATA SHEET
1 cambiumnetworks.com©2023 Cambium Networks, Inc.
quick look:
• Dual radio 802.11ax
• 2.5 GbE Uplink Ethernet
• 1 GbE with power out
• Outdoor IP67 rated,
-40ºC to 65ºC
• HE 120º Sector Antenna
Outdoor Wi-Fi 6 Designed for Greater Range
and Speed
The XV2-2T1 is a dual radio Wi-Fi 6 access point (AP)
designed for outdoor deployments in Wi-Fi hotspots, outdoor enterprise networks, hospitality, and education markets.

Surge suppression up to 4kV and an LTE co-existence filter are featured.

The XV2-2T1 delivers Cambium 30VDC power out, or 48VDC
for PoE devices connected to the second gigabit Ethernet port. Ideal for connecting the XV2-2T1 to a Cambium
subscriber module (SM), T erragraph CN (connection node), or any IP and Ethernet device such as a security IP camera, or another Wi-Fi access point.

The new IEEE 802.11ax standard delivers higher network
speeds and enables more connected devices at higher
packet quality. In outdoor deployments, the IEEE 802.11ax standard delivers greater range by boosting the RF frame preamble by 3dB and improved signal quality with increased guard interval vs previous Wi-Fi technology. The XV2-2T1 is fully backward compatible with existing Wi-Fi technology and prepares a network for higher growth and greater density of Wi-Fi connected devices.

Cloud or on-premises management
XV2-2T1 continues the enterprise network convergence
with edge-intelligent AP managed by application-intelligent Cambium Networks XMS or cnMaestroTM management
system. Choose the management system that best
fits your business and use the latest technology from
Cambium Networks.

XV2-2T1 Wi-Fi 6 Outdoor Access Point
802.11ax Dual-radio, 2x2, HE 120º Sector Antenna

2 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
Access Point Specifications
Note: Some features will be included on subsequent firmware releases.

FCC Ch 1–11, 36–48, 52–64, 100–144, 149–165
ISED Ch 1–11, 36–48, 52–64, 100–144, 149–165
ETSI Ch 1–13, 36–48, 52–64, 100–144
ROW (Individual country limits may apply)
Ch 1–14, 36–48, 52–64, 100–144, 149–177
2400–2483.5 MHz, 5150–5895 MHz
Radios 5 GHz 802.11 a/n/ac Wave 2/ax, 2x2

2.4 GHz 802.11 b/g/n/ax, 2x2
BLE 4.1
Wi-Fi 802.11 a/b/g/n/ac Wave 2/ax
SSID
Security
WPA3, WPA2 (CCMP, AES, 802.11i), WPA2
Enterprise (802.1x/EAP), WPA PSK (TKIP),
WEP, Open
Max PHY
Rate
5 GHz radio 1,201 Mbps

2.4 GHz radio 573.5Mbps
Ports 1 x IEEE 100/1000/2500 Mbps
1 x IEEE 10/100/1000 Mbps Ethernet with SW
configurable passive PoE output of 30V or 48V up
to 30 Watts
Antenna 5 GHz 13.5 dBi, Sector

2.4 GHz 11 dBi, Sector
Max EIRP 5 GHz 36 dBm

2.4 GHz 35 dBm
EIRP may be limited by country regulations
LTE Filter
Band 38, 40
Power 20W max
Up to 50W when powering an auxiliary device
Dimensions 582 mm x 200 mm x 80 mm
(22.91 in x 7.87 in x 3.15 in)
Weight 1,200 g (2.64 lbs)
Security Kensington lock slot
LEDs Multi-color status LEDs
Ambient
Operation
Temperature
-40ºC to 65ºC
(-40ºF to 149ºF)
Storage
Temperature
-40ºC to 70ºC
(-40ºF to 158ºF)
Humidity 95% RH non-condensing
MTBF 25ºC = 674,966 hours
65ºC = 197,106 hours
Mount Options Pole or wall mounting.

Pole diameter: MIN 30 mm / MAX 75 mm
Certifications
(Compliance)
Wi-Fi Alliance 802.11 a/b/g/n/ac/ax, FCC, IC,
CE, EN 60601-1-2, EN 60950-1,IEC 62368-1
Safety, EN 60601-1-2 Medical, EN 61000-4-
2/3/5 Immunity, EN 50121-1 Railway EMC, EN
50121-4 Railway Immunity, IEC 61373 Railway
Shock & Vibration, EN 62311 Human Safety/RF
Exposure, WEEE & RoHS
3 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
XMS Management cnMaestro Management
Deployment Xirrus Management System (XMS-Cloud) cnMaestro Cloud, cnMaestro on-premises, Standalone AP Services Deep Packet Inspection (DPI) Application Visibility and Control
EasyPass Access Service
Monetized, cloud-managed guest portal with design tools APIs RESTful management and statistics API
Location API
RESTful management and statistics API
Location API
Webhooks
Captive
Portal
Web page redirect, landing page, redirect to internal
or external server, landing page and authentication
Client isolation per SSID, per network
Client rate limiting per SSID
EasyPass, Guest Ambassador
Click-through authentication
Microsoft Azure and Google G Suite SSO integration
Hosted on cnMaestro or hosted on site AP
Redirect to HTTP/RADIUS external portal/authentication
Active Directory integration, Google, Facebook,
Office 365 integration
Data rate, time duration, data throughput limit
Server DNS logging, Hotspot 2.0
Credit Card Merchant billing, ePSK, Vouchers
Accounting RADIUS accounting, load balancing AAA servers, Dynamic Authorization COA, DM Management
Note: Some features will be included on subsequent firmware releases.

Cambium Networks XMS leverages intelligent APs with an embedded edge controller to deliver edge services at any network density. XMS management plane is a cloud-first technology with a simple and easy-to-use interface delivering application L7 policy-based control, EasyPass BYOD secure access, and an MSP dashboard with drag-and-drop design.

Cambium Networks cnMaestro™ uses a distributed intelligence architecture with cloud-first management and edge-intelligent APs that self-optimize for the RF environment. cnMaestro delivers a single pane-of-glass management for Cambium broadband fixed wireless, cnMatrix Ethernet switches, enterprise-grade Wi-Fi APs and service provider residential routers.

4 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
Network Specifications
Note: Some features will be included on subsequent firmware releases.

Operational
Modes
Standalone
Cloud managed cnMaestro or VM
Cloud managed XMS
WLAN 1024 concurrent clients per Access Point,
16 SSIDs WPA3, WPA3 SAE, WPA3
Enterprise, WPA-TKIP, WPA2 AES,
802.1x,802.11w PMF
Authentication
Encryption
802.1x EAP-SIM/AKA, EAP-PEAP, EAP-TTLS,
EAP-TLS MAC authentication to
local database or external RADIUS
Scheduled
WLAN On/off by day, week, time of day
Guest
Access
See “Captive Portal” section for additional
details.

Data Limit Client bitrate/time/throughput limit per SSID Subscriber QoS WMM
Fast Roaming 802.11r, OKC, Enhanced roaming
Mesh Multi-hop, either band
Channel
Selection
Multimodal channel selection with
AutoChannel and AutoBand. Granular
control of off-channel scan and channel
selection
RF
Management
Multimodal RF optimization supporting
AutoCell performed in the intelligent edge
AP. Out-of-band RF spectrum analysis, radio
self test network assurance, RF monitor with
chn/noise/interference
Data rate pruning and minimum data rates
Network LACP (802.3ad) ,TCP connection log, NAT
logging firewall, DHCP server, L2, L3 or
DNS based access control, VLAN Pooling,
RADIUS attribute VID, VLAN per SSID
per user
Band Steer
Load Balance Ye s
Tunnel L2TP, L2oGRE, PPPoE
Network and
RF Management
Tools
Wired and wireles remote packet capture,
auto logging, ZapD performance tool,
rogue AP detection
Services NTP, Syslog, SNMP traps, DNS proxy
Standards
Wi-Fi
Protocols
VHT MCS rates, 16/64/256/1024-QAM, 20/40/80 MHz
TWT, Long OFDM Symbol, Transmit beamforming, Airtime Fairness, AMSDU, AMPDU, RIFS, STBC, LDPC, MIMO Power Save, MRC, BPSK, QPSK, CCK, DSSS, OFDM, OFDMA, UL/DL MU-MIMO IEEE 802.11 a/ac/ax/b/d/e/g/h/i/k/n/r/u/v
5 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
Front View
Front View
Back Panel
Side View
Bottom View

6 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
Antenna Patterns

2.4 GHz Azimuth
5 GHz Azimuth

2.4 GHz Elevation
5 GHz Elevation

7 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
Cambium Ordering Information
XV2-2T1 Regulatory Model
XV2-2T1XA00-US XV2-2T1 Dual-Radio Wi-Fi 6. Outdoor (FCC) 802.11ax 2x2, 120º Sector, US XV2-2T1XA00-CA XV2-2T1 Dual-Radio Wi-Fi 6. Outdoor (IC) 802.11ax 2x2, 120º Sector, CA XV2-2T1XA00-EU XV2-2T1 Dual-Radio Wi-Fi 6. Outdoor (ETSI) 802.11ax 2x2, 120º Sector, EU XV2-2T1XA00-RW XV2-2T1 Dual-Radio Wi-Fi 6. Outdoor 802.11ax 2x2, 120º Sector, RW MSX-SUB-T3-1 cnMaestro X for Enterprise: Advanced management and includes Cambium Care Pro Support; 1-year term MSX-SUB-T3-3 cnMaestro X for Enterprise: Advanced management and includes Cambium Care Pro Support; 3-year term MSX-SUB-T3-5 cnMaestro X for Enterprise: Advanced management and includes Cambium Care Pro Support; 5-year term XMSC-SUB-2R-1 XMS-Cloud 1-year subscription: 2-radio AP with EasyPass Guest Self-Registration and Guest Ambassador modules and Cambium Care Advanced Support
XMSC-SUB-2R-3 XMS-Cloud 3-year subscription: 2-radio AP with EasyPass Guest Self-Registration and Guest Ambassador modules and Cambium Care Advanced Support
XMSC-SUB-2R-5 XMS-Cloud 5-year subscription: 2-radio AP with EasyPass Guest Self-Registration and Guest Ambassador modules and Cambium Care Advanced Support
EASY -SUB-2R-1 EasyPass 1-year subscription for a 2-radio AP operating with XMS-Cloud or XMS-Enterprise EASY -SUB-2R-3 EasyPass 3-year subscription for a 2-radio AP operating with XMS-Cloud or XMS-Enterprise EASY -SUB-2R-5 EasyPass 5-year subscription for a 2-radio AP operating with XMS-Cloud or XMS-Enterprise CCADV-SUP-XV2-2T-1 Cambium Care Advanced, 1-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support, SW updates, and NBD advance replacement for HW
CCADV-SUP-XV2-2T-3 Cambium Care Advanced, 3-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support, SW updates, and NBD advance replacement for HW
CCADV-SUP-XV2-2T-5 Cambium Care Advanced, 5-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support, SW updates, and NBD advance replacement for HW
CCPRO-SUP-XV2-2T-1 Cambium Care Pro, 1-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support and SW updates CCPRO-SUP-XV2-2T-3 Cambium Care Pro, 3-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support and SW updates CCPRO-SUP-XV2-2T-5 Cambium Care Pro, 5-year support for one XV2-2T Wi-Fi 6 AP. 24x7 TAC support and SW updates 8 cambiumnetworks.com©2023 Cambium Networks, Inc.

DATA SHEET
XV2-2T1 Wi-Fi 6 Outdoor Access Point
DATA SHEET 8
©2023 Cambium Networks, Inc.

DATA SHEET 8

DATA SHEET

ABOUT CAMBIUM NETWORKS
Cambium Networks empowers millions of people with wireless connectivity worldwide. Its wireless portfolio is used by commercial and government network operators as well as broadband service providers to connect people, places and things. With a single network architecture spanning fixed wireless and Wi-Fi, Cambium Networks enables operators to achieve maximum performance with minimal spectrum. End-to-end cloud management transforms networks into dynamic environments that evolve to meet changing needs with minimal physical human intervention. Cambium Networks empowers a growing ecosystem of partners who design and deliver gigabit wireless solutions that just work. cambiumnetworks.com
04032023
3800 Golf Road Suite 360, Rolling Meadows, Illinois 60008 USA XV2-2T1 Wi-Fi 6 Access Point
Cambium Ordering Information
N000000L142A PoE, 60W, 56V, 5GbE DC Injector, Indoor, Energy Level 6 Supply, accepts C5 connector N000900L031A AC line cord, US Type B, 720mm, C5 connector N000900L032A AC line cord, EU Type F angled, 720mm, C5 connector N000900L033A AC line cord, UK Type G angled, 720mm, C5 connector N000900L034A AC line cord, BR Type N, 720mm, C5 connector N000900L011A AC line cord, AU Type I, 720mm, C5 connector N000900L012A AC line cord, IN Type D angled, 720mm, C5 connector N000900L013A AC line cord, AR Type I, 720mm, C5 connector N000900L015A AC line cord, CN Type I, 720mm, C5 connector N000900L048A AC line cord, ZA Type M angled, 720mm, C5 connector

LIMITED WARRANTY
Cambium Networks XV2-2T1 Wi-Fi 6 Access Point
includes a 3-year hardware warranty.

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SOW Submission
Proposal Review
Council Approval
8/3/2023
Procurement
Order Equipment
Order Materials
Hire Crew
Construction
Prep/Pre-construction
Construction Start Date
Waterfront and Downtown Vallejo
Blue Rock Springs Park
Dan Foley Park
Network Testing
10/25/2023
Post Construction
Quality Inspections
11/8/2023
1 Proposal Acceptance
30 days
6/29/2023
8/9/2023
2 SOW Submission
3 days
6/29/2023
7/3/2023
3 Proposal Review
15 days
7/4/2023
7/24/2023
4 Council Approval
2 days
7/25/2023
7/26/2023
5 Contract Signing
5 days
8/3/2023
8/9/2023
6 Procurement
30 days
7/27/2023
9/6/2023
7 Order Equipment
30 days
7/27/2023
9/6/2023
8 Order Materials
30 days
7/27/2023
9/6/2023
9 Hire Crew
10 days
8/10/2023
8/23/2023
10 Construction
35 days
9/7/2023
10/25/2023
11 Prep/Pre-construction
5 days
9/7/2023
9/13/2023
12 Construction Start Date
1 day
9/14/2023
9/14/2023
13 Waterfront and Downtown Vallejo
20 days
9/15/2023
10/12/2023
14 Blue Rock Springs Park
3 days
10/2/2023
10/4/2023
15 Dan Foley Park
3 days
10/5/2023
10/9/2023
16 Network Testing
10 days
10/10/2023
10/23/2023
17 Final Completion
1 day
10/25/2023
10/25/2023
18 Post Construction
5 days
10/31/2023
11/6/2023
19 Quality Inspections
5 days
10/31/2023
11/6/2023
20 Project Closing Phase
1 day
11/8/2023
11/8/2023
Vallejo Public Wi-Fi Projects

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Proposal Acceptance
SOW Submission
Proposal Review
Council Approval
8/3/2023
Procurement
Order Equipment
Order Materials
Hire Crew
Construction
Prep/Pre-construction
Construction Start Date
Waterfront and Downtown Vallejo
Blue Rock Springs Park
Dan Foley Park
Network Testing
10/25/2023
Post Construction
Quality Inspections
11/8/2023
1 Proposal Acceptance
30 days
6/29/2023
8/9/2023
2 SOW Submission
3 days
6/29/2023
7/3/2023
3 Proposal Review
15 days
7/4/2023
7/24/2023
4 Council Approval
2 days
7/25/2023
7/26/2023
5 Contract Signing
5 days
8/3/2023
8/9/2023
6 Procurement
30 days
7/27/2023
9/6/2023
7 Order Equipment
30 days
7/27/2023
9/6/2023
8 Order Materials
30 days
7/27/2023
9/6/2023
9 Hire Crew
10 days
8/10/2023
8/23/2023
10 Construction
35 days
9/7/2023
10/25/2023
11 Prep/Pre-construction
5 days
9/7/2023
9/13/2023
12 Construction Start Date
1 day
9/14/2023
9/14/2023
13 Waterfront and Downtown Vallejo
20 days
9/15/2023
10/12/2023
14 Blue Rock Springs Park
3 days
10/2/2023
10/4/2023
15 Dan Foley Park
3 days
10/5/2023
10/9/2023
16 Network Testing
10 days
10/10/2023
10/23/2023
17 Final Completion
1 day
10/25/2023
10/25/2023
18 Post Construction
5 days
10/31/2023
11/6/2023
19 Quality Inspections
5 days
10/31/2023
11/6/2023
20 Project Closing Phase
1 day
11/8/2023
11/8/2023
1 Proposal A...
2 SOW Subm...
3 Proposal ...
4 Council Ap...
5 Contract Si...
6 Procurement
7 Order Equ...
8 Order Mater...
9 Hire Crew
10 Construction
11 Prep/Pre-co...
12 Constructio...
13 Waterfront...
14 Blue Rock ...
15 Dan Foley ...
16 Network Te...
17 Final Comp...
18 Post Constr...
19 Quality Ins...
20 Project Clos...

Task Name
Vallejo Public Wifi - 29 Jun 2023

ACTION ITEM 9.A.

DATE: September 12, 2023
TO: Mayor and Members of the City Council
FROM: Mike Malone, City Manager
Rekha Nayar, Finance Director
SUBJECT: CONSIDERATION OF STAFF RECOMMENDATIONS ON FUNDING ALLOCATION OF

AMERICAN RESCUE PLAN ACT (ARPA) STATE AND LOCAL FISCAL RECOVERY

FUNDS (SLFRF) AND PROVIDE NOTICE OF INTENT TO AMEND THE BUDGET (STEP 1)

RECOMMENDATION

1. Receive a presentation regarding the American Rescue Plan Act and consider staff recommendations on the reallocation of ARPA State and Local Fiscal Recovery Funds

2. Provide notice to amend FY 2023-24 budget related to ARPA State and Local Fiscal Recovery Funds

REASONS FOR RECOMMENDATION
After taking inventory of the projects under the first tranche of ARPA funding, The City of Vallejo has $862,000 remaining. To reallocate the funding under the City's Charter Section 703, the City Council must formally be notified and then the budget must be amended to recognize and appropriate the funds, after Council provides guidance regarding how the allocation should be expended following the guidelines issued by the Treasury Department.

BACKGROUND AND DISCUSSION
Background
On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA), delivering $1.9 trillion of aid towards addressing the COVID pandemic and corresponding economic crisis. This legislative package included $350 billion in federal fiscal relief to local governments. This provision of the American Rescue Plan is referred to as the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) and includes $65.1 billion of direct and flexible aid to American cities, towns, and villages. The City of Vallejo was a recipient of these funds in the amount of $25,727,736.

The Local Fiscal Recovery Funds are designed to bolster agencies' responses to the COVID-19 pandemic and its economic impacts by supporting the immediate pandemic response, bringing back jobs, and laying the groundwork for a strong and equitable recovery. These funds must be obligated by December 31, 2024, and expended by December 31, 2026.The relief has the following objectives:
• Support urgent COVID-19 response efforts to continue to decrease the spread of the virus and bring the pandemic under control
• Replace lost public sector revenue to strengthen support for vital public services and help retain jobs • Support immediate economic stabilization for households and businesses

Date: September 12, 2023
Subject: CONSIDERATION OF STAFF RECOMMENDATIONS ON FUNDING ALLOCATION OF

AMERICAN RESCUE PLAN ACT (ARPA) STATE AND LOCAL FISCAL RECOVERY

FUNDS (SLFRF) AND PROVIDE NOTICE OF INTENT TO AMEND THE BUDGET (STEP 1)

• Address systemic public health and economic challenges that have contributed to the unequal impact of the pandemic

The Treasury Department released an Interim Final on May 17, 2021, and allowed for comments until July 16, 2021.The Department of Treasury announced that the Final Rule took effect on April 1, 2022.

The allowable uses under the Final Rule include the following:
• Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet

Ineligible uses include the following:
• Contribution towards federal matching requirements, pension liability, financial reserves, legal settlements, and debt service
• Infrastructure not directly addressed in the Rescue Plan • Changes that reduce net tax revenue

On August 10, 2023, the Secretary of the Treasury issued an interim final rule to implement the amendments made by the Consolidated Appropriations Act, 2023. This Interim Rule provides the guidance and parameters of the new eligibility. The existing uses under the 2022 Final Rule remain unchanged.

The Interim Rule created three new categories:
• Expenditures that provide emergency relief from natural disasters • Funding transportation infrastructure eligible projects and matching funds. • Spending on any program, project, or service that would also be eligible under HUD’s Community Development Block Grant program.

The Interim Final Rule was recently published in the Federal Register, kicking off a 60-day comment period.

The timeline for the Final Rule is uncertain. The volume and complexity of the comments will determine how long it will take to proceed to a Final Rule.

Date: September 12, 2023
Subject: CONSIDERATION OF STAFF RECOMMENDATIONS ON FUNDING ALLOCATION OF

AMERICAN RESCUE PLAN ACT (ARPA) STATE AND LOCAL FISCAL RECOVERY

FUNDS (SLFRF) AND PROVIDE NOTICE OF INTENT TO AMEND THE BUDGET (STEP 1)

Community Feedback

In April 2021, staff created a webpage where community members could learn more about the Rescue Plan and submit ideas - https://www.myvallejo.com/american-rescue-plan-act. The page has continued to be updated as more information and resources have become available. As of early September, over 1,000 visitors and more than 500 people have engaged with the web page. Ideas were collected from the launch of the webpage to August 15 and then reviewed and categorized by Staff. The top ten categories of ideas in order of interest include:

1. Homelessness and Mental Health

2. Streets Safety

3. City Infrastructure

4. Road/Street Maintenance

5. Schools/Education

6. Food Insecurity

7. Housing

8. Public Safety

9. Small Business

10. Code Enforcement

Discussion
After evaluating the progress of the Council-approved projects that received SLFRF funding allocations in the first tranche, it has been determined that there will be a balance remaining of $862,000. Staff recommends the following allocation criteria and projects based on community needs and government operations.

Allocation Criteria
Allocate to one-time projects
Allocating funding towards one-time projects limits the City's ongoing liabilities and increases the City's fiscal health. Projects that require ongoing support from the General Fund are not recommended. Instead, staff suggests allocating funds to one-time projects to promote fiscal security.

Allocate the funds consistent with the City Council and community member input Staff recommends supporting projects and programs that are consistent with City Council desires and feedback from community members. Specifically, staff suggests using the City Council's vision for a safe, prosperous, and vibrant City as the basis of the allocation categories.

Allocate the funds for projects that will result in a return on investment and community impact

Recommendations
The recommendation before City Council is to provide funding for the following high-priority areas:

The Vallejo Naval &
Historical Museum
$410,000 Funding would allow for barrier removal and
Americans with Disability Act (ADA) improvements
to the museum. These improvements would
increase public access, upgrade lighting, and
Date: September 12, 2023
Subject: CONSIDERATION OF STAFF RECOMMENDATIONS ON FUNDING ALLOCATION OF

AMERICAN RESCUE PLAN ACT (ARPA) STATE AND LOCAL FISCAL RECOVERY

FUNDS (SLFRF) AND PROVIDE NOTICE OF INTENT TO AMEND THE BUDGET (STEP 1)

enhance the audio/visual systems used for
community programs.

Broadway Project $200,000 This allocation would address a funding shortfall in the Broadway low-income housing project.

Main Street $100,000 Provide funding for Vallejo First Corporation with the purpose of revitalizing the City’s downtown
core while promoting economic activity.

Empress Theatre $100,000 This project would fund an upgrade to the historic theatre’s audio/visual systems. The upgrade will
allow for the support of a broader variety of
cultural, educational, and entertainment
performances.

Human Society $52,000 Expenditures here will fund additional cost increases associated with ongoing animal care
services while providing equity adjustments to
support staffing and contract service costs.

Staff suggested alternative options are as follows:

Vallejo Marina Dredging $500,000 The project will improve access by funding small interim emergency dredging. The dredging will address increased siltation at the entrance of the Marina and the fuel island.

Skate park $41,000 The purpose of this allocation is to close the funding gap for the Modernize Vallejo Skatepark project from the Cycle 8 Participatory Budgeting process. The result of the funding will rejuvenate the skate facility at Wardlaw Park with state- of-the-art obstacles.

FISCAL IMPACT
The City of Vallejo has $862,000 remaining from the first tranche of the State and Local Fiscal Recovery Funds. The purpose of these funds is to invest in the City's COVID-19 recovery efforts.

Staff is providing a notice of intent to amend the FY 2023-24 Budget to reallocate these funds received through the American Rescue Plan Act.

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.

ATTACHMENTS

1. Overview-of-the-2023-Interim-Final-Rule
Date: September 12, 2023
Subject: CONSIDERATION OF STAFF RECOMMENDATIONS ON FUNDING ALLOCATION OF

AMERICAN RESCUE PLAN ACT (ARPA) STATE AND LOCAL FISCAL RECOVERY

FUNDS (SLFRF) AND PROVIDE NOTICE OF INTENT TO AMEND THE BUDGET (STEP 1)

2. SLFRF-Final-Rule

CONTACT
Mike Malone, City Manager (707) 648-4576
[email protected]
Terrance Davis, Assistant City Manager, (707) 648-4577
[email protected]

Coronavirus State & Local
Fiscal Recovery Funds:

Overview of the Interim Final Rule

August 2023
ii

CONTENTS
Introduction .................................................................................................. 2 Emergency Relief from Natural Disasters .......................................... 4 Surface Transportation and Title I Projects ......................................9 Surface Transportation Projects ....................................................10 Title I Projects ......................................................................................16 Program Administration ...........................................................................19

1 This Overview of the 2023 Interim Final Rule provides a summary of major provisions of the State and Local Fiscal Recovery Funds (SLFRF) 2023 interim final rule for informational purposes and is intended as a brief, simplified user guide to the interim final rule provisions.

The descriptions provided in this document summarize key provisions of the 2023 interim final rule but are non-exhaustive, do not describe all terms and conditions associated with the use of SLFRF funds, and do not describe all requirements that may apply to this funding. Recipients should refer to the 2023 interim final rule for a complete description of the new eligible uses and associated requirements. Any SLFRF funds received are also subject to the terms and conditions of the agreement entered into by Treasury and the respective jurisdiction, which incorporate the provisions of the 2023 interim final rule, the 2022 final rule, and the guidance that implements this program. Recipients seeking information about the eligible uses discussed in the 2022 final rule should reference the Overview of the 2022 Final Rule and the 2022 final rule. 2 introduction
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), established by the American Rescue Plan, delivers $350 billion to state, local, territorial, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency.

On May 10, 2021, Treasury issued an interim final rule implementing the SLFRF program. On January 6, 2022, Treasury subsequently issued a final rule that responded to public comments. On April 1, 2022, the final rule became effective. On December 29, 2022, the Consolidated Appropriations Act, 2023 was enacted, amending the SLFRF program to provide additional flexibility for recipients to use SLFRF funds to respond to natural disasters, build critical infrastructure, and support community development.

Treasury has issued an interim final rule (IFR) implementing the amendments to the SLFRF program and is seeking feedback from the public on all aspects of the IFR. Comments on the IFR may be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov or by mailing comments to the address provided in the IFR. Refer to the IFR for additional information about the comment process.

The existing eligible uses, as discussed in the 2022 final rule, remain unchanged. Recipients may continue to use SLFRF funds in alignment with the 2022 final rule.

EMERGENCY RELIEF FROM NATURAL DISASTERS
The IFR provides a framework for using SLFRF funds to provide emergency relief from natural disasters or their negative economic impacts. Specifically, the IFR discusses the standard for providing emergency relief from natural disasters, using a two-step process. Recipients must first identify a natural disaster that has occurred or is expected to occur imminently, or a natural disaster that is threatened to occur in the future, and then identify emergency relief that responds to the physical or negative economic impacts, or potential physical or negative economic impacts of the identified natural disaster. The emergency relief must be related and reasonably proportional to the impact identified.

SURFACE TRANSPORTATION PROJECTS
The IFR provides a framework for using SLFRF funds for projects eligible under the 26 surface transportation programs specified in the 2023 CAA (Surface Transportation projects). This eligible use category is broken out into three pathways. Pathway One outlines how recipients may use SLFRF funds for projects receiving funding from DOT . Pathway Two outlines how recipients may use SLFRF funds for projects that are not receiving funding from DOT . Pathway Three outlines how recipients may use SLFRF funds to satisfy non-federal share requirements for certain Surface Transportation projects or to repay a loan provided under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. The requirements of titles 23, 40, and 49 of the U.S. code generally apply to this eligible use category.

TITLE I PROJECTS
The IFR outlines how recipients may use SLFRF funds for activities that are eligible under section 105(a) of the Housing and Community Development Act of 1974 (Title I projects), which are the eligible activities under the Community Development Block Grant (CDBG) and Indian Community Development Block Grant (ICDBG) programs. The eligible activities under the Title I projects eligible use category are broad and enable recipients to undertake a wide range of projects. The requirements of title I of the Housing and Community Development Act of 1974 generally apply to this eligible use category. 3 INTERIM FINAL RULE EFFECTIVE DATE AND TIMELINE FOR USE OF FUNDS The IFR was submitted for publication in August 2023 and will become effective when published. Recipients may use SLFRF funds for the new eligible uses for costs incurred beginning December 29, 2022. Consistent with the existing eligible uses, recipients must obligate SLFRF funds for the new eligible uses by December 31, 2024.

Recipients must expend SLFRF funds obligated to provide emergency relief from natural disasters by December 31, 2026. Recipients must expend SLFRF funds obligated for Surface Transportation projects and Title I projects by September 30, 2026.
4 Emergency Relief from Natural Disasters
Recipients may use SLFRF funds to provide emergency relief from natural disasters or the negative economic effects of natural disasters. Recipients seeking to use SLFRF funds for this eligible use category should undertake the following two-step process:

1. Identify a natural disaster that has occurred or is expected to occur imminently, or a natural disaster that is threatened to occur in the future.

2. Identify emergency relief that responds to the physical or negative economic impacts, or potential physical or negative economic impacts, of the natural disaster. The emergency relief must be related and reasonably proportional to the impact identified.

IDENTIFYING NATURAL DISASTERS
The IFR defines a natural disaster as a hurricane, tornado, storm, flood, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, drought, or fire, in each case attributable to natural causes, that causes or may cause substantial damage, injury, or imminent threat to civilian property or persons. A natural disaster may also include another type of natural catastrophe, attributable to natural causes, that causes or may cause substantial damage, injury, or imminent threat to civilian property or persons.

IDENTIFYING EMERGENCY RELIEF
The IFR defines emergency relief as assistance that is needed to save lives and to protect property and public health and safety, or to lessen or avert the threat of catastrophe. The assistance must be related and reasonably proportional to the physical or negative economic impacts of the natural disaster that has occurred or is expected to occur imminently, or to the potential physical or negative economic impacts of a natural disaster that is threatened to occur in the future.

If responding to a natural disaster that has occurred or is expected to occur imminently, recipients must identify a natural disaster that meets Treasury’s definition above and an emergency declaration or designation for the recipient’s geography and jurisdiction in the form of:
• An emergency declaration pursuant to the Robert T . Stafford Disaster Relief and Emergency Assistance Act; • An emergency declaration by the Governor of a state pursuant to respective state law; • An emergency declaration by a Tribal government; or
• A designation of an event of a natural disaster by the chief executive (or equivalent) of a recipient government as long as the chief executive documents the event satisfies the definition of natural disaster provided above.

If providing assistance to lessen or avert the threat of a future natural disaster, recipients should document evidence of historical patterns or predictions of natural disasters that would reasonably demonstrate the likelihood of future occurrence of a natural disaster in its community.1 Recipients should use this evidence to support its determination that mitigation measures would be related and reasonably proportional to the threat of a natural disaster.
1 For example, a recipient could utilize FEMA’s National Risk Index to establish the likelihood of a future hurricane, or a Tribal government could cite Indigenous Traditional Ecological Knowledge to determine future risks 5 NON-EXHAUSTIVE LIST OF ELIGIBLE USES
Below, Treasury identifies a non-exhaustive list of eligible emergency relief, which means that the listed eligible uses include some, but not all, of the uses of funds that could be eligible. The list distinguishes between emergency relief provided from a declared or designated natural disaster that has occurred or is expected to occur imminently, and emergency relief provided from the threat of a future natural disaster. To assess whether additional types of emergency relief would be eligible under this category beyond the non-exhaustive list provided below, recipients should first identify a natural disaster and then identify emergency relief that responds to the natural disaster’s physical or negative economic impacts according to the standards discussed above.

Declared or Designated Natural Disasters
- Temporary housing:
• Rental assistance, reimbursement for hotel costs
• Temporary housing units when individuals are facing challenges finding permanent housing due to shortages caused by a natural disaster
• Temporary emergency housing including congregate and non-congregate shelter • Shelter following an evacuation
- Food assistance
• Financial assistance for lost wages:

Supplemental benefits for individuals participating in state unemployment insurance programs or the Department of Labor’s DUA program at the time of the disaster or following the disaster. The supplemental benefit may not exceed $400 a week for the duration of the need for emergency relief. - Other immediate needs. Additional eligible uses to address other immediate needs:

Emergency protective measures, including:
9 Transportation and pre-positioning equipment
and resources
9 Flood fighting
9 Firefighting
9 Supplies and commodities
9 Medical care and transport
9 Evacuation and sheltering
9 Childcare
9 Demolition of structures
9 Search and rescue to locate survivors, household
pets and service animals
9 Use or lease of temporary generators for facilities
that provide essential community services
9 Dissemination of information to the public to
provide warnings and guidance about health and
safety hazards
9 Searching to locate and recover human remains
9 Storage and interment of unidentified human
remains
9 Mass mortuary services
9 Construction of emergency berms or temporary
levees to provide protection from floodwaters or
landslides
9 Emergency repairs necessary to prevent further
damages
9 Buttressing, shoring or bracing facilities to
stabilize them or prevent collapse
9 Emergency slope stabilization
9 Mold remediation
9 Extracting water and clearing mud, silt, or other
accumulated debris
9 Taking actions to save the lives of animals
9 Snow removal
6 In addition to eligible uses summarized above, recipients may also use SLFRF funds to address other immediate needs such as those listed below.
• Debris removal, including the clearance, removal, and disposal of vegetable debris (such as tree limbs, branches, stumps, or tress), construction and demolition debris, sand, mud, silt, gravel, rocks, boulders, white goods, and vehicle and vessel wreckage.
• Public infrastructure repair, including roads, bridges, and utilities damaged by a natural disaster, restoring the infrastructure to its pre-disaster size, capacity, and function. Recipients may incorporate mitigation measures into the repair project by following the requirements described in the mitigation section below. • Increased operational costs including payroll costs and costs for government facilities and government services used before, during or after a natural disaster. • Cash assistance for uninsured or underinsured disaster-caused expenses such as repair or replacement of personal property and vehicles, or funds for moving and storage, medical, dental, childcare, funeral expenses, behavioral health services, and other miscellaneous items. • Cash assistance for low-income households that have been impacted by a natural disaster. ƒ Low-income households are ones with (i) income at or below 185 percent of the Federal Poverty Guidelines for the size of the household based on the most recently published poverty guidelines by the Department of Health and Human Services or (ii) income at or below 40 percent of area median income for the county and size of household based on the most recently published data by the Department of Housing and Urban Development.
• Home repairs for primary residences not covered by insurance that have become uninhabitable because of natural disaster to make the residence habitable again. Recipients may incorporate mitigation measures into the repair project by following the requirements described in the mitigation section below.

Threat of Future Natural Disasters
Mitigation Activities to lessen or avert the threat of a natural disaster and its potential physical or negative economic impacts, including structure elevation, mitigation reconstruction, dry flood proofing, structural retrofitting, non-structure retrofitting, wind retrofit, and infrastructure retrofit. Mitigation activities may be stand-alone projects that reduce or eliminate the potential impacts of the threat of natural disaster and may also be incorporated into repair or reconstruction projects that address the impacts of a natural disaster. 7 MITIGATION ACTIVITIES WITH CAPITAL EXPENDITURES EXCEEDING $1 MILLION For mitigation activities with total expected capital expenditures of $1 million or greater, recipients (except for Tribal governments) must complete and meet the substantive requirements of a Written Justification for the capital expenditures in their project.

A Written Justification includes:
• Description of emergency relief to be provided and potential impact to be addressed: Recipients must provide a description of the specific mitigation activities to be provided, and why the emergency relief is needed to lessen or avert the potential impacts of the natural disaster that is threatened to occur in the future. When appropriate, recipients may provide quantitative information on the extent and type of assistance needed, such as the number of individuals or entities that may be affected. Recipients must use the documented evidence of historical patterns or predictions of natural disasters that would reasonably demonstrate the likelihood of future occurrence of a natural disaster in their communities, along with considerations of efficacy, cost, cost effectiveness, and time to delivery, to support their determinations that mitigation activities would be related and reasonably proportional. • Explanation of why a capital expenditure is appropriate: Recipients must provide an assessment demonstrating why a mitigation activity capital expenditure is appropriate to address the specified potential impact identified. The assessment must include an explanation of why existing equipment and facilities, or policy changes or additional funding to pertinent programs or services, would be inadequate to addressing the potential impact of the threat of a natural disaster and why policy changes or additional funding to pertinent programs or services would be insufficient without the corresponding capital expenditures. • Comparison of the proposed capital expenditure against alternative capital expenditures: Recipients must provide an objective comparison of the proposed mitigation capital expenditure against at least two alternative capital expenditures and demonstrate why their proposed capital expenditure is superior to alternative capital expenditures that could be made. Specifically, recipients must assess the proposed capital expenditure against at least two alternative types or sizes of capital expenditures that are potentially effective and reasonably feasible. Where relevant, recipients must compare the proposal against the alternative of improving existing capital assets already owned or leasing other capital assets. Recipients must use quantitative data when available, although they are encouraged to supplement with qualitative information and narrative description. Recipients that complete analyses with minimal or no quantitative data must provide an explanation for doing so.

DUPLICATION OF BENEFITS
As a general matter, recipients may not claim use of federal financial assistance to cover a cost that the recipient is covering with another federal award, by insurance, or from another source, and subrecipients are bound by the same requirements as recipients. Specific requirements apply when recipients use federal funds to provide assistance with respect to losses suffered as a result of a major disaster or emergency declared under the Stafford Act (disaster losses). If a recipient uses SLFRF funds to cover disaster losses, the Stafford Act’s prohibition on duplication of benefits applies. Recipients may not provide financial assistance to a person, business concern, or other entity with respect to disaster losses for which the beneficiary will receive financial assistance under any other program or from insurance or any other source. Recipients may provide assistance with respect to disaster losses to a person, business concern, or other entity that is or may be entitled to receive assistance for those losses from another source, if such person, business concern, or other entity has not received the other benefits by the time of application for SLFRF funds and the person, business concern, or other entity agrees to repay any duplicative assistance to the SLFRF recipient. Recipients also may use SLFRF funds to provide assistance for any portion of disaster losses not covered by other benefits. Recipients are 8 advised to review FEMA’s guidance, which describes a “delivery sequence” for assistance for disaster losses.

Recipients must treat SLFRF funds as last in the delivery sequence, unless the recipient, in consultation with the appropriate FEMA Regional Administrator or state disaster-assistance administrator, determines that another sequence is appropriate. Recipients also must notify subrecipients and contractors that, when providing assistance in response to a Stafford Act declaration, they are responsible for ensuring that beneficiaries disclose any other assistance received for the same disaster losses prior to receiving assistance with SLFRF funds.

LABOR STANDARDS
Treasury encourages recipients to adhere to strong labor standards when undertaking capital expenditures to provide emergency relief from natural disasters, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions. Treasury also encourages recipients to prioritize, in their procurements, employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws. 9 Surface Transportation and Title i Projects
Recipients may use SLFRF funds for Surface Transportation projects and Title I projects. For projects undertaken under these eligible use categories, there are several statutory requirements that apply to these eligible use categories, including:

Limitation on SLFRF Contribution Towards Surface Transportation and Title I Projects: The total amount of SLFRF funds that a recipient may use for Surface Transportation projects and Title I projects, taken together, cannot exceed the greater of $10 million and 30% of a recipient’s SLFRF allocation. For example:
ƒ Consider a recipient that received $60 million in SLFRF funds. This recipient would have $18 million available to use for Surface Transportation projects and Title I projects. ƒ This recipient could choose to spend $10 million under the Surface Transportation projects eligible use category and $8 million in the Title I projects eligible use category, or $3 million for Surface Transportation projects and $15 million for Title I projects, or some other combination. ƒ This recipient cannot spend more than $18 million in SLFRF funds across the Surface Transportation projects and Title I projects eligible use categories, taken together.

Restriction on Supplanting of Funds: Recipients using SLFRF funds for Surface Transportation projects and Title I projects must supplement, and not supplant, other federal, state, territorial, Tribal, and local government funds (as applicable) otherwise available for such uses. Funds are considered “otherwise available for such uses”:
ƒ For non-federal funds, if they have been obligated for activities or projects that are eligible as part of any Surface Transportation project or Title I project, or
ƒ For federal funds, if a federal agency has committed to a particular project pursuant to an award agreement or otherwise.

For the Surface Transportation projects and Title I projects eligible use categories, this means that SLFRF recipients may not:
ƒ De-obligate funds that were obligated for specific uses that are eligible Surface Transportation project or Title I project activities (e.g., cancel, amend, renegotiate, or otherwise revise or abrogate a contract, subaward, or similar transaction that requires payment) and replace those previously obligated funds with SLFRF funds. ƒ Use SLFRF funds to replace federal or non-federal funds identified in a federal commitment, such as an award agreement.

The supplement, not supplant restriction does not apply to the other eligible use categories in the SLFRF program, including the emergency relief from natural disasters eligible use category.

Applicability of Certain Existing Laws: Except as otherwise determined by the Secretary, the use of SLFRF funds for Surface Transportation and Title I projects is subject to certain other laws, including the requirements of titles 23, 40, and 49 of the U.S. Code, title I of the Housing and Community Development Act of 1974, and the National Environmental Policy Act of 1969. The sections that follow discuss how these laws apply.

Obligation and Expenditure Deadline: Recipients using SLFRF funds for Surface Transportation and Title I projects must obligate funds by December 31, 2024 and expend funds by September 30, 2026. 10 Surface Transportation Projects
Recipients may use SLFRF funds for Surface Transportation projects in the following ways:

1. Supplementing surface transportation projects receiving funding from DOT (Pathway One)

2. Funding surface transportation projects not receiving funding from DOT (Pathway Two)

3. Satisfying non-federal share requirements for certain surface transportation projects or repaying a loan provided under the TIFIA program (Pathway Three)
In addition to the limitations and requirements described above, the eligible projects and additional requirements and limitations associated with each pathway are outlined below.

PATHWAY ONE: SURFACE TRANSPORTATION PROJECTS RECEIVING FUNDING FROM DOT Recipients may use SLFRF funds for Surface Transportation projects that are or will be receiving funding from DOT prior to the obligation deadline of December 31, 2024. A Surface Transportation project must be subject to DOT’s oversight during the period that SLFRF funds are used for the project. Recipients must consult with DOT before using SLFRF funds under Pathway One. Under Pathway One, recipients may:
ƒ Expand an existing project that is receiving funding from DOT ƒ Cover unexpected costs of an existing project receiving funding from DOT ƒ Expand the scope of a project, cover additional costs, or in other ways supplement DOT funding for projects that have not yet, but will receive funding from DOT by the December 31, 2024 obligation deadline

PATHWAY ONE - ELIGIBLE DOT PROGRAMS
Under Pathway One, recipients may use SLFRF funds for projects eligible only under the programs listed below. Recipients should refer to the relevant program guidance for DOT programs of interest for further information and detail about the types of projects eligible under those programs. 9 INFRA Grants
9 National Highway Performance Program
9 Bridge Investment Program
9 Surface Transportation Block Grant Program
9 Highway Safety Improvement Program
9 Congestion Mitigation and Air Quality
Improvement Program
9 Charging and Fueling Infrastructure Discretionary
Grant Program
9 Territorial and Puerto Rico Highway Program
9 National Highway Freight Program
9 Rural Surface Transportation Grant Program
9 Carbon Reduction Program
9 Promoting Resilient Operations for Transformative,
Efficient, and Cost-Saving Transportation Program
9 Tribal Transportation Program
9 Federal Lands Transportation Program
9 Federal Lands Access Program
9 Rebuilding American Infrastructure with
Sustainability and Equity Grant Program
9 Transportation Infrastructure Finance and
Innovation Act Program
9 Urbanized Formula Grants
9 Fixed Guideway Capital Investment Grant
9 Formula Grants for Rural Areas
9 State of Good Repair Grants
9 Grants for Buses and Bus Facilities
9 National Culvert Removal, Replacement, and
Restoration Grant Program
9 Bridge Replacement, Rehabilitation, Preservation,
Protection, and Construction Program
9 Activities to carry out metropolitan
transportation planning
9 Projects that further the completion of
a designated route of the Appalachian
Development Highway System
11 PATHWAY ONE – APPLICABLE REQUIREMENTS
Recipients using SLFRF funds for Surface Transportation projects under Pathway One must comply with the applicable requirements and limitations that apply to the project as administered by DOT , including the applicable requirements of titles 23, 40, and 49. Recipients are responsible for ensuring all requirements are met, as would typically be the case for a DOT-funded project in the absence of SLFRF funds.

Recipients using SLFRF funds for Surface Transportation projects under Pathway One are not required to contribute cost-sharing or matching funds alongside SLFRF funds. However, because SLFRF funds are federal funds, using SLFRF funds under Pathway One will still impact the cost-share requirements that apply to certain Surface Transportation projects due to differences in applicable non-federal cost share requirements across DOT projects and programs. In some cases, DOT programs are capped in the amount of federal funds that may be used in a project, regardless of whether those funds are provided by DOT or another federal source. This is true, for example, of the State of Good Repair Grant Formula Program, the Railcar Vehicle Replacement Program, and Grants for Buses and Bus Facilities Program. Recipients must consult with DOT to determine the applicable non- federal cost share requirements.

In addition, recipients must also comply with the following requirements:
• Limitation on Operating Expenses: Recipients using SLFRF funds for projects eligible for Urbanized Formula Grants, Fixed Guideway Capital Investment Grants, Formula Grants for Rural Areas, State of Good Repair Grants, or Grants for Buses and Bus Facilities may not use SLFRF funds for operating expenses of these projects. Operating expenses are those costs necessary to operate and manage a public transportation system, including costs such as driver salaries, the cost of fuel, and the cost of equipment and supplies having a useful life of less than one year. Operating expenses do not include preventive maintenance activities. The limitation on operating expenses does not apply to other Surface Transportation projects or to other uses of SLFRF funds, including under the revenue loss eligible use category. • State of Good Repair and Performance Targets: States that use SLFRF funds for Surface Transportation projects under Pathway One for programs eligible under title 23, or that otherwise are subject to the requirements of title 23, must either demonstrate progress in achieving a state of good repair under 23 U.S.C. 119(e) or support the achievement of one or more performance targets under 23 U.S.C. 150.

Treasury is delegating authority to DOT to oversee and administer compliance with certain requirements applicable to Surface Transportation projects within Pathway One. Recipients that direct SLFRF funds toward Surface Transportation projects under Pathway One are required to complete the existing DOT reporting requirements that already apply to projects funded by DOT and will be required to report certain information to Treasury. In all instances, recipients must consult with DOT prior to using SLFRF funds under Pathway One. 12 PATHWAY TWO - SURFACE TRANSPORTATION PROJECTS NOT RECEIVING FUNDING FROM DOT If recipients wish to pursue Surface Transportation projects that are not or will not be funded by DOT , they may pursue them under Pathway Two. Pathway Two projects will be administered by Treasury. Within this pathway, Treasury is articulating a streamlined framework for recipients to use up to $10 million in SLFRF funds per project on Surface Transportation projects that do not include DOT funding but meet certain parameters. Recipients may begin using SLFRF funds now for projects that meet the parameters of the streamlined framework, outlined below.

For recipients seeking to use SLFRF funds under Pathway Two for projects outside the parameters of the streamlined framework, recipients must submit a Notice of Intent to Treasury through the process described in the next section. Treasury will use the notices of intent, along with comments to the IFR, to design and implement the framework for approving these projects.

PATHWAY TWO - STREAMLINED FRAMEWORK
In the streamlined framework, recipients may use SLFRF funds for a Surface Transportation project not receiving funding from DOT to conduct a project that would be eligible under the RAISE grant program and that meets the criteria discussed below.2 For these projects, recipients are not required to submit an application to, or receive approval from, Treasury to conduct the project. For a RAISE-eligible project to qualify for the streamlined framework, it must satisfy the following criteria:
ƒ Contributes no more than $10 million SLFRF: The recipient’s contribution of SLFRF funding to the project under Pathway Two must not exceed $10 million. If a recipient has more than $10 million available for Surface Transportation and Title I projects, as discussed in the earlier example, then it could choose to fund multiple $10 million projects under Pathway Two. (It could also choose to fund one $10 million project under Pathway Two and use remaining funds available under the cap on funds for Title I projects. It could also choose to spend the remaining funds in another eligible use category where there is no cap on funds.) ƒ Limited to actions that typically do not have a significant environmental impact: The entire project scope must be limited to the set of actions or activities deemed by DOT as meeting the criteria for categorical exclusion as listed under 23 C.F.R. 771.116(c)(1)-(22), 771.117(c)(1)-(30), and 771.118(c)(1)-(16).

The recipient also must determine that those actions do not involve unusual circumstances, as described in 23 CFR 771.116(b), 771.117(b), and 771.118(b).

PATHWAY TWO– APPLICABLE REQUIREMENTS
Generally, the requirements of titles 23, 40, and 49 apply to recipients’ use of SLFRF funds under Pathway Two (both to projects under the streamlined framework and projects outside the streamlined framework).

Furthermore, restrictions that apply to projects regardless of the source of funds of the project apply as they would to any other project carried out by a recipient. For all of the applicable requirements under titles 23, 40, and 49 described below, the associated DOT regulations also apply, unless Treasury states otherwise.

Applicable portions of Titles 23, 40, and 49 generally include:
• Title 23: All parts of title 23
• Title 40: Chapters 141 and 145
• Title 49: Chapters 53, 55, 67, 471, and subtitle V
2 The eligibility of projects under the RAISE grant program is described in the “Notice of Funding Opportunity for the Department of Transportation’s National Infrastructure Investments (i.e., the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Grant Program) under the Infrastructure Investment and Jobs Act (“Bipartisan Infrastructure Law”), Amendment No. 2” (2023 RAISE Grant NOFO) under “3. Other” in “C. Eligibility Information, available at https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%20 2023%20NOFO%20Amendment2.pdf.
13 More specifically, applicable provisions include those relating to the following requirements:
• Underlying project requirements.
ƒ For example, if a recipient intends to use SLFRF funds under Pathway Two for an INFRA project that would be eligible under title 23 (as included by the RAISE program), then in addition to complying with the requirements established in the RAISE NOFO, the recipient must also comply with the project eligibility and execution requirements of the INFRA program in 23 U.S.C. 117. • Design, planning, construction, operation, maintenance, vehicle weight limit, and toll requirements with respect to particular projects.
• Location requirements for particular projects.
• Project approval requirements.
ƒ The approval requirements of titles 23, 40, and 49 of the U.S. Code apply to Pathway Two projects other than those that qualify for the streamlined framework described above. Treasury has determined not to require recipients to submit an application to, or receive approval from, Treasury to conduct a project that would be eligible under the RAISE grant program and meets the criteria of the streamlined framework of Pathway Two. Depending on the nature of the project, a recipient may still be required to obtain approval pursuant to a specific requirement under titles 23, 40 or 49 or the regulations adopted by DOT thereunder.
• Procurement requirements.
ƒ Recipients generally must satisfy the Buy America requirements of titles 23, 40, and 49 of the U.S. Code when funds are used on Surface Transportation projects under Pathway Two. However, recipients are not required to satisfy with the Buy America requirements in the case of Surface Transportation projects meeting the criteria for streamlined projects under Pathway Two. • Wage and labor requirements.
ƒ For example, the requirements of 23 U.S.C. 113, applying Davis-Bacon prevailing wage protections for highway projects, apply.
• Compliance requirements.
ƒ Compliance provisions apply to the extent that they require recipients to establish and maintain measures to oversee the eligible projects that they are undertaking. • Definitions of terms used in the provisions above.

Recipients should note that the RAISE program includes eligibility for projects with applicable requirements that are found outside of titles 23, 40, and 49. If a recipient would like to use SLFRF funds for a project eligible under the RAISE program but governed by laws outside titles 23, 40, and 49, the general principles described above for titles 23, 40, and 49 will apply, and recipients may ask Treasury for more detail about the specific requirements that apply to the particular project.

In addition to the applicable requirements of titles 23, 40, and 49 described above, recipients pursuing Surface Transportation projects under Pathway Two must also comply with the following requirements:
• Limitation on Operating Expenses: Recipients using SLFRF funds for projects eligible for Urbanized Formula Grants, Fixed Guideway Capital Investment Grants, Formula Grants for Rural Areas, State of Good Repair Grants, or Grants for Buses and Bus Facilities may not use SLFRF funds for operating expenses of these projects. Operating expenses are those costs necessary to operate and manage a public transportation system, 14 including costs such as driver salaries, the cost of fuel, and the cost of equipment and supplies having a useful life of less than one year. Operating expenses do not include preventive maintenance activities. The limitation on operating expenses does not apply to other Surface Transportation projects or to other uses of SLFRF funds, including under the revenue loss eligible use category. • State of Good Repair and Performance Targets: States that use SLFRF funds for Surface Transportation projects under Pathway Two for programs eligible under title 23, or that otherwise are subject to the requirements of title 23, must either demonstrate progress in achieving a state of good repair under 23 U.S.C. 119(e) or support the achievement of one or more performance targets under 23 U.S.C. 150. • National Environmental Policy Act (NEPA): Recipients using funds for Surface Transportation projects that qualify for the streamlined framework under Pathway Two are not required to conduct NEPA environmental reviews. However, projects supported with SLFRF funds may still be subject to NEPA review and other environmental statutes if they are also funded by other federal financial assistance programs or have certain federal licensing or registration requirements. In addition, a project that qualifies for the streamlined framework may still be subject to limitations or prohibitions as a result of the application of other environmental statutes. For projects under Pathway Two outside of the streamlined framework, recipients must submit a notice of intent as outlined above, and the requirements of NEPA and other environmental laws apply to these Surface Transportation projects
PATHWAY TWO - INAPPLICABLE REQUIREMENTS OF TITLES 23, 40, AND 49 Certain sections of the relevant chapters of titles 23, 40, and 49 of the U.S. Code do not apply to recipients’ use of SLFRF funds for Surface Transportation projects under Pathway Two. The following types of provisions generally do not apply:
• Grant size requirements
• Allocation requirements that require states to distribute funds received under certain programs to their local governments or to spend funds received under certain programs for the benefit of particular areas • Non-federal cost-share requirements
• Reporting requirements that would normally apply when DOT provides funding for a project • STIP/TIP Requirements
ƒ Generally, the STIP and TIP requirements do not apply to SLFRF funds used for Surface Transportation projects under Pathway Two. However, if a project receiving SLFRF funds under this framework is regionally significant and requires an action by the FHWA or the FTA, it will still be required to be included in the STIP or TIP . If a project receiving SLFRF funds under this framework is included in a TIP , for informational and conformity purposes, it also may be required to be included in the STIP .

PATHWAY TWO – PROJECTS OUTSIDE OF THE STREAMLINED APPROACH – NOTICE OF INTENT Recipients interested in financing Surface Transportation projects outside of the parameters of the streamlined approach in Pathway Two must submit a notice of intent to Treasury. The notice of intent must be submitted to [email protected] and is due 30 calendar days after the end of the IFR comment period. For an example of what an ideal notice of intent would include, please see the IFR section titled “Pathway Two: Notice of Intent for Projects Outside Streamlined Framework. ”
Treasury will evaluate the projects included in these notices of intent, along with comments to this IFR, to design and implement the framework for approving these types of projects. 15 PATHWAY THREE: USING SLFRF TO SATISFY NON-FEDERAL SHARE REQUIREMENTS FOR CERTAIN

SURFACE TRANSPORTATION PROJECTS
Under Pathway Three, recipients may use SLFRF funding to repay a TIFIA loan or to satisfy non-federal share requirements for projects eligible under the following programs:
9 INFRA Grants
9 Fixed Guideway Capital Investment Grants
9 Mega Grants
9 Projects eligible for credit assistance under the
TIFIA program
If a recipient uses SLFRF funds to satisfy the non-federal share requirements for projects eligible under the programs noted above, DOT will not treat the SLFRF funds as federal funds for this limited purpose and will credit SLFRF toward applicable cost-share or non-federal match requirements accordingly.

Recipients using SLFRF funds to satisfy non-federal cost share requirements under Pathway Three must consult with DOT to understand the applicable non-federal cost share requirements and how SLFRF funds may be used for these purposes. As with any use of funds to meet non-federal cost share requirements, the requirements associated with the project, as administered by DOT , continue to apply unless otherwise provided by DOT .

Recipients are required to comply with the existing DOT reporting requirements associated with the project for which they are using SLFRF funds for non-federal share requirements. Recipients will also be required to report certain information to Treasury.
16 Title i projects
Recipients may use SLFRF funds for Title I projects, which are the activities eligible under the CDBG and ICDBG programs, subject to certain requirements and limitations.

ELIGIBLE ACTIVITIES
Below is an illustrative list of eligible Title I projects:
9 Acquisition of certain real property for a public
purpose, subject to certain limitations
9 Disposition of certain property, subject to certain
limitations and rules
9 Acquisition, construction, reconstruction,
rehabilitation, or installation of public facilities
and improvements, clearance and remediation
activities
9 Public services, subject to the limitation
discussed below
9 Interim assistance where immediate action
is required for certain activities such as street
repair, and costs to complete an urban renewal
project under Title I
9 Relocation payments for relocated families,
businesses, nonprofit organizations, and farm
operations, under certain conditions
9 Payments to housing owners for loss of certain
rental income
9 Certain housing services
9 Acquisition, construction, reconstruction,
rehabilitation, or installation of privately owned
utilities
9 Rehabilitation and reconstruction of housing,
conversion of structures to housing, or
construction of certain housing
9 Homeownership assistance
9 Technical assistance to entities to increase
capacity to carry out CDBG-eligible projects
9 Assistance to certain institutions of higher
education to carry out eligible activities
9 Administration activities including general
management, oversight, and coordination
costs, fair housing activities, indirect costs, and
submission of applications for federal programs
9 Planning activities including the development
of plans and studies, policy planning, and
management and capacity building activities;
and
9 Satisfying the non-federal share requirements of
a federal financial assistance program in support
of activities that would be eligible under the
CDBG and ICDBG programs3
3 Recipients using SLFRF funds to satisfy non-federal match or cost-share requirements under the Title I eligible use category must analyze the projects and activities for which they intend to use SLFRF funds to meet non-federal share requirements to confirm that the project or activity is an eligible activity under section 105 of the Housing and Community Development Act and would comply with HUD’s statutory, regulatory, and other requirements apply to CDBG and ICDBG activities. 17 INELIGIBLE ACTIVITIES UNDER TITLE I
Specific activities are generally not eligible projects under CDBG or ICDBG and accordingly, are not available as eligible projects under the Title I eligible use category. While the following projects are not eligible uses of SLFRF funds as a Title I project, they still may be eligible uses of SLFRF funds under other SLFRF eligible use categories. Non-Tribal government recipients should reference HUD’s regulations at 24 CFR 570.207 and the “Activities Specified as Ineligible” section of HUD’s Guide to National Objectives and Eligible Activities for CDBG Entitlement Communities for more information. Tribal governments should reference HUD’s regulations at 24 CFR 1003.207. The activities that are generally ineligible under CDBG and ICDBG are the following:
 Buildings or portions thereof, used for the
general conduct of government
 General government expenses
 Political activities
 Purchase of equipment
 Operating and maintenance expenses
 New housing construction
 Income payments

TITLE I PROJECTS PROGRAM REQUIREMENTS
Recipients using SLFRF funds for Title I projects generally must comply with Title I requirements and the associated regulations. For example, project-level approval and certification requirements generally must be satisfied prior to recipients obligating and expending funds on Title I projects, which in the CDBG program, exist for projects subject to certain environmental reviews. On the other hand, recipients are not required to provide the Title I certification requirements that apply at the consolidated and annual planning level. In addition, recipients must comply with NEPA requirements, as implemented by Title I and the associated HUD regulations, and as adapted to the SLFRF program by Treasury.

Eligible activities must also satisfy other program requirements such as adherence to the Primary Objective and CDBG National Objectives, as described below, to be eligible under this eligible use category. Recipients should refer to and must comply with the following HUD regulations when determining eligible projects under this eligible use category: 24 C.F.R. 570.201 - 570.209 with respect to non-Tribal governments and 24 C.F.R. 1003.201 – 1003.209 with respect to Tribal governments. Recipients may refer to additional HUD guidance for information about the full list of projects eligible under CDBG, including guidance about complying with the National Objectives and other program requirements.

Where applicable, program requirements of the CDBG Entitlement Grants program will apply to non-Tribal government SLFRF recipients, and program requirements of the ICDBG Single Purpose Grants will apply to Tribal Government SLFRF recipients.

Project-level Approval and Certification Requirements
As noted above, when using SLFRF funds for Title I projects, recipients must satisfy project-level approval and certification requirements related to NEPA environmental review requirements.

Recipients are not required to submit certifications or obtain Treasury approval for Title I projects that satisfy either of the criteria below. Additionally, they may begin using SLFRF funds for the project right away:
9 Exempt Activities: as
contemplated by 24 FR 58.34(a).
9 Categorically Excluded Activities Not Subject to 24 CFR

58.5: as contemplated by 24 CFR 58.35(b), provided that the circumstances described in 24 CFR 58.35(c) are not present. 18 For exempt projects, recipients must document in writing that the project meets the conditions of a specified exemption. For categorically excluded projects, recipients are required to maintain an Environmental Review Record, which is a well-organized written record of the process and determinations made with respect to the categorical exclusion. Treasury will provide additional information on the Environmental Review Record and certification requirements following issuance of the IFR.

For recipients using SLFRF funds for Title I projects that do not meet the criteria above, recipients must comply with the environmental review requirements set forth in the HUD statute and regulations, submit a certification to Treasury, and receive approval.

Other Program Requirements
When using SLFRF funds for Title I projects, recipients must comply with the following requirements that apply to the total amount of SLFRF used towards Title I projects, including:

For all SLFRF recipients:
9 The Primary Objective: SLFRF recipients must
direct at least 70% of SLFRF funds used for Title I
projects to projects that principally benefit low-
and moderate-income persons.
9 Public Services Cap: Not more than 15% of
SLFRF funds used for Title I projects may be spent
under the “public services” category of eligible
activities.
9 Planning and Administrative Costs Cap:

Not more than 20% of SLFRF funds used for
Title I projects may be spent on planning and
administrative costs.
9 BEAD Program Requirements: Requirements of
the Broadband Equity, Access, and Deployment
(BEAD) program apply as outlined in section 60102
of the Infrastructure Investment and Jobs Act.4
For non-Tribal SLFRF recipients only:
9 CDBG National Objectives: Any project
undertaken by a non-Tribal SLFRF recipient must
satisfy at least one CDBG National Objective.
9 Labor Standards Requirements: Prevailing
wage rate requirements in accordance with
the Davis-Bacon Act and other labor standards
applied by HUD to construction work under Title
I apply.5
SLFRF recipients that are also CDBG grantees (but not ICDBG grantees) should note that HUD program requirements related to timely expenditures of CDBG funds continue to apply to their CDBG funds. Treasury encourages SLFRF recipients that are also CDBG grantees to continue to spend their CDBG funds in compliance with such requirements.

Treasury is not delegating authority to HUD to oversee or administer Title I projects. Accordingly, recipients will report projects only to Treasury.
4 For more guidance, see Section 1.2 of NTIA’s BEAD Program “Letter of Intent and Initial Planning Funding Grant Application Guidance,” available at https://broadbandusa.ntia.doc.gov/sites/default/files/2022-05/BEAD%20Planning%20Application%20Guidance.pdf. 5 Non-Tribal government recipients must comply with these requirements in accordance with HUD regulations for Title I labor standards requirements at 24 CFR 570.603 and may reference Chapter 16.1.1 of HUD's “Basically CDBG for Entitlements” Guide, HUD’s “Davis-Bacon and Labor Standards: Agency/Contractor Guide,” and HUD’s “Davis-Bacon and Labor Standards: Contractor Guide Addendum.” Such requirements do not apply to Tribal government recipients of SLFRF. 19 Finally, many of the uses in the Title I projects eligible use category are also eligible in the public health and negative economic impacts eligible use category where there is no cap on the amount of SLFRF funds that may be directed toward an eligible use. Recipients seeking to use SLFRF funds for Title I projects may consider the relevant eligible uses and available funding levels to determine which eligible use category best supports their community’s needs. As noted above, this IFR did not alter the public health and negative economic impact eligible use category. Please see the 2022 final rule for more information.

Program Administration
Generally, recipients using SLFRF funds for the new eligible uses added by the 2023 CAA must comply with the general rules and restrictions that apply to the SLFRF program. For example, the restrictions on use set forth in the final rule generally apply to the new eligible uses described in the IFR.

The IFR describes program administration requirements, including timeline for use of funds, use of funds to meet non-federal match or cost-share requirements, and reporting on use of funds.

TIMELINE FOR USE OF FUNDS
The IFR was submitted for publication in August 2023 and will become effective when published. Recipients may use SLFRF funds for these new eligible uses for costs incurred beginning December 29, 2022. Consistent with the existing eligible uses discussed in the 2022 final rule, recipients must obligate SLFRF funds for these new eligible uses by December 31, 2024. Recipients must expend SLFRF funds obligated to provide emergency relief from natural disasters by December 31, 2026. Recipients must expend SLFRF funds obligated for Surface Transportation projects and Title I projects by September 30, 2026.

NON-FEDERAL MATCH OR COST-SHARE REQUIREMENTS
Under the Surface Transportation projects eligible use category, recipients may use SLFRF funds to satisfy non- federal cost share requirements for certain programs under Pathway Three. Under the Title I projects eligible use category, recipients may use SLFRF funds to satisfy the non-federal share requirements of a federal financial assistance program in support of activities that would be eligible under the CDBG and ICDBG programs.

The 2023 CAA did not alter the existing eligible uses of SLFRF funds. Recipients may still use SLFRF funds in accordance with the 2022 final rule. As described in the 2022 final rule, SLFRF funds available under the “revenue loss” eligible use category generally still may be used to meet the non-federal cost-share or matching requirements of other federal programs. However, note that SLFRF funds under the revenue loss eligible use category may not be used as the nonfederal share for purposes of a state’s Medicaid and CHIP programs because the Office of Management and Budget has approved a waiver as requested by the Centers for Medicare & Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. SLFRF funds beyond those available under the revenue loss eligible use category may not be used to meet the non-federal match or cost-share requirements of other federal programs, other than as specifically provided for by statute.

REPORTING, COMPLIANCE & RECOUPMENT
Recipients are required to comply with Treasury’s Compliance and Reporting Guidance, which includes submitting mandatory periodic reports to Treasury. Recipients must maintain records supporting their determination that projects meet relevant requirements, and recipients should be prepared to attest to having completed these determinations as part of their ongoing reporting to Treasury. Treasury will update the Compliance and Reporting Guidance with additional information regarding the IFR.

This document has been submitted to the Office of the Federal Register (OFR) for publication and is currently pending placement on public display at the OFR and publication in the Federal Register. The document may vary slightly from the published document if minor editorial changes have been made during the OFR review process. Upon publication in the Federal Register, the regulation can be found at www.federalregister.gov, www.regulations.gov, and at www.treasury.gov. The document published in the Federal Register is the official document.

1 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: Effective date: The provisions in this final rule are effective April 1, 2022.

FOR FURTHER INFORMATION CONTACT:

Katharine Richards, Senior Advisor, Office of Recovery Programs, Department of the Treasury, (844) 529– 9527
SUPPLEMENTARY INFORMATION:

2 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 governments2 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 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

1 Pub. L. 117–2. https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf. 2 Throughout this Supplementary Information, Treasury uses “state, local, and Tribal governments” or “recipients” to refer generally to governments receiving SLFRF funds; this includes states, territories, Tribal governments, counties, metropolitan cities, and nonentitlement units of local government. 3 86 Fed. Reg. 26786 (May 17, 2021).
3 reaching millions of children as well.4 However, the disease continues to present an imminent threat to public health, especially among unvaccinated individuals. As the Delta variant spread across the country this summer and fall, the United States faced another severe wave of cases, deaths, and strain on the healthcare system, with the risk of hospitalization and mortality exponentially greater to unvaccinated Americans. COVID-19 has now infected over 50 million and killed over 800,000 Americans since January 2020; tens of thousands of Americans continue to be infected each day.5 Even as the nation recovers, new and emerging COVID-19 variants may continue to pose threats to both public health and the economy. Moving forward, state, local, and Tribal governments will continue to play a major role in responding through vaccination campaigns, testing, and other services.

The economic recovery similarly has made tremendous progress but faces continued risks from the disease and the disruptions it has caused. In the early months of the pandemic, the United States experienced the sharpest economic downturn on record, with unemployment spiking to 14.8 percent in April 2020.6 The economy has gradually added back jobs, with growth accelerating in the first half of 2021.7 However, as the Delta variant spread, the intensified health risks and renewed disruptions slowed growth, demonstrating the continued risks from the virus.

By fall 2021, the economy had exceeded its pre-pandemic size8 and unemployment had fallen below 5 percent,9 but despite this progress, too many Americans remain unemployed, out of the

4 Centers for Disease Control and Prevention, COVID Data Tracker: COVID -19 Vaccinations in the United States, https://covid.cdc.gov/covid-data-tracker/#vaccinations (last visited December 31, 2021). 5 Centers for Disease Control and Prevention, COVID Data Tracker, http://www.covid.cdc.gov/covid -data- tracker/#datatracker-home (last visited December 7, 2021). 6 U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE], retrieve d from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UNRATE (last visited December 7, 2021). 7 Id.
8 U.S. Bureau of Economic Analysis, Real Gross Domestic Product [GDPC1], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/GDPC1 (last visited December 7, 2021). 9 U.S. Bureau of Labor Statistics, supra note 5.
4 labor force, or unable to pay their bills, with this pain particularly acute among lower-income Americans and communities of color. Again, moving forward, state, local, and Tribal governments will remain on the frontlines of the economic response and rebuilding a stronger economy in the aftermath of the pandemic.

However, as state, local, and Tribal governments continue to face substantial needs to respond to public health and economic conditions, they have also experienced severe impacts from the pandemic and resulting recession. State, local, and Tribal governments cut over 1.5 million jobs in the early months of the pandemic amid sharp declines in revenue and remain over 950,000 jobs below their pre-pandemic levels.10 As the Great Recession demonstrated, austerity among state, local, and Tribal governments can hamper overall economic growth and severely curtail the ability of governments to serve their constituents.

Recognizing these imperatives, the SLFRF program provides vital resources for state, local, and Tribal governments to respond to the pandemic and its economic effects and to replace revenue lost due to the public health emergency, preventing cuts to government services.

Specifically, the ARPA provides that SLFRF funds11 may be used:
a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;

10 U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001] and All Employees, Local Government [CES9093000001], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CES9092000001 and https://fred.stlouisfed.org/series/CES9093000001 (last visited December 7, 2021).
11 The ARPA adds section 602 of the Social Security Act, which creates the State Fiscal Recovery Fund, and section 603 of the Social Security Act, which creates the Local Fiscal Recovery Fund (together, SLFRF). Sections 602 and 603 contain substantially similar eligible uses; the primary difference between the two sections is that section 602 establishes a fund for states, territories, and Tribal governments and section 603 establishes a fund for metropolitan cities, nonentitlement units of local government, and counties. 5 b) To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers; c) For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
d) To make necessary investments in water, sewer, or broadband infrastructure.

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, 6 local, and Tribal governments as they use these funds to make transformative investments in their communities. Finally, with so many pressing and effective ways to use SLFRF funds, there is no excuse for waste, fraud, or abuse of these funds.

Treasury received over 1,500 comments spanning nearly all aspects of the interim final rule. The final rule considers and responds to comments, provides clarification to many aspects of the interim final rule, and makes several changes to eligible uses under the program, summarized immediately below.

Executive Summary of Major Changes and Clarifications

The final rule provides broader flexibility and greater simplicity in the program, in response to public comments. Among other clarifications and changes, the final rule provides for the following:
• Public Health and Negative Economic Impacts: In addition to programs and services, the final rule clarifies that recipients may use funds for capital expenditures that support an eligible COVID-19 public health or economic response. For example, recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects consistent with the requirements in this final rule and the Supplementary Information.

In addition, the final rule presumes that an expanded set of households and communities are “impacted” or “disproportionately impacted” by the pandemic, thereby allowing recipients to provide responses to a broad set of households and entities without requiring additional analysis. Further, the final rule provides a broader set of enumerated eligible uses available for these communities as part of COVID-19 public health and economic response, including making affordable housing, childcare, and early learning 7 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 $10 million, 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.

8 Structure of the Supplementary Information

In addition to this Introduction, this Supplementary Information is organized into four sections: 1) Eligible Uses, 2) Restrictions on Use, 3) Program Administration Provisions, and 4) Regulatory Analyses.

The Eligible Uses section describes the standards to determine eligible uses of funds in each of the four eligible use categories:
1) Responding to the public health and negative economic impacts of the pandemic (which includes several sub-categories)
2) Providing premium pay to essential workers
3) Providing government services to the extent of revenue loss due to the pandemic, and 4) Making necessary investments in water, sewer, and broadband infrastructure.

Each eligible use category has separate and distinct standards for assessing whether a use of funds is eligible. Standards, restrictions, or other provisions in one eligible use category do not apply to the others. Therefore, recipients should first determine which eligible use category a potential use of funds fits within, then assess whether the potential use of funds meets the eligibility standard or criteria for that category. In the case of uses to respond to the public health and negative economic impacts of the pandemic, recipients should also determine which sub- category the eligible use fits within (i.e., public health, assistance to households, assistance to small businesses, assistance to nonprofits, aid to impacted industries, or public sector capacity and workforce), then assess whether the potential use of funds meets the eligibility standard for that sub-category. Treasury does not pre-approve uses of funds; recipients are advised to review the final rule and may pursue eligible projects under it. 9 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 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 10 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 11 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.

12 II. ELIGIBLE USES

A. PUBLIC HEALTH AND NEGATIVE ECONOMIC IMPACTS
Background

Since the first case of COVID-19 was discovered in the United States in January 2020, the disease has infected over 50 million and killed over 800,000 Americans.12 The disease – and necessary measures to respond – have had an immense public health and economic impact on millions of Americans across many areas of life, as detailed below in the respective sections on Public Health and Negative Economic Impacts. Since the release of the interim final rule in May 2021, the country has made major progress in fighting the disease and rebuilding the economy but faces continued risks, as illustrated by the spread of the Delta variant and the resulting slowdown in the economic recovery. The SLFRF program, and Treasury’s interim final rule, provide substantial flexibility to recipients to respond to pandemic impacts in their local community; this flexibility is designed to help state, local, and Tribal governments adapt to the evolving public health emergency and tailor their response as needs evolve and to the particular local needs of their communities.

Indeed, state, local, and Tribal governments face continued needs to respond at scale to the public health emergency. This includes continued public health efforts to slow the spread of the disease, to increase vaccination rates and provide vaccinations to new populations as they become eligible, to protect individuals living in congregate facilities, and to address the broader impacts of the pandemic on public health. Similarly, while a strong economic recovery is underway, the economy remains 3.9 million jobs below its pre-pandemic level, pointing to the

12 Centers for Disease Control and Prevention, COVID Data Tracker, http://www.covid.cdc.gov/covid -data- tracker/#datatracker-home (last visited December 31, 2021). 13 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 underserved14 communities, that amplified and exacerbated the impacts of the pandemic, also present continued barriers to full and equitable recovery.

As state, local, and Tribal governments work to meet the public health and economic needs of their communities, these governments are also confronting the need to rebuild their own capacity. Facing severe budget challenges during the pandemic, many state, local, and Tribal governments have been forced to make cuts to services or their workforces, including cutting over 1.5 million jobs from February to May 2020, or delay critical investments. As of fall 2021, state, local, and Tribal government employment remained over 950,000 jobs below pre- pandemic levels.15 In the recovery from the Great Recession, cuts to state, local, and Tribal governments became a meaningful drag on economic growth for several years, and the SLFRF program provides the resources needed to re-invest in vital public services and workers to avoid this outcome.16

13 U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS] https://fred.stlouisfed.org/series/PAYEMS (last visited December 7, 2021). 14 Treasury uses “underserved” to refer to populations sharing a particular characteristic, as well as geograp hic communities, that have been systematically denied a full opportunity to participate in aspects of economic, social, and civic life. In the interim final rule, Treasury generally used the term “disadvantaged” to refer to these same populations and communities.
15 U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001] and All Employees, Local Government [CES9093000001], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CES9092000001 and https://fred.stlouisfed.org/series/CES9093000001 (last visited December 7, 2021).
16 Tracy Gordon, State and Local Budgets and the Great Recession, Brookings Institution (Dec. 31, 2012), http://www.brookings.edu/articles/state-and-local-budgets-and-the-great-recession. 14 1. GENERAL PROVISIONS: STRUCTURE AND STANDARDS
Background: Sections 602(c)(1)(A) and 603(c)(1)(A) of the Social Security Act establish that recipients may use funds “to respond to the public health emergency with respect to COVID-19 or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.” The interim final rule established three categories within this eligible use: 1) public health responses for those impacted by the pandemic, including the general public; 2) responses to the negative economic impacts that were experienced by those impacted as a result of the pandemic; and 3) additional services, either as a public health response or a response to the negative economic impacts of the pandemic, for disproportionately impacted communities.

The interim final rule established the method to determine which specific programs or services may be eligible to respond to the public health emergency or to respond to the negative economic impacts of the public health emergency within this framework. The interim final rule included multiple enumerated uses that are eligible within each of these categories when provided to eligible populations, including populations that the interim final rule presumed to have been impacted (in the case of public health responses and responses to negative economic impacts) or disproportionately impacted (in the case of disproportionately impacted communities). Finally, the interim final rule also allowed recipients to designate additional individuals or classes as impacted or disproportionately impacted. The standards for each of these criteria under the interim final rule are discussed below.

To assess whether a program or service would be eligible to respond to the public health emergency or its negative economic impacts, the interim final rule stated that, “the recipient [is required] to, first, identify a need or negative impact of the COVID–19 public health emergency 15 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

17 In some cases, a use may be permissible under another eligible use category even if it falls outside the scope of section (c)(1)(A) of section 602 and 603 of the Social Security Act. 16 of harm experienced; uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses.” Throughout this final rule, Treasury refers to households, communities, small businesses, nonprofits, and industries that experienced public health or negative economic impacts of the pandemic as “impacted.” The first section in the interim final rule under this eligible use category included public health responses for these impacted classes. The second category in the interim final rule under this eligible use category included responses to the negative economic impacts that were experienced by these impacted classes as a result of the pandemic.

The interim final rule further recognized that certain populations have experienced disproportionate health or negative economic impacts during the pandemic, as pre-existing disparities in these communities amplified the impacts of the pandemic. For example, the interim final rule recognized that the negative economic effects of the pandemic were particularly pronounced among lower-income families, who were more likely to experience income loss and more likely to have a job that required in-person work. The interim final rule recognized the role of pre-existing social vulnerabilities and disparities in driving the disparate health and economic outcomes and presumed that programs designed to address these health or economic disparities are responsive to the public health or negative economic impacts of the COVID-19 public health emergency, when provided in disproportionately impacted communities. In addition to identifying certain populations and communities 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 17 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. 18 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 19 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 20 by individuals, households, small businesses, nonprofits, or impacted industries (together “beneficiaries”).18 This restructuring is intended to make the rule easier to navigate and to implement, including any criteria or conditions on particular uses of funds.

The reorganization of the public health and negative economic impacts section of the final rule is also intended to clarify the enumerated eligible uses described in the interim final rule. The reorganization itself is not intended to change the scope of the enumerated uses that were included in the interim final rule or that were allowable under the interim final rule. In some cases, specific enumerated uses are being altered, and those changes are discussed 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.

18 Note that small businesses, nonprofits, and industries may also function as subrecipients. For additional information on these distinctions see section Distinguishing Subrecipients versus Beneficiaries. 21 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 22 some impacts, for example impacts of COVID-19 itself that are addressed by providing prevention and mitigation services, such a class could reasonably include the general public.

Second, the program, service, or other intervention must address or respond to the identified impact or harm. The final rule maintains the interim final rule requirement that eligible uses under this category must be in response to the disease itself or other public health harms that it caused.19
Responses must be reasonably designed to benefit the individual or class that experienced the public health impact or harm. Uses of funds should be assessed based on their responsiveness to their intended beneficiaries and the ability of the response to address the impact or harm experienced by those beneficiaries.

Responses must also be related and reasonably proportional to the extent and type of public health impact or harm experienced. Uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses.

Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced. In evaluating whether a use is reasonably proportional, recipients should consider relevant factors about the harm identified and the response. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the response.

19 In designing an intervention to mitigate COVID-19, the recipient should consider guidance from public health authorities, particularly the Centers for Disease Control and Prevention (CDC), in assessing appropriate COVID -19 mitigation and prevention strategies (see Centers for Disease Control and Prevention, COVID-19, https://www.cdc.gov/coronavirus/2019-ncov/index.html). A program or service that imposes conditions on participation in or acceptance of the service that would undermine efforts to stop the spread of COVID -19 or discourage compliance with practices in line with CDC guidance for stopping the spread of COVID-19 is not a permissible use of funds.
23 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 24 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 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 25 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 26 responsiveness to their intended beneficiary and the ability of the response to address the impact or harm experienced by that beneficiary.20
Responses must also be related and reasonably proportional to the extent and type of harm experienced; uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses.21 Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that experienced severe harm and in a much larger amount to a group that experienced relatively little harm. In evaluating whether a use is reasonably proportional, recipients should consider relevant factors about the harm identified and the response. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the response.

Finally, recipients should be aware of the distinction between beneficiaries of funds and subrecipients; a recipient may provide services to beneficiaries through subrecipients that did not experience a negative economic impact, see section Distinguishing Subrecipients versus Beneficiaries. That is, a recipient may award SLFRF funds to an entity that did not experience a negative economic impact in order to implement a program or provide a service to beneficiaries on its behalf. Such transfers, when implementing a public health or negative economic impact

20 For example, expenses such as excessive compensation to employees or expenses which have already been reimbursed through another federal program, are not reasonably designed to address a negative economic impa ct to a beneficiary.
21 For example, a program or service that imposes conditions on participation in or acceptance of the service that would undermine efforts to stop the spread of COVID-19 or discourage compliance with practices in line with CDC guidance for stopping the spread of COVID-19 is not a permissible use of funds.

27 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.

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 28 need to assess whether the beneficiaries experienced a negative economic impact and whether the eligible use responds to that impact, consistent with the two-part framework described above; the organization carrying out the eligible use does not need to have experienced a negative economic impact if it is serving as the vehicle for reaching the beneficiaries. When making determinations about how to implement a program, recipients should consider whether that method of program implementation is an effective and efficient method to implement the program and do so in accordance with the Uniform Guidance provisions that govern procurements and sub-granting of federal funds, as applicable.

As noted above, recipients should analyze eligible uses based on the beneficiary of the assistance or the entity that experienced a negative economic impact. Assistance to a small business or to an impacted industry must respond to a negative economic impact experienced by that small business or industry. Recipients may not provide assistance to small businesses or impacted industries that did not experience a negative economic impact, although recipients can identify negative economic impacts for classes, rather than individual businesses, and may also presume that small businesses in certain areas experienced impacts; see section General Provisions: Structure and Standards and section Assistance to Small Businesses for details.

Several examples illustrate the application of these concepts. For example, a recipient could provide assistance to households via a contract with a business to create subsidized jobs for the long-term unemployed; in this case the business is a subrecipient and need not have experienced a negative economic impact, but the recipient would need to identify a specific connection between the assistance provided and addressing the negative economic impact experienced by the unemployed households. The recipient could, for instance, document the subsidized jobs created under the contract and their reservation for long-term unemployed 29 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 30 impacted communities. Under the interim final rule, recipients were allowed to presume that families residing in QCTs or receiving services provided by Tribal governments were disproportionately impacted by the pandemic.

Definition of Low- and Moderate-Income
Public Comment: As noted earlier, many commenters sought a definition for “low- and moderate-income” to provide recipients greater clarity on which specific households could be presumed to be impacted by the pandemic.

Treasury Response: The final rule maintains the presumptions identified in the interim final rule and defines low- and moderate-income for the purposes of determining which households and populations recipients may presume to have been impacted. To simplify the administration of this presumption, the final rule adopts a definition of low- and moderate- income based on thresholds established and used in other federal programs.

Definitions. The final rule defines a household as low income if it has (i) income at or below 185 percent of the Federal Poverty Guidelines (FPG) for the size of its household based on the most recently published poverty guidelines by the Department of Health and Human Services (HHS) or (ii) income at or below 40 percent of the Area Median Income (AMI) for its county and size of household based on the most recently published data by the Department of Housing and Urban Development (HUD).22
The final rule defines a household as moderate income if it has (i) income at or below 300 percent of the FPG for the size of its household based on the most recently published

22 AMI is also often referred to as median family income for the area. Since AMI is synonymous with this term and used more generally, the final rule refers to AMI.
31 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 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

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. 32 services. See section General Provisions: Standards for Identifying Other Eligible Populations for details on applicable standards.

Applicable levels. For reference, the FPG is commonly referred to as the federal poverty level (FPL) and is related to—although distinct from—the U.S. Census Bureau’s poverty threshold. The final rule uses the FPG when referring specifically to the HHS guidelines, as these are the quantitative metrics used for determining low- and moderate-income households.

The FPG by household size for 2021 is included in the table below. Recipients should refer to HHS Poverty Guidelines for this information, which is updated annually and available on the HHS website.24 For calculating the thresholds of 40 percent and 65 percent of AMI, recipients should refer to the annual HUD Section 8 50 percent income limits by county and household size published by HUD and available on the HUD website; in particular, recipients should calculate the 40 percent threshold as 0.8 times the 50 percent income limit, and recipients should calculate the 65 percent threshold as 1.3 times the 50 percent income limit.25 Finally, for median income of Census Tracts and other geographic areas, recipients should refer to the most recent American Community Survey 5-year estimates available through the Census website.26

24 U.S. Department of Health and Human Service, HHS Poverty Guidelines for 2021, available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines. 25 U.S. Department of Housing and Urban Development, FY 2021 Section 8 Income Limits, available athttps://www.huduser.gov/portal/datasets/il/il21/Section8-FY21.xlsx. Recipients may refer to the list of counties (and New England towns) identified by state and metropolitan area for identifying the appropriate area. U.S.

Department of Housing and Urban Development, FY 2021 List of Counties (and New England Towns) Identified by State and Metropolitan Area, available at https://www.huduser.gov/portal/datasets/il/il21/area-definitions-FY21.pdf. 26 The U.S. Census Bureau provides an interactive map: U.S. Census Bureau, Median Household Income State Selection Map, available at
https://data.census.gov/cedsci/map?q=Median%20Household%20Income&g=0100000US%2404000%24001&tid= ACSST5Y2019.S1901&cid=S1901_C01_012E&vintage=2019. The U.S. Ce nsus Bureau also provides an interactive table: U.S. Census Bureau, Median Household Income In The Past 12 Months (In 2019 Inflation - Adjusted Dollars), available at
https://data.census.gov/cedsci/table?q=b19013&tid=ACSDT5Y2019.B19013&hidePreview=true. 33 2021 Federal Poverty Guidelines
Household size 48 Contiguous States
and the District of
Columbia
Alaska Hawaii
1 $12,880 $16,090 $14,820
2 $17,420 $21,770 $20,040
3 $21,960 $27,450 $25,260
4 $26,500 $33,130 $30,480
5 $31,040 $38,810 $35,700
6 $35,580 $44,490 $40.920
7 $40,120 $50,170 $46,140
8 $44,660 $55,850 $51,360
For families/households with more than 8 persons, add the following amounts for each additional person:
48 Contiguous States and the District of Columbia: $4,540 Alaska: $5,680
Hawaii: $5,220

Source: “HHS Poverty Guidelines for 2021,” available at https://aspe.hhs.gov/topics/poverty- economic-mobility/poverty-guidelines.

Rationale. In defining low income, the final rule uses both the FPG and AMI to account for national trends and regional differences. The metric of 185 percent of FPG aligns with some other programs; for instance, under the National School Lunch Program, students with household incomes under 185 percent of FPG qualify for free or reduced-price lunch, and schools often use eligibility for free or reduced-price lunch as an indicator of low-income status under Title 1-A of the Elementary and Secondary Education Act. Eligibility for other programs, such as the Federal Communications Commission’s e-Rate program and the Special Supplemental Nutrition Program for Women, Infants and Children employ this metric as well. In addition, 185 percent of the FPG for a family of four is $49,025, which is approximately the wage earnings for a two- earner household in which both earners receive the median wage in occupations, such as waiters 34 and waitresses and hotel clerks, that were heavily impacted by COVID-19.27 This measure is targeted toward those at the bottom of the income distribution and thus helps to promote use of SLFRF funds towards populations with the greatest needs. At the same time, with approximately one-quarter of Americans below 185 percent of the poverty threshold, this approach is broad enough to facilitate use of SLFRF funds across many jurisdictions.28 Because regions have different cost and income levels, this definition also allows for upward adjustment based on AMI for those regions where 40 percent of AMI exceeds 185 percent of FPG. The metric of 40 percent of AMI is based on the midpoint of values often used to designate certain categories of low-income households; specifically, it is the midpoint of the 30 percent income limit and the 50 percent income limit 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

27 See U.S. Bureau of Labor Statistics, Occupational Employment and Wage Estimates, https://www.bls.gov/oes/current/oes_nat.htm (last visited December 7, 2021). 28 U.S. Census Bureau, Poverty Status by State, https://www.census.gov/data/tables/time -series/demo/income- poverty/cps-pov/pov-46.html (last visited December 7, 2021). 29 For instance, Melissa Kearney et al. (2013) cap the “struggling lower middle -income class” at 250 percent of the federal poverty level, while Isabel Sawhill and Edward Rodrigue (2015) de fine the “middle class” as those with incomes of at least 300 percent of the poverty line. Melissa Kearney et al., “A Dozen Facts about America’s Struggling Lower-Middle Class,” The Hamilton Project (December 2013), https://www.hamiltonproject.org/assets/legacy/files/downloads_and_links/THP_12LowIncomeFacts_Final.pdf; Isabel Sawhill and Edward Rodrigue, “An Agenda for Reducing Poverty and Improving Opportunity,” Brookings Institution, https://www.brookings.edu/wp-content/uploads/2016/07/Sawhill_FINAL.pdf. 30 Data on median annual wages from: U.S. Bureau of Labor and Statistics, Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/current/oes_nat.htm (last visited December 7, 2021). 35 above the poverty line, often lack economic security.31 Treasury determined the AMI threshold for moderate income by maintaining the same ratio of FPG multiplier to AMI multiplier as in the definition of low income. This anchors the threshold to the existing definitions of moderate income from the literature while taking into account geographical variation in income and expenses in the same manner as the definition of low income.

Eligibility Presumptions
Public Comment: Many commenters believed that a broader range of groups should be considered presumptively impacted and disproportionately impacted, arguing that many households had been affected by the pandemic and that broader presumed eligibility would help recipients provide assistance quickly and effectively.

Treasury also received many comments on the presumption that families living in QCTs or receiving services from Tribal governments were disproportionately impacted by the pandemic. While many commenters supported the interim final rule's recognition of disproportionate impacts of the pandemic on low-income communities, many commenters disagreed with treating QCTs as the only presumed eligible group of disproportionately impacted households, apart from households served by Tribal governments. While acknowledging a potential increase in administrative burden, commenters recommended that Treasury presume other households or geographic areas, in addition to QCTs, were disproportionately impacted; suggestions included all low- and moderate-income households, geographic areas designated as

31 For instance, households earning between 200 and 300 percent of the FPG have significantly higher rates of food and housing insecurity than those earning above 300 percent of the FPG. Table 1, Kyle J. Caswell and Stephen Zuckerman, Food Insecurity, Housing Hardship, and Medical Care Utilization, Urban Institute (June 2018), https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghardship_medicalcareu tilization_finalized.pdf.
36 Opportunity Zones, Difficult Development Areas (DDAs), areas with a certain amount of Real Estate Advantage Program (REAP) recipients, or use of eligibility criteria from the Community Reinvestment Act. One commenter generally recommended that a clearer definition of “disproportionately impacted” should be provided and that any definition should include communities of color and people of limited means. Another recommended specific eligibility for people that had recently interacted with the criminal justice system. Many commenters representing Tribal governments and groups recommended a presumption of eligibility for all Tribal uses of funds, clarification that off reservation members remained eligible, and broad flexibility on use of funds.

Additionally, commenters noted that some areas are technically eligible to be QCTs but fall short because of the aggregate population of eligible tracts. One commenter noted that these areas should be considered the same as QCTs for the purpose of SLFRF funds. Some commenters argued that rural counties typically have few QCTs despite high levels of poverty and disruption caused by the COVID-19 pandemic. Other rural commenters recommended that the designation be by county rather than at a more granular level, arguing that the QCT designation is biased towards urban areas and understates the harm done to rural America. Many commenters representing Tribal governments supported the presumption that services provided by Tribal governments respond to disproportionate impacts.

Treasury Response:

Summary: While households residing in QCTs or served by Tribal governments were presumed to be disproportionately impacted, Treasury emphasizes that under the interim final rule recipients could also identify other households, populations, or geographic areas that were disproportionately impacted by the pandemic and provide services to respond. 37 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 38 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 disproportionate, or meaningfully more severe, impact from the pandemic. As discussed in the interim final rule, pre-existing disparities in health and economic outcomes magnified the impact of the COVID-19 public health emergency on certain households and communities. As with the interim final rule, under the final rule recipients may presume that households residing in QCTs or receiving services provided by Tribal governments were disproportionately impacted by the pandemic. In addition, under the final rule recipients may presume that low-income households were disproportionately impacted by the pandemic.

Finally, under the final rule recipients may also presume that households residing in the U.S. territories or receiving services from territorial governments were disproportionately impacted.

Treasury notes that households presumed to be disproportionately impacted would also be presumptively impacted, as these households have not only experienced pandemic impacts but have experienced disproportionate pandemic impacts; as a result, these households are presumptively eligible for responsive services for both impacted and disproportionately impacted households.

Many different geographic, income-based, or poverty-based presumptions could be used to designate disproportionately impacted populations. The combination of permitting recipients to use QCTs, low-income households, and services provided by Tribal or territorial governments as presumptions balances these varying methods. Specifically, QCTs are a commonly used designation of geographic areas based on low incomes or high poverty rates of households in the community; for recipients providing geographically targeted services, QCTs may provide a 39 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

32 For instance, the American Community Survey does not include all territories. U.S. Census Bur eau, Areas Published, https://www.census.gov/programs-surveys/acs/geography-acs/areas-published.html (last visited November 9, 2021).
33 U.S. Department of Health and Human Services, supra note 19. 34 For instance, data from the American Community Survey is based on geographical location rather than Tribal membership. U.S. Census Bureau, My Tribal Area, https://www.census.gov/Tribal/Tribal_glossary.php. 40 preexisting health and economic disparities in the territories amplified the impact of the pandemic on these communities.35

Categorical Eligibility
Public Comment: Several commenters suggested that the final rule permit recipients to rely on a beneficiary’s eligibility for other federal benefits programs as an easily administrable proxy for identifying a group or population that experienced a negative economic impact as a result of the COVID-19 public health emergency (i.e., categorical eligibility). In other words, a recipient would determine that individuals or households are eligible for an SLFRF-funded program based on the individual or household’s eligibility in another program, typically another federal benefit program. Commenters noted that categorical eligibility is a common policy in program administration that can significantly ease administrative burden on both program administrators and beneficiaries.

Treasury Response: Treasury agrees that allowing recipients to identify impacted and disproportionately impacted beneficiaries based on their eligibility for other programs with similar income tests would ease administrative burden. To the extent that the other program’s eligibility criteria align with a population or class that experienced a negative economic impact of the pandemic, this approach is also consistent with the process allowed under the final rule for recipients to determine that a class has experienced a negative economic impact, and then document that an individual receiving services is a member of the class. For these reasons, the final rule recognizes categorical eligibility for the following programs and populations:

35 Lina Stoylar et. al., Challenges in the U.S. Territories: COVID-19 and the Medicaid Financing Cliff, Kaiser Family Foundation (May 18, 2021), https://www.kff.org/coronavirus-covid-19/issue-brief/challenges-in-the-u-s- territories-covid-19-and-the-medicaid-financing-cliff/. 41 • 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
42 o For services to address educational disparities, Treasury will recognize Title I eligible schools36 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

36 Title I eligible schools means schools eligible to receive services under section 1113 of Title I, Part A of the Elementary and Secondary Education Act of 1965, as amended (20 U.S.C. 6313), including schools served under section 1113(b)(1)(C) of that Act.
43 recipient would only need to demonstrate that the small businesses receiving assistance were restaurants in the downtown area. The recipient would not need to demonstrate that each restaurant served experienced its own negative economic impact.

In identifying an impacted class and responsive program, service, or capital expenditure, recipients should consider the relationship between the definition of the class and proposed response. Larger and less-specific classes are less likely to have experienced similar harms and thus the responses are less likely to be responsive to the harms identified. That is, as the group of entities being served by a program has a wider set of fact patterns, or the type of entities, their circumstances, or their pandemic experiences differ more substantially, it may be more difficult to determine that the class has actually experienced the same or similar negative economic impact and that the response is appropriately tailored to address that impact.

Standard: Designating Other Disproportionately Impacted Classes Summary of Interim Final Rule: As noted above, the interim final rule provided a broad set of enumerated eligible uses of funds in disproportionately impacted communities, including to address pre-existing disparities that contributed to more severe pandemic impacts in these communities. The interim final rule presumed that these services are eligible uses when provided in a QCT, to families and individuals living in QCTs, or when these services are provided by Tribal governments. Recipients may also provide these services to “other populations, households, or geographic areas disproportionately impacted by the pandemic” and, in identifying these disproportionately impacted communities, should be able to support their determination that the pandemic resulted in disproportionate public health or economic outcomes to the group identified.
44 Public Comment: A significant number of commenters expressed uncertainty regarding the process for determining eligibility for disproportionately impacted communities beyond QCTs. A commenter noted that a clearer definition of “disproportionately impacted” should be delineated and that any definition should include communities of color and people of limited means. Some commenters suggested a template or checklist to see if an area meets the standard for disproportionately impacted communities outside of QCTs. Some commenters stated that QCT and non-QCT beneficiaries should be treated the same.

Treasury Response: Under the interim final rule, presuming eligibility for services in QCTs, for populations living in QCTs, and for Tribal governments was intended to ease administrative burden, providing a simple path for recipients to offer services in underserved communities, and is not an exhaustive list of disproportionately impacted communities. To further clarify, the final rule codifies the interpretive framework discussed above, including presumptions of groups disproportionately impacted, as well as the ability to identify other disproportionately impacted populations, households, or geographies (referred to here as disproportionately impacted classes).

As discussed in the interim final rule, in identifying other disproportionately impacted classes, recipients should be able to support their determination that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations, households, or geographic areas to be served. For example, the interim final rule considered data regarding the rate of COVID-19 infections and deaths in low-income and socially vulnerable communities, noting that these communities have experienced the most severe health impacts, compared to national averages. Similarly, the interim final rule considered the high concentration of low- income workers performing essential work, the reduced ability to socially distance, and other 45 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 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 46 health or negative economic impact. An assessment of the effects of a response (e.g., survey data on levels of resident support for various potential responses) is not a substitute for an assessment of the impact experienced by a particular class. Data about the appropriateness or desirability of a response may be used to assess the reasonableness of a response, once an impact or disproportionate impact has been identified but should not be the basis for assessing impact.

2. PUBLIC HEALTH
Background
On January 21, 2020, the Centers for Disease Control and Prevention (CDC) identified the first case of novel coronavirus in the United States.37 Since that time, and through present day, the United States has faced numerous waves of the virus that have brought acute strain on health care and public health systems. At various points in the pandemic, hospitals and emergency medical services have seen significant influxes of patients; response personnel have faced shortages of personal protective equipment; testing for the virus has been scarce; and congregate living facilities like nursing homes have seen rapid spread.

Since the initial wave of the COVID-19 pandemic, the United States has faced several additional major waves that continued to impact communities and stretch public health services.

The summer 2020 wave impacted communities in the south and southwest. As the weather turned colder and people spent more time indoors, a wave throughout fall and winter 2020

37 Press Release, Centers for Disease Control and Prevention, First Travel-related Case of 2019 Novel Coronavirus Detected in United States (Jan. 21, 2020), https://www.cdc.gov/media/releases/2020/p0121 -novel-coronavirus- travel-case.html.
47 impacted communities in almost every region of the country as the virus reached a point of uncontrolled spread and over 3,000 people died per day due to COVID-19.38 In December 2020, the Food and Drug Administration (FDA) authorized COVID-19 vaccines for emergency use, and soon thereafter, mass vaccination in the United States began. At the time of the interim final rule publication in May 2021, the number of daily new infections was steeply declining as rapid vaccination campaigns progressed across the country. By summer 2021, COVID-19 cases had fallen to their lowest level since early months of the pandemic, when testing was scarce. However, throughout late summer and early fall, the Delta variant, a more infectious and transmittable variant of the SARS-CoV-2 virus, sparked yet another surge. From June to early September, the seven-day moving average of reported cases rose from 12,000 to 165,000.39
As of December 2021, COVID-19 in total has infected over 50 million and killed over 800,000 Americans.40 Preventing and mitigating the spread of COVID-19 continues to require a major public health response from federal, state, local, and Tribal governments.

First, state, local, and Tribal governments across the country have mobilized to support the national vaccination campaign. As of December 2021, more than 80 percent of adults have received at least one dose, with more than 470 million total doses administered.41 Additionally, more than 15 million children over the age of 12 have received at least one dose of the vaccine and over 47 million people have received a booster dose.42 Vaccines for younger children, ages 5

38 Centers for Disease Control and Prevention, COVID Data Tracker: Trends in Number of COVID -19 Cases and Deaths in the US Reported to CDC, by State/Territory, https://covid.cdc.gov/covid -data- tracker/#trends_dailytrendscases (last visited December 7, 2021). 39 Id.
40 Centers for Disease Control and Prevention, COVID Data Tracker, http://www.covid.cdc.gov/covid -data- tracker/#datatracker-home (last visited December 31, 2021). 41 Centers for Disease Control and Prevention, COVID Data Tracker: COVID -19 Vaccinations in the United States, https://covid.cdc.gov/covid-data-tracker/#vaccinations (last visited December 7, 2021). 42 Id.
48 through 11, have been approved and are reaching communities and families across the country.

As new variants continue to emerge globally, the national effort to administer vaccinations and other COVID-19 mitigation strategies will be a critical component of the public health response.

In early reporting on uses of SLFRF funds, recipients have indicated that they plan to put funds to immediate use to support continued vaccination campaigns. For example, one recipient has indicated that it plans to use SLFRF funds to support a vaccine incentive program, providing $100 gift cards to residents at community vaccination clinics. The program aimed to target communities with high public health needs.43 Another recipient reported that it is partnering with multiple agencies, organizations, and providers to distribute COVID-19 vaccinations to homebound residents in assisted living facilities.44
State, local, and Tribal governments have also continued to execute other aspects of a wide-ranging public health response, including increasing access to COVID-19 testing and rapid at-home tests, contact tracing, support for individuals in isolation or quarantine, enforcement of public health orders, new public communication efforts, public health surveillance (e.g., monitoring case trends and genomic sequencing for variants), enhancement to health care capacity through alternative care facilities, and enhancement of public health data systems to meet new demands or scaling needs.

State, local, and Tribal governments have also supported major efforts to prevent COVID-19 spread through safety measures at key settings like nursing homes, schools, congregate living settings, dense worksites, incarceration settings, and in other public facilities.

43 Columbus, Ohio Recovery Plan, https://www.columbus.gov/recovery/. 44 Luzerne County, Pennsylvania Recovery Plan,
https://www.luzernecounty.org/DocumentCenter/View/26304/Final-Interim-Recovery-Plan-Performance-Report- 83121.
49 This has included, for example, implementing infection prevention measures or making ventilation improvements.

In particular, state, local, and Tribal governments have mounted significant efforts to safely reopen schools. A key factor in school reopening is the ability to implement COVID-19 mitigation strategies such as providing masks and other hygiene resources, improving air-quality and ventilation, increasing outdoor learning and eating spaces, testing and contact tracing protocols, and a number of other measures.45 For example, one recipient described plans to use SLFRF funds to further invest in school health resources that were critical components of school reopening and reducing the spread of COVID-19 in schools. Those investments include the increasing school nurses and social workers, improved ventilation systems, and other health and safety measures.

The need for public health measures to respond to COVID-19 will continue moving forward. This includes the continuation of vaccination campaigns for the general public, booster doses, and children. This also includes monitoring the spread of COVID-19 variants, understanding the impact of these variants, developing approaches to respond, and monitoring global COVID-19 trends. Finally, the long-term health impacts of COVID-19 will continue to require a public health response, including medical services for individuals with “long COVID,” and research to understand how COVID-19 impacts future health needs and raises risks for the tens of millions of Americans who have been infected.

The COVID-19 pandemic also negatively impacted other areas of public health, particularly mental health and substance use. In January 2021, over 40 percent of American

45 This includes implementing mitigation strategies consistent with the Centers for Disease Control and Prevention’s (CDC) Guidance for COVID-19 Prevention in K-12 Schools (November 5, 2021), available at https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/k-12-guidance.html. 50 adults reported symptoms of depression or anxiety, up from 11 percent in the first half of 2019.46 The mental health impacts of the pandemic have been particularly acute for adults ages 18 to 24, racial and ethnic minorities, caregivers for adults, and essential workers, with all reporting significantly higher rates of considering suicide.47 The proportion of children’s emergency department visits related to mental health has also risen noticeably.48 Similarly, rates of substance use and overdose deaths have spiked: preliminary data from the CDC show a nearly 30 percent increase in drug overdose mortality from April 2020 to April 2021, bringing the estimated overdose death toll for a 12-month period over 100,000 for the first time ever.49 The CDC also found that 13 percent of adults started or increased substance use to cope with stress related to COVID-19 and 26 percent reported having symptoms of trauma- and stressor-related disorder (TRSD) related to the pandemic.50
Another public health challenge exacerbated by the pandemic was violent crime and gun violence, which increased during the pandemic and has disproportionately impacted low-income communities.51 According to the Federal Bureau of Investigation (FBI), although the property crime rate fell 8 percent in 2020, the violent crime rate increased 6 percent in 2020 compared to

46 Nirmita Panchal et al., The Implications of COVID–19 for Mental Health and Substance Abuse (Feb. 10, 2021), https://www.kff.org/coronaviruscovid-19/issue-brief/the-implications-of-covid-19- for-mental-health-and-substance- use/#:∼:text= Older%20adults%20are%20also%20 more,prior%20to%20the%20current%20crisis; Mark É. Czeisler et al., Mental Health, Substance Abuse, and Suicidal Ideation During COVID-19 Pandemic– United States, June 24- 30 2020, Morb. Mortal. Wkly. Rep. 69(32):1049-57 (Aug. 14, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm.
47 Id.
48 Rebecca T. Leeb et al., Mental Health-Related Emergency Department Visits Among Children Aged <18 Years During the COVID Pandemic—United States, January 1—October 17, 2020, Morb. Mortal. Wkly. Rep. 69(45):1675–80 (Nov. 13, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6945a3.htm. 49 Centers for Disease Prevention and Control, National Center for Health Statistics, Provisional Drug Overdose Death Counts, https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm (last visited May 8December 6, 2021). 50Panchal, supra note 42; Mark É. Czeisler et al., supra note 42. 51 The White House, FACT SHEET: More Details on the Biden-⁠Harris Administration’s Investments in Community Violence Interventions (April 7, 2021), https://www.whitehouse.gov/briefing -room/statements- releases/2021/04/07/fact-sheet-more-details-on-the-biden-harris-administrations-investments-in-community- violence-interventions/.
51 2019 data.52 In particular, the estimated number of aggravated assault offenses rose 12 percent, while murder and manslaughter increased 30 percent from 2019 to 2020.53 The proportion of homicides committed with firearms rose from 73 percent in 2019 to 76 percent in 2020.54 Exposure to violence can create serious short-term and long-term harmful effects to health and development, and repeated exposure to violence may be connected to negative health outcomes.55 Addressing community violence as a public health issue may help prevent and even reduce additional harm to individuals, households, and communities.56 Many communities are using SLFRF funds to invest in holistic approaches in violence prevention that are rooted in targeted outreach and addressing root causes. For example, the City of St. Louis is planning to invest in expanding a “community responder” model designed to provide clinical help and to divert non-violent calls away from the police department.

Additionally, the city will expand access to mental health services, allowing residents to seek support at city recreation centers, libraries, and other public spaces.57 Similarly, Los Angeles County will further invest in its “Care First, Jails Last” program which seeks to replace “arrest and incarceration” responses with health interventions.58 While the pandemic affected communities across the country, it disproportionately impacted some demographic groups and exacerbated health inequities along racial, ethnic, and

52 Federal Bureau of Investigation, FBI Releases 2020 Crime Statistics (September 27, 2021) https://www.fbi.gov/news/pressrel/press-releases/fbi-releases-2020-crime-statistics. 53 Id.
54 Id.
55 The Educational Fund to Stop Gun Violence, Community Gun Violence, https://efsgv.org/learn/type -of-gun- violence/community-gun-violence/ (last visited November 9, 2021). 56 Giffords Law Center, Healing Communities in Crisis: Lifesaving Solutions to the Urban Gun Violence Epidemic (March 2016), https://giffords.org/wp-content/uploads/2019/01/Healing-Communities-in-Crisis.pdf. 57 St. Louis, MO Recovery Plan, https://www.stlouis-mo.gov/government/recovery/covid-19/arpa/plan/. 58 Los Angeles County, CA Recovery Plan, http://file.lacounty.gov/SDSInter/bos/supdocs/160391.pdf. 52 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 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

59 Office of the White House, National Strategy for the COVID-19 Response and Pandemic Preparedness (Jan. 21, 2021), https://www.whitehouse.gov/wp-content/uploads/2021/01/National-Strategy-for-the-COVID-19-Response- and-Pandemic-Preparedness.pdf.
60 In a study of 13 states from October to December 2020, the CDC found that Hispanic or Latino and Native American or Alaska Native individuals were 1.7 times more likely to visit an emergency room for COVID -19 than White individuals, and Black individuals were 1.4 times more likely to do so than White individuals. See Sebastian D. Romano et al., Trends in Racial and Ethnic Disparities in COVID–19 Hospitalizations, by Region—United States, March– December 2020, MMWR Morb Mortal Wkly Rep 2021, 70:560–565 (Apr. 16, 2021), https:// www.cdc.gov/mmwr/volumes/70/wr/ mm7015e2.htm?s_cid=mm7015e2_w. 61 Centers for Disease Control and Prevention, COVID Data Tracker: Trends in COVID -19 Cases and Deaths in the United States, by County-level Population Factors, https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths (last visited December 7, 2021).
62 The CDC’s Social Vulnerability Index includes fifteen variables measuring social vulnerability, including unemployment, poverty, education levels, single-parent households, disability status, non-English speaking households, crowded housing, and transportation access.

Centers for Disease Control and Prevention, COVID Data Tracker: Trends in COVID -19 Cases and Deaths in the United States, by Social Vulnerability Index, https://covid.cdc.gov/covid-data-tracker/#pop-factors_totaldeaths (last visited December 7, 2021).
63 Centers for Disease Control and Prevention, Risk for COVID-19 Infection, Hospitalization, and Death By Race/Ethnicity, https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization- death-by-race-ethnicity.html (last visited December 7, 2021). 53 mortality.64 In addition, individuals living in low-income communities may have had more limited ability to socially distance or to self-isolate when ill, resulting in faster spread of the virus, and were over-represented among essential workers, who face greater risk of exposure.65 Social distancing measures in response to the pandemic may have also exacerbated pre- existing public health challenges. For example, for children living in homes with lead paint, spending substantially more time at home raises the risk of developing elevated blood lead levels, while screenings for elevated blood lead levels declined during the pandemic.66 The combination of these underlying social and health vulnerabilities may have contributed to more severe public health outcomes of the pandemic within these communities, resulting in an exacerbation of pre-existing disparities in health outcomes.67

Summary of the Interim Final Rule Approach to Public Health Summary: As discussed above, the interim final rule provided flexibility for recipients to pursue a wide range of eligible uses to “respond to” the COVID-19 public health emergency.

Uses of funds to “respond to” the public health emergency address the SARS-CoV-2 virus itself,

64 See, e.g., Centers for Disease Control and Prevention, Risk of Severe Illness or Death from COVID -19 (Dec. 10, 2020), https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/racial-ethnic-disparities/disparities- illness.html (last visited December 7, 2021).
65 Milena Almagro et al., Racial Disparities in Frontline Workers and Housing Crowding D uring COVID-19:

Evidence from Geolocation Data (Sept. 22, 2020), NYU Stern School of Business (forthcoming), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3695249; Grace McCormack et al., Economic Vulnerability of Households with Essential Workers, JAMA 324(4):388-90 (2020), available at https://jamanetwork.com/journals/jama/fullarticle/2767630. 66 See, e.g., Joseph G. Courtney et al., Decreases in Young Children Who Received Blood Lead Level Testing During COVID-19 – 34 Jurisdictions, January-May 2020, Morb. Mort. Wkly. Rep. 70(5):155-61 (Feb. 5, 2021), https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a2.htm; Emily A. Benfer & Lindsay F. Wiley, Health Justice Strategies to Combat COVID-19: Protecting Vulnerable Communities During a Pandemic, Health Affairs Blog (Mar. 19, 2020), https://www.healthaffairs.org/do/10.1377/hblog20200319.757883/full/. 67 See, e.g., Centers for Disease Control and Prevention, supra note 58; Benfer & Wiley, supra note 62; Nathaniel M. Lewis et al., Disparities in COVID-19 Incidence, Hospitalizations, and Testing, by Area-Level Deprivation – Utah, March 3-July 9, 2020, Morb. Mortal. Wkly. Rep. 69(38):1369-73 (Sept. 25, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6938a4.htm.
54 support efforts to prevent or decrease spread of the virus, and address other impacts of the pandemic on public health. The interim final rule implemented these provisions by identifying a non-exhaustive list of programs or services that may be funded as responding to COVID-19 (“enumerated eligible uses”), along with considerations for evaluating other potential uses of funds not explicitly listed. Enumerated eligible uses are discussed below. For guidance on how to determine whether a particular use is allowable, beyond those enumerated, see section Standards:

Identifying a Public Health Impact.

Enumerated eligible uses under this section built and expanded upon permissible expenditures under the Coronavirus Relief Fund; for clarity, the interim final rule expressly listed as eligible uses the uses permissible under the Coronavirus Relief Fund, with minor exceptions.68 The interim final rule also recognized that the nature of the COVID-19 public health emergency, and responsive policy measures, programs, and services, had changed over time and is expected to continue evolving.

The interim final rule categorized enumerated eligible uses to respond to the public health emergency into several categories: 1) COVID-19 mitigation and prevention, 2) medical expenses, 3) behavioral health care, 4) public health and safety staff, 5) expenses to improve the design and execution of health and public health programs, and 6) eligible uses to address disparities in public health outcomes. For each category in turn, this section describes public comments received and Treasury’s responses, as well as comments received proposing additional enumerated eligible uses.

68 Generally, funding uses eligible under CRF as a response to the direct public health impacts of COVID -19 will continue to be eligible under the ARPA, including those not explicitly listed in the final rule, with the following two exceptions: 1) the standard for eligibility of public health and safety payrolls has been updated (see section Public Sector Capacity and Workforce in General Provisions: Other) and 2) expenses related to the issuance of tax - anticipation notes are no longer an eligible funding use (see section Restrictions on Use: Debt Service). 55 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; 56 public communication efforts; enhancement to health care capacity, including through alternative care facilities; purchases of personal protective equipment; support for prevention, mitigation, or other services in congregate living facilities (e.g., nursing homes, incarceration settings, homeless shelters, group living facilities) and other key settings like schools; ventilation improvements in congregate settings, health care settings, or other key locations; enhancement of public health data systems; 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. 57 Treasury is further clarifying that when providing COVID-19 prevention and mitigation services, recipients can identify the impacted population as the general public. Treasury presumes that all enumerated eligible uses for programs and services, including COVID-19 mitigation and prevention programs and services, are reasonably proportional responses to the harm identified unless a response is grossly disproportionate to the type or extent of harm experienced. Note that capital expenditures are not considered “programs and services” and are not presumed to be reasonably proportional responses to an identified harm except as provided in section Capital Expenditures in General Provisions: Other. In other words, recipients can provide any COVID-19 prevention or mitigation service to members of the general public without any further analysis of impacts of the pandemic on those individuals and whether the service is responsive.

This approach gives recipient governments an extensive set of eligible uses that can adapt to local needs, as well as evolving response needs and developments in understanding of transmission of COVID-19. Treasury emphasizes how the enumerated eligible uses can adapt to changing circumstances. For example, when the interim final rule was released, national daily COVID-19 cases were at relatively low levels and declining;69 as the Delta variant spread and cases peaked in many areas of the country, particularly those with low vaccination rates, government response needs and tactics evolved, and the SLFRF funds provided the ability to quickly and nimbly adapt to new public health needs. Treasury also notes that funds may be used to support compliance with and implementation of COVID-19 safety requirements, including vaccination requirements, testing programs, or other required practices.

69 See Centers for Disease Control and Prevention, COVID Data Tracker, https://covid.cdc.gov/covid -data- tracker/#trends_dailycases (last visited December 7, 2021). 58 Recipient governments do not need to have an official health or public health program in order to utilize these eligible uses; any recipient can pursue these eligible uses, though Treasury recommends consulting with health and public health professionals to support effective implementation.

The CDC has provided recommendations and guidelines to help mitigate and prevent COVID-19. The interim final rule and final rule help support recipients in stopping the spread of COVID-19 through these recommendations and guidelines.70 The final rule reflects changing circumstances of COVID-19 and provides a broad range of permissible uses for mitigating and preventing the spread of the disease, in a manner consistent with CDC guidelines and recommendations.

The purpose of the SLFRF funds is to mitigate the fiscal effects stemming from the COVID-19 public health emergency, including by supporting efforts to stop the spread of the virus. The interim final rule and final rule implement this objective by, in part, providing that recipients may use SLFRF funds for COVID-19 mitigation and prevention.71 A program or service that imposes conditions on participation in or acceptance of the service that would undermine efforts to stop the spread of COVID-19 or discourage compliance with recommendations and guidelines in CDC guidance for stopping the spread of COVID-19 is not a permissible use of funds. In other words, recipients may not use funds for a program that undermines practices included in the CDC’s guidelines and recommendations for stopping the spread of COVID-19. This includes programs that impose a condition to discourage compliance with practices in line with CDC guidance (e.g., paying off fines to businesses incurred for

70 See Centers for Disease Control and Prevention, COVID-19, https://www.cdc.gov/coronavirus/2019- ncov/index.html (last visited November 8, 2021).
71 See 35.6(b); IFR discussion of CDC guidelines.
59 violation of COVID-19 vaccination or safety requirements), as well as programs that require households, businesses, nonprofits, or other entities not to use practices in line with CDC guidance as a condition of receiving funds (e.g., requiring that businesses abstain from requiring mask use or employee vaccination as a condition of receiving SLFRF funds).

Vaccination programs and vaccine incentives. At the time of the interim final rule release, many vaccination programs were using mass vaccination tactics to rapidly reach Americans en masse for first vaccine doses.72 Since that time, the FDA has authorized booster vaccine doses for certain groups and certain vaccines and has also authorized vaccines for youths73,74 The inclusion of “vaccination programs” as an eligible use allows for adaptation as the needs of programs change or new groups become eligible for different types of vaccinations.

Public Comment: Since the release of the interim final rule, many recipient governments have also requested clarification on whether vaccine incentives are a permissible use of funds.

Treasury Response: Treasury issued guidance clarifying that “[vaccine] programs that provide incentives reasonably expected to increase the number of people who choose to get vaccinated, or that motivate people to get vaccinated sooner than they otherwise would have, are an allowable 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.

72 Centers for Disease Control and Prevention, COVID Data Tracker: COVID -19 Vaccinations in the United States, https://covid.cdc.gov/covid-data-tracker/#vaccinations (last visited October 18, 2021). 73 U.S. Food and Drug Administration, Coronavirus (COVID-19) Update: FDA Takes Additional Actions on the Use of a Booster Dose for COVID-19 Vaccines, https://www.fda.gov/news-events/press-announcements/fda- authorizes-pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age (last visited November 8, 2021).
74 U.S. Food and Drug Administration, FDA Authorizes Pfizer-BioNTech COVID-19 Vaccine for Emergency Use in Children 5 through 11 Years of Age, https://www.fda.gov/news-events/press-announcements/fda-authorizes- pfizer-biontech-covid-19-vaccine-emergency-use-children-5-through-11-years-age (last visited November 8, 2021) 75 Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as of July 19, 2021; https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

60 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);

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. 61 • Expenses of establishing temporary medical facilities and other measures to increase COVID-19 treatment capacity, including related construction costs; • Acquisition of equipment for COVID-19 prevention and treatment, including ventilators, ambulances, and other medical or emergency services equipment; • Improvements to or construction of emergency operations centers and acquisition of emergency response equipment (e.g., emergency response radio systems); • Installation and improvements of ventilation systems; • Costs of establishing public health data systems, including technology infrastructure; • Adaptations to congregate living facilities, including skilled nursing facilities, other long-term care facilities, incarceration settings, homeless shelters, residential foster care facilities, residential behavioral health treatment, and other group living facilities, as well as public facilities and schools (excluding construction of new facilities for the purpose of mitigating spread of COVID-19 in the facility); and • Mitigation measures in small businesses, nonprofits, and impacted industries (e.g., developing outdoor spaces).

Other clarifications on COVID-19 mitigation: medical care, supports for vulnerable populations, data systems, carceral settings. Based on public comments and questions received from recipients following the interim final rule, Treasury is making several further clarifications on enumerated eligible uses in this category.

Public Comment: Several commenters requested clarification on eligible uses of funds for medical care; Treasury addresses those comments in the section Medical Expenses below.

Public Comment: Recipients posed questions on the type and scope of activities eligible as “supports for vulnerable populations to access medical or public health services.” 62 Treasury Response: Enumerated eligible uses should be considered in the context of the eligible use category or section where they appear; in this case, “supports for vulnerable populations to access medical or public health services” appears in the section COVID-19 Mitigation and Prevention. As such, these eligible uses should help vulnerable or high-risk populations access services that mitigate COVID-19, for example, transportation assistance to reach vaccination sites, mobile vaccination or testing programs, or on-site vaccination or testing services for homebound individuals, those in group homes, or similar settings.

Public Comment: Some commenters asked whether “enhancement of public health data systems” could include investments in software, databases, and other information technology resources that support responses to the COVID-19 public health emergency but also provide benefits for other use cases and long-term capacity of public health departments and systems.

Treasury Response: These are permissible uses of funds under the interim final rule and remain eligible under the final rule.

Assistance to businesses and nonprofits to implement COVID-19 mitigation strategies.

Background: As detailed above, Treasury received many public comments describing uncertainty about which eligible use category should be used to assess different potential uses of funds. As a result, Treasury has re-categorized some uses of funds in the final rule to provide greater clarity, consistent with the principle that uses of funds should be assessed based on their intended beneficiary. For example, COVID-19 mitigation and prevention serves the general public or specific populations within the public. However, in the interim final rule, assistance to small businesses, nonprofits, and impacted industries to implement COVID-19 mitigation and prevention strategies was categorized in the respective sections within Negative Economic 63 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 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. 64 Uses of funds can include loans, grants, or in-kind assistance to small businesses, nonprofits, or other entities to implement COVID-19 prevention or mitigation tactics, such as vaccination; testing; contact tracing programs; physical plant changes to enable greater use of outdoor spaces or ventilation improvements; enhanced cleaning efforts; and barriers or partitions.

For example, this would include assistance to a restaurant to establish an outdoor patio, given evidence showing much lower risk of COVID-19 transmission outdoors.76 Uses of funds can also include aid to travel, tourism, hospitality, and other impacted industries to implement COVID-19 mitigation and prevention measures to enable safe reopening, for example, vaccination or testing programs, improvements to ventilation, physical barriers or partitions, signage to facilitate social distancing, provision of masks or personal protective equipment, or consultation with infection prevention professionals to develop safe reopening plans.

Recipients providing assistance to small businesses, nonprofits, or impacted industries that includes capital expenditures (i.e., expenditures on property, facilities, or equipment) should also review the section Capital Expenditures in General Provisions: Other, which describes eligibility standards for these expenditures. Recipients providing assistances in the form of loans should review the section Treatment of Loans Made with SLFRF Funds in General Provisions:

Other.

Recipients should also be aware of the difference between beneficiaries of assistance and subrecipients when working with small businesses, nonprofits, or impacted industries. As noted above, Treasury presumes that the general public, as well as small businesses, nonprofits, and impacted industries in general, has been impacted by the COVID-19 disease itself and is eligible

76 See Centers for Disease Control and Prevention, Participate in Outdoor and Indoor Activities, https://www.cdc.gov/coronavirus/2019-ncov/daily-life-coping/outdoor-activities.html (last visited November 8, 2021).
65 for services that mitigate or prevent COVID-19 spread. As such, a small business, nonprofit, or impacted industry receiving assistance to implement COVID-19 mitigation measures is a beneficiary of assistance (e.g., granting funds to a small business to develop an outdoor patio to reduce transmission). In contrast, if a recipient contracts with, or grants funds to, a small business, nonprofit, or impacted industry to carry out an eligible use for COVID-19 mitigation on behalf of the recipient, the entity is a subrecipient (e.g., contracting with a small business to operate COVID-19 vaccination sites). For further information on distinguishing between beneficiaries and subrecipients, as well as the impacts of the distinction on reporting and other requirements, see section Distinguishing Subrecipients versus Beneficiaries.

b. MEDICAL EXPENSES

Background: The interim final rule also included as an enumerated eligible use medical expenses, including medical care and services to address the near-term and potential longer-term impacts of the disease on individuals infected.

Public Comment: Some commenters sought clarification on the types of medical expenses eligible and for whom, including whether funds could be used under this category for expanding health insurance coverage (e.g., subsidies for premiums, expanding a group health plan), improvements to healthcare facilities or establishment of new medical facilities, direct costs of medical services, and costs to a self-funded health insurance plan (e.g., a county government health plan) for COVID-19 medical care.

Treasury Response: In the final rule, Treasury is maintaining this enumerated eligible use category and clarifying that it covers costs related to medical care provided directly to an individual due to COVID-19 infection (e.g., treatment) or a potential infection (e.g., testing). 66 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 67 commenters suggested that funding should be available broadly and quickly for this purpose, recommending that funding available for behavioral health not be tied to the amount of revenue loss experienced by the recipient.

Treasury Response: In the final rule, Treasury is maintaining this enumerated eligible use category and clarifying that it covers an expansive array of services for prevention, treatment, recovery, and harm reduction for mental health, substance use, and other behavioral health challenges caused or exacerbated by the public health emergency. The specific services listed in the interim final rule also remain eligible.77
Treasury is further clarifying that when providing behavioral health services, recipients can identify the impacted population as the general public and, as with all enumerated eligible uses, presume that all programs and services are reasonably proportional responses to the harm identified unless a response is grossly disproportionate to the type or extent of harm experienced.

In contrast, capital expenditures are not 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.

77 Hotlines or warmlines, crisis intervention, overdose prevention, infe ctious disease prevention, and services or outreach to promote access to physical or behavioral health primary care and preventative medicine. 68 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 insurance78 or services not typically billable to insurance, such as peer support groups, costs for residence in supportive housing or recovery housing, and the 988 National Suicide Prevention Lifeline or other hotline services. Recipients may also use funds in conjunction with other federal grants or programs (see section Program Administration Provisions), though eligible services under SLFRF are not limited to those eligible under existing federal programs.

Given the public health emergency’s exacerbation of the ongoing opioid and overdose crisis, Treasury highlights several ways that funds may be used to respond to opioid use disorder

78 However, SLFRF funds may not be used to reimburse a service that was also billed to insurance. 69 and prevent overdose mortality.79 Specifically, eligible uses of funds include programs to expand access to evidence-based treatment like medications to treat opioid use disorder (e.g., direct costs or incentives for emergency departments, prisons, jails, and outpatient providers to offer medications and low-barrier treatment), naloxone distribution, syringe service programs, outreach to individuals in active use, post-overdose follow up programs, programs for diversion from the criminal justice system, and contingency management interventions.

Finally, for clarity, Treasury has addressed the eligibility standard for capital expenditures, or investments in property, facilities, or equipment, in one section of this Supplementary Information; see section Capital Expenditures in General Provisions: Other.

Examples of capital expenditures related to behavioral health that Treasury recognizes as eligible include behavioral health facilities and equipment (e.g., inpatient or outpatient mental health or substance use treatment facilities, crisis centers, diversion centers), as long as they adhere to the standards detailed in the Capital Expenditures section.

d. PREVENTING AND RESPONDING TO VIOLENCE

Background: The interim final rule highlighted that some types of violence had increased during the pandemic and that the ability of victims to access services had decreased, noting as an example the challenges that individuals affected by domestic violence face in accessing services.

Accordingly, the interim final rule enumerated as an eligible use, in disproportionately impacted communities, evidence-based community violence intervention programs. Following the release of the interim final rule, Treasury received several recipient questions regarding whether and

79 In line with the Department of Health and Human Services, Overdose Prevention Strategy, https://www.hhs.gov/overdose-prevention/, and the Office of National Drug Control Policy, Administration’s Statement on Drug Policy Priorities for Year One (April 1, 2021), https://www.whitehouse.gov/wp- content/uploads/2021/03/BidenHarris-Statement-of-Drug-Policy-Priorities-April-1.pdf. 70 how funds may be used to respond to an increase in crime, violence, or gun violence in some communities during the pandemic. Treasury released further guidance identifying how enumerated eligible uses and eligible use categories under the interim final rule could support violence reduction efforts, including rehiring public sector staff, behavioral health services, and services to address negative economic impacts of the pandemic that may aid victims of crime.

The guidance also identified an expanded set of enumerated eligible uses to address increased gun violence.

Public Comment: Several commenters expressed support for this use of funds.

Treasury Response: In the final rule, Treasury is maintaining enumerated eligible uses in this area and clarifying how to apply eligibility standards. Throughout the final rule, enumerated eligible uses should respond to an identified impact of the COVID-19 public health emergency in a reasonably proportional manner to the extent and type of harm experienced. Many of the enumerated eligible uses – like behavioral health services, services to improve employment opportunities, and services to address educational disparities in disproportionately impacted communities – that respond to the public health and negative economic impacts of the pandemic may also have benefits for reducing crime or aiding victims of crime. For example, the pandemic exacerbated the impact of domestic violence, sexual assault, and human trafficking; enumerated eligible uses like emergency housing assistance, cash assistance, or assistance with food, childcare, and other needs could be used to support survivors of domestic violence, sexual assault, or human trafficking who experienced public health or economic impacts due to the pandemic.

Public Comment: Several commenters expressed support for community violence intervention programs or argued that traditional public safety approaches had negatively 71 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 eligible use is responsive to the impacts of the pandemic in all communities. The final rule incorporates guidance issued after the interim final rule on specifically types of services eligible, including:
• Evidence-based practices like focused deterrence, street outreach, violence interrupters, and hospital-based violence intervention models, complete with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance; and
• Capacity-building efforts at community violence intervention programs like funding more intervention workers, increasing their pay, providing training and professional development for intervention workers, and hiring and training workers to administer the programs.

Public Comment: Some commenters sought further clarification on whether some of the enumerated eligible uses are considered responsive to all crime, violent crime, or gun violence.

Treasury Response: Enumerated eligible uses that respond to an increase in gun violence may be pursued in communities experiencing an increase in gun violence associated with the pandemic, specifically: 1) hiring law enforcement officials – even above pre-pandemic levels – or paying overtime where the funds are directly focused on advancing community policing 72 strategies for gun violence, 2) additional enforcement efforts to reduce gun violence exacerbated by the pandemic, including prosecuting gun traffickers, dealers, and other parties contributing to the supply of crime guns, as well as collaborative federal, state, and local efforts to identify and address gun trafficking channels, and 3) investing in technology and equipment to allow law enforcement to more efficiently and effectively respond to the rise in gun violence resulting from the pandemic, for example technology to assist in the identification of guns whose serial numbers have been damaged.

3. NEGATIVE ECONOMIC IMPACTS
a. ASSISTANCE TO HOUSEHOLDS

Background
While the U.S. economy is now on the path to a strong recovery, the public health emergency, including the necessary measures taken to protect public health, resulted in significant economic and financial hardship for many Americans. As businesses closed, consumers stayed home, schools shifted to remote education, and travel declined precipitously, over 22 million jobs were lost in March and April 2020.80 One year later, in April 2021, the economy still remained over 8 million jobs below its pre-pandemic peak,81 and the unemployment rate hovered around 6 percent.82
In the months since Treasury issued the interim final rule in May 2021, the economy has made large strides in its recovery. The economy gained over 4 million jobs in the seven months

80 U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PAYEMS (last visited December 7, 2021). 81 Id.
82 U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UNRATE (last visited December 7, 2021). 73 from May to November 2021;83 the unemployment rate fell more than 1.5 percentage points to

4.2 percent, which is the lowest rate since February 2020;84 and the size of the nation’s economy surpassed the pre-pandemic peak in the second quarter of 2021.85 While the economy has made immense progress in its recovery since May 2021, the economy has also faced setbacks that illustrate the continued risks to the recovery. As the Delta variant spread across the country this summer and fall, the United States faced another severe wave of cases, deaths, and strain on the healthcare system, which contributed to a slowdown in the pace of recovery in the third quarter.86 Supply chain disruptions have also demonstrated the difficulties of restarting a global economy.87 Moreover, although many Americans have returned to work as of November 2021, the economy remains 3.9 million jobs below its pre-pandemic peak,88 and 2.4 million workers have dropped out of the labor market altogether relative to February 2020.89 Thus, despite much progress, there is a continued need to respond to the pandemic’s economic effects to ensure a full, broad-based, and equitable recovery.

Indeed, the pandemic’s economic impacts continue to affect some demographic groups more than others. Rates of unemployment remain particularly severe among workers of color and workers with lower levels of educational attainment; for example, the overall unemployment rate in the United States was 4.2 percent in November 2021, but certain groups saw much higher

83 U.S. Bureau of Labor Statistics, supra note 79.
84 U.S. Bureau of Labor Statistics, supra note 81.
85 U.S. Bureau of Economic Analysis, Real Gross Domestic Product [GDPC1], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/GDPC1 (last visited December 7, 2021). 86 U.S. Department of the Treasury, Economy Statement by Catherine Wolfram, Acting Assistant Secretary for Economy Policy, for the Treasury Borrowing Advisory Committee (November 1, 2021), available at https://home.treasury.gov/news/press-releases/jy0453.
87 Yuka Hayashi, IMF Cuts Global Growth Forecast Amid Supply-Chain Disruptions, Pandemic Pressures, Wall Street Journal (October 12, 2021), available at https://www.wsj.com/articles/imf-cuts-global-growth-forecast-amid- supply-chain-disruptions-warns-of-inflation-risks-11634043601. 88 U.S. Bureau of Labor Statistics, supra note 79.
89 U.S. Bureau of Labor Statistics, Civilian Labor Force Level [CLF16OV], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CLF16OV (last visited December 7, 2021). 74 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 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

90 U.S. Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey: Employment status of the civilian population by sex and age (December 6, 2021), https://www.bls.gov/news.release/empsit.t01.htm (last visited December 7, 2021); U.S. Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey: Employment status of the civilian noninstitutional population by race, Hispanic or Latino ethnicity, sex, and age (December 6, 2021), https://www.bls.gov/web/empsit/cpseea04.htm (last visited December 7, 2021); U.S.

Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey: Employment status of the civilian noninstitutional population 25 years and over by educational attainment (December 6, 2021), https://www.bls.gov/web/empsit/cpseea05.htm (last visited December 7, 2021). 91 Elise Gould & Jori Kandra, Wages grew in 2020 because the bottom fell out of the low -wage labor market, Economic Policy Institute (Feb. 24, 2021), https://files.epi.org/pdf/219418.pdf. See also, Michael Dalton et al., The K-Shaped Recovery: Examining the Diverging Fortunes of Workers in the Recovery from the COVID -19 Pandemic using Business and Household Survey Microdata¸ U.S. Bureau of Labor Statistics Working Paper Series (July 2021), https://www.bls.gov/osmr/research-papers/2021/pdf/ec210020.pdf. 92 Center on Budget and Policy Priorities, Tracking the COVID–19 Recession’s Effects on Food, Housing, and Employment Hardships, https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-economys- effects-on-food-housing-and (last visited December 17, 2021). 93 Michael Karpman, Dulce Gonzalez, Genevieve M. Kenney, Parents Are Struggling to Provide for Their Families during the Pandemic, Urban Institute (May 2020), https://www.urban.org/research/publication/parents-are- struggling-provide-their-families-during-
pandemic?utm_source=urban_researcher&utm_medium=email&utm_campaign=covid_parents&utm_term=lhp. 94 Women have carried a larger share of childcare responsibilities than men during the COVID-19 crisis. See, e.g., Gema Zamarro & María J. Prados, Gender differences in couples’ division of childcare, work and mental health during COVID-19, Rev. Econ. Household 19:11-40 (2021), available at https://link.springer.com/article/10.1007/s11150-020-09534-7; Titan Alon et al., The Impact of COVID-19 on Gender Equality, National Bureau of Economic Research Working Paper 26947 (April 2020), available at https://www.nber.org/papers/w26947.
75 Women of color have been hit especially hard: the labor force participation rate for Black women has fallen by 3.6 percentage points95 during the pandemic as compared to 1.3 percentage points for Black men96 and 1.7 percentage points for White women.97 As the economy recovers, the effects of the pandemic-related recession may continue to impact households, including a risk of longer-term effects on earnings and economic potential.

For example, unemployed workers, especially those who have experienced longer periods of unemployment, earn lower wages over the long term once rehired.98 In addition to the labor market consequences for unemployed workers, recessions can also cause longer-term economic challenges through, among other factors, damaged consumer credit scores99 and reduced familial and childhood wellbeing.100 These potential long-term economic consequences underscore the continued need for robust policy support.

Low- and moderate-income households, those with income levels at or below 300 percent of the federal poverty level (FPL), face particular hardships and challenges. These households report much higher rates of food insecurity and housing hardships than households with higher incomes. For example, households with incomes at or below 300 percent FPL are several times

95 U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, Black or African American Women [LNS11300032], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/LNS11300032 (last visited December 7, 2021). 96 U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, Black or African American Men [LNS11300031], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/LNS11300031 (last visited December 7, 2021). 97 U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, White Women [LNS11300029], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/LNS11300029 (last visited December 7, 2021).
98 See, e.g., Michael Greenstone & Adam Looney, Unemployment and Earnings Losses: A Look at Long-Term Impacts of the Great Recession on American Workers, Brookings Institution (Nov. 4, 2011), https://www.brookings.edu/blog/jobs/2011/11/04/unemployment-and-earnings-losses-a-look-at-long-term-impacts- of-the-great-recession-on-american-workers/.
99 Chi Chi Wu, Solving the Credit Conundrum: Helping Consumers’ Credit Records Impaired by the Foreclosure Crisis and Great Recession, National Consumer Law Center (Dec. 2013), https://www.nclc.org/images/pdf/credit_reports/report-credit-conundrum-2013.pdf. 100 Irwin Garfinkel, Sara McLanahan, Christopher Wimer, eds., Children of the Great Recession , Russell Sage Foundation (Aug. 2016), available at https://www.russellsage.org/publications/children-great-recession. 76 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 insecure102 at rates more than twice as high as higher-income households, and low- and moderate-income households reported housing quality hardship103 at rates statistically significantly greater than the rate for higher-income households.104 The economic crisis caused by the pandemic worsened economic outcomes for workers in many low- and moderate-income households. Industries that employed low-wage workers experienced a disproportionate level of job loss. For example, from February 2020 to February 2021, the hospitality and leisure industry lost nearly 3.5 million jobs.105 While the entire industry was impacted, 72 percent of the job losses occurred in the lowest wage service occupations compared to only a 6 percent rate of job loss in the highest wage management and finance jobs.106 Similar trends exist in other heavily impacted industries. In public education, the lowest wage occupations, service and transportation jobs, saw a job loss rate of 20 and 26 percent, respectively.107 During that same time period, the highest wage occupations in public education, management, actually saw jobs increase by 7 percent.108

101 Kyle J Casewell and Stephen Zuckerman, Food Insecurity, Housing Hardship, and Medical Care Utilization, Urban Institute (June 2018), available at https://www.urban.org/sites/default/files/publication/98701/2001896_foodinsecurity_housinghar dship_medicalcareu tilization_finalized.pdf
102 Housing insecurity is defined as not paying the full amount of rent or mortgage and/or utility bills (gas, oil, or electricity) sometime in the previous 12 months. 103 Housing quality hardship is defined as an affirmative response to one or more questions related to problems with a respondent’s physical dwelling: pests and/or insects; leaking roof or ceiling; windows that are broken or cannot shut; exposed electrical wires; broken plumbing (toilet, hot water, other ); holes in walls, ceiling, or floor; no appliances (refrigerator or stove); and no phone (of any kind). 104 Id.
105 Elise Gould and Melat Kassa. Low-wage, low-hours workers were hit hardest in the COVID-19 recession: The State of Working America 2020 employment report, Economic Policy Institute (May 2021), available at https://www.epi.org/publication/swa-2020-employment-report/. 106 Id.
107 Id.
108 Id.
77 While many households suffered negative economic outcomes as a result of the COVID- 19 pandemic and economic recession, households with low incomes were impacted in disproportionate and exceptional ways. From January 2020 to March 2021, low-wage workers experienced job loss at a rate five times higher than middle-wage workers, and high-wage workers actually experienced an increase in job opportunities.109 Because workers in low-income households were more likely to lose their job or experience reductions in pay, those same households were also more likely to experience economic hardships like trouble paying utility bills, affording rent or mortgage payments, purchasing food, and paying for medical expenses.110 The disproportionate negative impacts the pandemic has had on low-income families extend beyond financial insecurity. For example, low-income families have reported higher levels of social isolation, stress, and other negative mental health outcomes during the pandemic. While over half of all U.S. adults report that their mental health was negatively affected by the pandemic, adults with low incomes reported major negative mental health impacts at a rate nearly twice that of adults with high incomes.111

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

109 R. Chetty, J. Friedman, N. Hendren, M. Stepner, & Team, T. O. I., The Economic Impacts of COVID -19:

Evidence from a New Public Database Built Using Private Sector Data (No. w27431; p. w27431) (2020), National Bureau of Economic Research. https://doi.org/10.3386/w27431. 110 M. Despard, Michal Grinstein-Weiss, Yung Chun, and Stephen Roll, COVID-19 job and income loss leading to more hunger and financial hardship, Brookings Institute (July 13, 2020), https://www.brookings.edu/blog/upfront/2020/07/13/covid-19-job-and-income-loss-leading-to-more-hunger-and- financial-hardship/.
111 N. Panchal, R. Kamal, C. Muñana, & P. Chidambaram, The Implications of COVID-19 for Mental Health and Substance Use, Kaiser Family Foundation (February 10, 2021), https://www.kff.org/coronavirus -covid-19/issue- brief/the-implications-of-covid-19-for-mental-health-and-substance-use/. 78 households, as well as a standard for assessing whether uses of funds beyond those enumerated are eligible.

The interim final rule described enumerated eligible uses for assistance to households in several categories: 1) assistance to unemployed workers, 2) state Unemployment Insurance Trust Funds, 3) assistance to households, and 4) expenses to improve the efficacy of economic relief.

Note that the interim final rule posed several questions to the public on enumerated eligible uses for assistance to households; comments on these questions are addressed in the relevant subject matter section below.

In addition, in recognition that pre-existing health, economic, and social disparities contributed to disproportionate pandemic impacts in certain communities, the interim final rule also provided a broader list of enumerated eligible uses to respond to the pandemic in disproportionately impacted communities, specifically: 1) building stronger communities through investments in housing and neighborhoods, 2) addressing educational disparities, and 3) promoting healthy childhood environments. In the interim final rule, under the Public Health section, recipients could also provide services to address health disparities and increase access to health and social services; these eligible uses have been re-organized into the Assistance to Households section to consolidate responses in disproportionately impacted communities and enhance clarity.

This section addresses enumerated eligible uses in the final rule to respond to negative economic impacts to households. As a reminder, recipients may presume that a household or population that experienced unemployment, experienced increased food or housing insecurity, or is low or moderate income experienced negative economic impacts resulting from the pandemic, 79 and recipients may provide services to them that respond to these impacts, including these enumerated eligible uses.

For guidance on how to determine whether a particular use, beyond those enumerated, is eligible; further detail on which households and communities are presumed eligible for services; and how to identify eligible households and communities beyond those presumed eligible, see section General Provisions: Structure and Standards.

Reorganizations and Cross-References: The final rule reorganizes all enumerated eligible uses for impacted and disproportionately impacted households into the section Assistance to Households, with the exception that expenses to improve the efficacy of economic relief has been re-categorized into a different section of the final rule for increased clarity; for discussion of that use category, see section General Provisions: Other.

Note that in conducting this reorganization, and based on further analysis and in response to comments, Treasury has determined that several enumerated uses included in the interim final rule for disproportionately impacted communities are directly responsive to negative economic impacts experienced by impacted households. In the final rule, these uses have been moved from “disproportionately impacted” to “impacted” households accordingly, making these services available to both disproportionately impacted and impacted households. These uses include assistance applying for public benefits or services; programs or services that address or mitigate the impacts of the COVID-19 public health emergency on childhood health or welfare, including childcare, early learning services, programs to provide home visits, and services for families involved in the child welfare system and foster youth; programs to address the impacts of lost 80 instructional time for students;112 and programs or services that address housing insecurity, lack of affordable housing, or homelessness.

The following activities remain enumerated eligible uses for disproportionately impacted households: remediation of lead paint or other lead hazards; housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity; and programs or services that address educational disparities, including assistance to high-poverty school districts to advance equitable funding across districts and geographies and evidence-based services to address the academic, social, emotional, and mental health needs of students.

Enumerated Eligible Uses for Impacted Households
The interim final rule included several enumerated eligible uses to provide assistance to households or populations facing negative economic impacts due to COVID-19. Enumerated eligible uses included: food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; emergency assistance for burials, home repairs, weatherization, or other needs; internet access or digital literacy assistance; cash assistance; or job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training. It also posed a question as to what other types of services or costs Treasury should consider as eligible uses to respond to the negative economic impacts of COVID–19.

This section addresses each of these enumerated eligible uses in turn, with the exception of job training, which has been re-categorized for increased clarity to the eligible use for “assistance to unemployed and underemployed workers.” In general, commenters supported

112For 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. 81 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 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.
82 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

113 See FAQ 2.21. Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as o f July 19, 2021; https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf. 83 included under this eligible use category; this remains a non-exhaustive list of eligible services.

For example, eligible services under this use category include: rent, rental arrears, utility costs or arrears (e.g., electricity, gas, water and sewer, trash removal, and energy costs, such as fuel oil), reasonable accrued late fees (if not included in rental or utility arrears), mortgage payment assistance, financial assistance to allow a homeowner to reinstate a mortgage or to pay other housing-related costs related to a period of forbearance, delinquency, or default, mortgage principal reduction, facilitating mortgage interest rate reductions, counseling to prevent foreclosure or displacement, relocation expenses following eviction or foreclosure (e.g., rental security deposits, application or screening fees). Treasury is clarifying that assistance to households for delinquent property taxes, for example to prevent tax foreclosures on homes, was permissible under the interim final rule and continues to be so under the final rule. In addition, Treasury is also clarifying that recipients may administer utility assistance or address arrears on behalf of households through direct or bulk payments to utility providers to facilitate utility assistance to multiple consumers at once, so long as the payments offset customer balances and therefore provide assistance to households.

This eligible use category also includes emergency assistance for individuals experiencing homelessness, either individual-level assistance (e.g., rapid rehousing services) or assistance for groups of individuals (e.g., master leases of hotels, motels, or similar facilities to expand available shelter).

Further, Treasury is clarifying that transitional shelters (e.g., temporary residences for people experiencing homelessness) are eligible capital expenditures. Recipients seeking to use funds for capital expenditures should refer to the section Capital Expenditures in General 84 Provisions: Other for additional eligibility standards that apply to uses of funds for capital expenditures.

Note that this enumerated eligible use describes “emergency housing assistance,” or assistance for responses to the immediate or near-term negative economic impacts of the pandemic. The final rule also clarifies and expands the ability of recipients to use SLFRF funds to address the general lack of affordable housing and housing challenges underscored by the pandemic. For discussion of affordable housing eligible uses, including services that primarily increase access to affordable, high-quality housing and support stable housing and homeownership over the long term, see the eligible use for “promoting long-term housing security: affordable housing and homelessness.”

3. Emergency assistance for pressing needs: burials, home repairs, weatherization, or other needs. The interim final rule included an enumerated eligible use for emergency assistance for burials, home repairs, weatherization, and other needs; these types of programs may provide emergency assistance for pressing and unavoidable household needs. Treasury did not receive comments on this eligible use and is maintaining it in the final rule.

Background on Home Repairs and Weatherization: The economic downturn has meant fewer households had the resources needed to make necessary home repairs and improvements.

In May 2021, 28 percent of landlords reported deferring maintenance and 27 percent of tenants reported maintenance requests going unanswered.114 While small and cosmetic repairs can often

114 Jung Hyun Choi, Laurie Goodman, and Daniel Pang, The Pandemic Is Making It Difficult for Mom -and-Pop Landlords to Maintain Their Properties, Urban Institute (July 23, 2021), https: //www.urban.org/urban- wire/pandemic-making-it-difficult-mom-and-pop-landlords-maintain-their-properties. 85 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 disparities are partially a result of economic hardship but are also caused by inequitable access to housing with proper insulation, up to date heating, cooling, and ventilation systems, and functioning and up to date lighting and appliances.118 While programs that address the effects of energy hardships, like the Low-Income Home Energy Assistance Program (LIHEAP), are critical, weatherization attempts to address root causes by addressing issues that lead to energy insecurities.

4. Internet access or digital literacy assistance. The interim final rule included an enumerated eligible use for assistance to households for internet access or digital literacy assistance. This enumerated eligible use, which responds to the negative economic impacts of the

115 U.S. Energy Information Administration, Residential Energy Consumption Survey (2017), Retrieved from https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php.

D. Hernández, Understanding ‘energy insecurity’ and why it matters to health, Social Science & Medicine, 167, 1 – 10 (2016), https://doi.org/10.1016/j.socscimed.2016.08.029. 116 Hernández, D. (2016). Understanding ‘energy insecurity’ and why it matters to health. Social Science & Medicine, 167, 1–10. https://doi.org/10.1016/j.socscimed.2016.08.029. 117 U.S. Energy Information Administration, Residential Energy Consumption Survey (RECS) https://www.eia.gov/consumption/residential/data/2015/hc/php/hc11.1.php (last visited November 9, 2021) 118 A. Drehobl, & L. Ross, Lifting the high energy burden in America’s largest cities: how energy efficiency can improve low income and underserved communities, American Council for an Energy Efficient Economy (2016), https://www.aceee.org/sites/default/files/publications/researchreports/u1602.pdf. 86 pandemic on a household by providing assistance that helps them secure internet access or increase their ability to use computers and the internet, is separate from the eligible use category for investments in broadband infrastructure, under Sections 602(c)(1)(D) and 603(c)(1)(D), which is used to build new broadband networks through infrastructure construction or modernization. For discussion of broadband infrastructure investment in the final rule, see section Broadband Infrastructure in Infrastructure.

Background: The COVID-19 public health emergency has underscored the importance of universally available, high-speed, reliable, and affordable broadband coverage as millions of Americans rely on the internet to participate in, among other critical activities, school, healthcare, and work. Recognizing the need for such connectivity, SLFRF funds can be used to make necessary investments in broadband infrastructure that increase access over the long term, as well as the necessary supports to purchase internet access or gain digital literacy skills needed to complete activities of daily living during the pandemic.

The National Telecommunications and Information Administration (NTIA) highlighted the growing necessity of broadband in daily lives through its analysis of NTIA Internet Use Survey data, noting that Americans turn to broadband internet service for every facet of daily life including work, study, and healthcare.119 With increased use of technology for daily activities and the movement by many businesses and schools to operating remotely during the pandemic,

119 See, e.g., Nation Telecommunications and Information Administration, More than Half of American Households Used the Internet for Health-Related Activities in 2019, NTIA Data Show (December 7, 2020), https://www.ntia.gov/blog/2020/more-half-american-households-used-internet-health-related-activities-2019-ntia- data-show; Nation Telecommunications and Information Administration, Nearly a Third of American Employees Worked Remotely in 2019, NTIA Data Show (September 3, 2020) https://www.ntia.gov/blog/2020/nearly -third- american-employees-worked-remotely-2019-ntia-data-show; and generally, Nation Telecommunications and Information Administration, Digital Nation Data Explorer (June 10, 2020), https://www.ntia.gov/data/digital -nation- data-explorer.
87 broadband has become even more critical for people across the country to carry out their daily lives.

However, even in areas where broadband infrastructure exists, broadband access may be out of reach for millions of Americans because it is unaffordable, as the United States has some of the highest broadband prices in the Organisation for Economic Co-operation and Development (OECD).120 According to a 2021 Pew Research Center study, 20 percent of non- broadband users say that the monthly cost of home broadband is the primary reason they do not have broadband at home, and 40 percent say that cost is one reason for their lack of home broadband.121 Further, according to another survey, 22 percent of parents with homebound schoolchildren during the COVID-19 pandemic say that it is very or somewhat likely that their children will have to rely on public wi-fi to finish their schoolwork because there is no reliable internet connection at home; this percentage nearly doubles for lower-income parents, 40 percent of whom noted that their children will have to rely on public wi-fi.122 The same survey showed that 36 percent of lower-income parents with homebound children say their child will not be able to complete their schoolwork because they do not have access to a computer at home.123 Public Comment: Many commenters highlighted the importance of broadband access during the pandemic, including for remote work and education, and argued that affordability presents a major barrier to broadband adoption by households; in other words, many households live in areas that have broadband infrastructure and service available but are unable to purchase

120 BroadbandSearch Blog Post, How Do U.S. Internet Costs Compare To The Rest Of The World?, available at https://www.broadbandsearch.net/blog/internet-costs-compared-worldwide. 121 Pew Research Center, Mobile Technology and Home Broadband 2021 (June 3, 2021), https://www.pewresearch.org/internet/2021/06/03/mobile-technology-and-home-broadband-2021/. 122 Pew Research Center, 53% of Americans Say the Internet Has Been Essential During the COVID -19 Outbreak (April 30, 2020), https://www.pewresearch.org/internet/2020/04/30/53 -of-americans-say-the-internet-has-been- essential-during-the-covid-19-outbreak/.
123 Id.
88 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. 89 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.

Public Comment: Some commenters also use the term “gap networks” to refer to equipment installed as part of wi-fi systems, such as routers, repeaters, and access points; this equipment provides consumer access to an existing broadband network and does not require new network build-out or construction. These commenters recommended that Treasury permit, as assistance to households for internet access, investments in public wi-fi networks, free wi-fi in public housing communities, and other equipment that offers internet access to end users by utilizing existing broadband networks.

Other commenters recommended that eligible uses in this category include providing devices and equipment necessary to access the internet, like computers and routers, directly to low-income households.

Treasury Response: Treasury has determined that these services, which expand internet access without constructing new networks, are an appropriate enumerated eligible use as assistance to households to respond to a negative economic impact, and they are permitted under the final rule. Treasury is clarifying that eligible uses under this category can also include a wide range of programs and services to expand internet access and digital literacy, such as subsidies for the cost of internet service, other programs that support adoption of internet service where available, digital literacy programs, or programs that provide devices and equipment to access the internet (e.g., programs that provide equipment like tablets, computers, or routers) to households. Recipients seeking to use funds for equipment should refer to the section Capital 90 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.
91 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.

92 6. Survivor’s benefits. The interim final rule included an enumerated eligible use for survivor’s benefits to surviving family members of individuals who have died from COVID-19, including cash assistance to widows, widowers, or dependents.

Public Comment: Treasury did not receive any comments on the inclusion of survivor’s benefits as an enumerated use for impacted households in the interim final rule.

Treasury Response: This use of funds remains eligible under the final rule. Consistent with the general reorganization noted above, the final rule organizes survivor’s benefits under assistance to households to clarify that households are the intended beneficiaries of survivor’s benefits.

7. Assistance accessing or applying for public benefits or services. Recognizing that eligible households often face barriers to accessing public benefits or services that improve health and economic outcomes, the interim final rule included as an enumerated eligible use in disproportionately impacted communities, public benefits navigators to assist community members with navigating and applying for available federal, state, and local public benefits or services. Treasury also clarified in subsequent guidance after the interim final rule that this eligible use category would include outreach efforts to increase uptake of the Child Tax Credit.

Background: The under-enrollment of eligible households in social assistance programs is a well-recognized and persistent challenge. There are many reasons why a household may not be receiving a particular benefit even though they are eligible. For many federal programs, enrollment processes vary from state-to-state. Sometimes, households are simply unaware that they are eligible for a particular benefit.124 For example, despite having one of the highest rates

124 Amy Finkelstein & Matthew J Notowidigdo, Take-Up and Targeting: Experimental Evidence from SNAP, The Quarterly Journal of Economics, vol 134(3), pages 1505-1556 (2019), https://www.nber.org/papers/w24652. 93 of participation of any benefits program, nearly 20 percent of eligible individuals do not participate in the Supplementary Nutritional Assistance Program (SNAP).125 In other cases, policies like public charge and asset testing can discourage otherwise eligible households.126 While the gap between households that need assistance and the number of households participating in public benefit programs has always existed, narrowing that gap and ensuring households receive the support they need is critical in mitigating the negative economic impacts of the pandemic.

Public Comment: Treasury has also received feedback from recipients and stakeholders noting the need to increase awareness and uptake of assistance programs, including gaps that remain in enrollment of eligible households in programs to address the negative economic impacts of the pandemic.127
Treasury Response: Treasury has determined that this impact of the pandemic is widely experienced across many jurisdictions and programs or services to increase awareness and uptake of assistance programs would respond to the pandemic’s negative economic impact in all communities. As such, in the final rule, this use is eligible for any impacted household or class of households, not only in disproportionately impacted communities.

125 United States Department of Agriculture, Trends in Supplemental Nutrition Assistance Program Participation Rates: Fiscal Year 2016 to Fiscal Year 2018 (May 2021), https://fns-prod.azureedge.net/sites/default/files/resource- files/Trends2016-2018.pdf.
126 Jeremy Barofsky et al., Spreading Fear: The Announcement Of The Public Charge Rule Reduced Enrollment In Child Safety-Net Programs, Health Affairs (October 2020), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2020.00763. 127 See, e.g., U.S. Department of the Treasury, By ZIP Code: Number of Children under Age 18 with a Social Security Number Who Are Not Found on a Tax Year 2019 or 2020 Tax Return but who Appear on a Tax Year 2019 Form 1095 and Associated Number of Policy Holders (June 2021), https://home.treasury.gov/system/files/131/Estimated-Counts-of-Children-Unclaimed-for-CTC-by-ZIP-Code- 2019.pdf.
94 8. Promoting healthy childhood environments. The interim final rule included programs and services that promote healthy childhood environments as an enumerated eligible use for disproportionately impacted households. The interim final rule listed three programs or services included under this use: childcare; programs to provide home visits by health professionals, parent educators, and social service professionals to individuals with young children to provide education and assistance for economic support, health needs, or child development; and services for child welfare-involved families and foster youth to provide support and education on child development, positive parenting, coping skills, or recovery for mental health and substance use.

The interim final rule also included an enumerated eligible use for early learning services in disproportionately impacted communities, to address disparities in education.

Public Comment: Childcare and Early Learning: Treasury received multiple comments that were supportive of the provision of childcare. Treasury has also received multiple comments and questions indicating that recipients have identified a need for childcare for a broader range of households and communities, for example those that may need childcare in order to return to work, in addition to households and communities disproportionately impacted by the pandemic.

Several commenters expressed uncertainty about how childcare facilities should interact with the boundaries of a QCT. Finally, one commenter recommended that pre-K or early learning services encompass care for infants and toddlers, arguing that these types of care are often more expensive or challenging to access for families.

Background: Childcare and Early Learning: As daycares and schools closed in-person activities during the pandemic, many working families were left without childcare during the 95 day.128 Although daycare centers and schools have since reopened in many communities, there remains a persistent childcare shortage as childcare employment levels have not fully rebounded since the sharp decline in childcare employment at the beginning of the pandemic.129 As a result, working parents in communities across the country, and more specifically women, may face challenges entering or reentering the labor force.130
Low-income households are also more likely to lose access to quality childcare.131 The widespread closure of childcare centers combined with a lack of access to paid family leave means parents in low-income households are more likely to experience a reduction of income or leave their jobs due to a lack of childcare options.132 Additionally, childcare providers serving primarily low-income families were less likely to remain open during the pandemic because of tighter profit margins and general community financial insecurity, compared to childcare providers serving primarily high-income families.133,134

128 Women have carried a larger share of childcare responsibilities than men during the COVID –19 crisis. See, e.g., Gema Zamarro & Marı´a J. Prados, Gender differences in couples’ division of childcare, work and mental health during COVID– 19, Rev. Econ. Household 19:11–40 (2021), available at https://link.springer.com/article/

10.1007/s11150-020-09534-7; Titan Alon et al., The Impact of COVID–19 on Gender Equality, National Bureau of Economic Research Working Paper 26947 (April 2020), available at https://www.nber.org/ papers/w26947. 129 See, e.g., Center For The Study Of Child Care Employment (CSCCE), Child Care Sector Jobs: BLS Analysis (November 8, 2021), https://cscce.berkeley.edu/child-care-sector-jobs-bls-analysis/; Emma K. Lee, and Zachary Parolin. The Care Burden during COVID-19: A National Database of Child Care Closures in the United States, Socius (January 2021), doi:10.1177/23780231211032028.
130 Jason Furman, Melissa Schettini Kearney, and Wilson Powell, The Role of Childcare Challenges in the US Jobs Market Recovery During the COVID-19 Pandemic, NBER Working Paper No. 28934 (June 2021), https://www.nber.org/papers/w28934.
131 U.S. Census Bureau, Phase 3.2 Household Pulse Survey: Table 2. Childcare Arrangements in the Last 4 Weeks for Children Under 5 Years Old, by Selected Characteristics, (Washington: 2021), available at https://www.census.gov/programs-surveys/household-pulse-survey/data.html. 132 Id.
133 N. Kalluri, C. Kelly, & A. Garg, Child Care During the COVID-19 Pandemic: A Bad Situation Made Worse.

Pediatrics (2021), https://doi.org/10.1542/peds.2020-041525. 134 National Association for the Education of Young Children, Am I Next? Sacrificing to Stay Open, Child Care Providers Face a Bleak Future Without Relief (December 2020), https://www.naeyc.org/sites/default/files/globally - shared/downloads/PDF.
96 In addition to disruptions to childcare, early learning services were also significantly impacted by the pandemic, and the disruption of these services had widespread ramifications for learning loss, parental support, and equity. Early learning centers have seen declined enrollment across the board, though there was a larger dip in enrollment for low-income households.135 This lower enrollment coincides with a diminishing workforce, as similarly to childcare, early childhood educators have been leaving the profession due to long hours, low pay,136 and health and safety concerns.137 As a result, children’s school readiness has suffered, leading to potential long-term impacts on life outcomes.138 The impact also extended 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

135 G. G. Weisenfeld, Impacts of Covid-19 on Preschool Enrollment and Spending, New Brunswick, NJ:

National Institute for Early Education Research (2021), https://nieer.org/wp - content/uploads/2021/03/NIEER_Policy_Brief_Impacts-of-Covid-19 on_Preschool_Enrollment_and_Spending_3_16_21.pdf.
136 Heather Long, ‘The pay is absolute crap’: Child-care workers are quitting rapidly, a red flag for the economy, Washington Post (September 19, 2021), https://www.washingtonpost.com/business/2021/09/19/childcare -workers- quit/.
137 Monash University, The emotional toll of COVID-19 among early childhood educators (August 5, 2020) https://lens.monash.edu/@education/2020/08/05/1381001/the-emotional-toll-of-covid-19-among-early-childhood- educators.
138 Daphna Bassok and Anna Shapiro, Understanding COVID-19-era enrollment drops among early-grade public school students, Brookings Institution (February 22, 2021), https://www.brookings.edu/blog/brown -center- chalkboard/2021/02/22/understanding-covid-19-era-enrollment-drops-among-early-grade-public-school-students/. 97 learning services are available to impacted households or classes of households, not just those disproportionately impacted. These eligible uses can include new or expanded services, increasing access to services, efforts to bolster, support, or preserve existing providers and services, and similar activities.

Further, Treasury is clarifying that improvements to or new construction of childcare, daycare, and early learning facilities are eligible capital expenditures. Recipients seeking to use funds for capital expenditures should refer to the section Capital Expenditures in General Provisions: Other for additional eligibility standards that apply to uses of funds for capital expenditures.

Public Comment: Home Visiting: Treasury has also received questions about whether the provision of home visiting services would be responsive to the health and mental health needs of impacted new mothers, citing the positive mental health impacts shown on the mother as well as improved outcomes for children.

Background: Home Visiting: Pregnant and recently pregnant individuals are at an increased risk for serious illness from COVID-19.139 Furthermore, pregnant individuals with COVID-19 are more likely to experience preterm birth (delivering the baby earlier than 37 weeks).140 In addition to heightened health risks from COVID-19, pregnant individuals may have experienced significant changes to their prenatal care during the pandemic141 or may also have

139 Centers for Disease Control and Prevention, Pregnant and Recently Pregnant People, https://www.cdc.gov/coronavirus/2019-ncov/need-extra-precautions/pregnant-people.html (last visited November 9, 2021).
140 Id.
141 Sarah Javaid, Sarah Barringer, Sarah D Compton, Elizabeth Kaselitz, Maria Muzik, Cheryl A. Moyer, The impact of COVID-19 on prenatal care in the United States: Qualitative analysis from a survey of 2519 pregnant women, Midwifery, Volume 98, 2021, 102991, ISSN 0266-6138, https://doi.org/10.1016/j.midw.2021.102991. 98 experienced increased mental health challenges, including high levels of depression, anxiety, loneliness, and post-traumatic stress during the pandemic.142 Home visiting services provided to families, particularly new mothers and newborns, feature regular home visits from trained nurses, social workers, and/or counselors who provide health care, mental health resources, positive parenting support, support in making personal health decisions, and awareness of other potentially helpful services. These functions have become even more essential at mitigating negative factors associated with the pandemic. Home visits give professionals a chance to flag potential domestic violence, which has risen worldwide over the course of the pandemic.143 Racial health disparities can also be driven down by home visits. For example, Black women are more likely to avoid hospitals during the pandemic, and home visitors can help either assuage concerns around hospitals or give effective advice for alternative methods of childbirth.144 Given the disproportionate effect of the pandemic on people of color, home visits are an essential equity tool that tackle major negative effects of the pandemic. These are just a few selections from the evidence that suggests many home visiting models can have a positive effect on maternal physical and mental health.145 Treasury Response: Home Visiting: Given the widespread impact of COVID-19 on pregnant and recently pregnant individuals, Treasury is re-categorizing home visiting services as an eligible use for impacted communities, not just disproportionately impacted communities.

142 A Basu, HH Kim, R Basaldua, KW Choi, L Charron, et al., A cross-national study of factors associated with women’s perinatal mental health and wellbeing during the COVID-19 pandemic, PLOS ONE 16(4): e0249780, (2021), https://doi.org/10.1371/journal.pone.0249780.
143 Amanda Taub, A New Covid-19 Crisis: Domestic Abuse Rises Worldwide, New York Times (April 6, 2020), https://www.nytimes.com/2020/04/06/world/coronavirus-domestic-violence.html. 144 Xenia Shih Bion, Efforts to Reduce Black Maternal Mortality Complicated by COVID -19, California Health Care Foundation (April 20, 2020), https://www.chcf.org/blog/efforts -reduce-black-maternal-mortality-complicated- covid-19/.
145 U.S. Department of Health and Human Services, Home Visiting Evidence of Effectiveness, https://homvee.acf.hhs.gov/outcomes/maternal%20health/In%20Brief. 99 Under the final rule, these eligible uses are available to impacted households or classes of households.

Public Comment: Child Welfare: While the interim final rule noted that certain types of assistance, particularly around child development and parenting, were eligible for child welfare- involved families, Treasury has received some recipient questions asking whether financial, educational, housing, or other supports and services are eligible uses for foster youth, including those aging out of the system, and child welfare-involved families. Other commenters asked about whether funding for kinship care would be eligible.

Background: Child Welfare: The COVID-19 pandemic placed meaningful strain on the child welfare and foster care system. Court hearings were delayed,146 essential mental health care was shifted to a virtual environment, and attendance and performance in school among foster children dropped sharply.147 Additionally, there was a nationwide rise of new children entering the foster care system and many states placed temporary moratoria on children aging out of the foster care system.148 As these temporary moratoria expire, additional support will be needed to assist children exiting the system.

Additionally, financial and material hardship are causal factors in the increase of new children entering the foster care system, whether through loss of a caregiver, domestic violence,149 or other associated costs of the pandemic. Therefore, support to decrease these

146 National Conference of State Legislatures, Criminal Justice System Responses to COVID -19 (November 16, 2020), https://www.ncsl.org/research/civil-and-criminal-justice/criminal-justice-and-covid-19.aspx. 147 John Burton Advocates for Youth, The Cumulative Impact of the Pandemic on Youth Who Have Been in Foster Care or Homeless (May 2020) https://jbay.org/wp-content/uploads/2021/04/JBAY-COVID-19- Impact.pdf.
148 John Kelly, Next Week, Thousands of Foster Youth Will Age Out on the Same Day (September 21, 2021), https://imprintnews.org/subscriber-content/thousands-of-foster-youth-will-age-out-on-the-same-day/59006. 149 Conrad-Hiebner, Aislinn, and Elizabeth Byram, The Temporal Impact of Economic Insecurity on Child Maltreatment: A Systematic Review. Trauma, Violence, & Abuse, vol. 21, no. 1, Jan. 2020, pp. 157 –178, doi:10.1177/1524838018756122.
100

hardships will support families and increase positive outcomes for youth and families that may otherwise become involved in the child welfare system.

Treasury Response: In the final rule, Treasury is clarifying that services to foster youth, including those aging out of the system, and child welfare-involved families may encompass a wide array of financial, educational, child development, or health supports, or other supports necessary, including supports for kinship care.

9. Addressing the impacts of lost instructional time.

Public Comment: The interim final rule included an enumerated eligible use to address educational disparities in disproportionately impacted communities, recognizing that underserved students have been more severely impacted by the pandemic and including responsive services for early learning, enhance funding to high-poverty districts, and providing evidence-based services to address the academic, social, emotional, and mental health needs of students. Some commenters expressed concerns that learning loss or the negative impacts of lost instructional time due to school closures or remote education during the pandemic had affected a significant share of students in grades kindergarten through twelve (K-12), including students who may not fall within a disproportionally impacted group.

Background: The COVID-19 pandemic resulted in the widespread closure of schools across the nation. While many schools and districts reopened to in-person instruction or implemented remote learning, the shift was not immediate or without consequence. Children who received virtual only or combined remote and in-person instruction were more likely to 101

report experiencing negative mental- and physical health outcomes than children who received in-person instruction.150
Treasury Response: Under the final rule, addressing the impact of lost instructional time and/or learning loss is an enumerated eligible use for impacted households. When providing services to address lost instructional time, recipients may presume that any K-12 student who lost access to in-person instruction for a significant period of time has been impacted by the pandemic and is thus eligible for responsive services.

Interventions or services that address the impact of lost instructional time may include offering high-quality tutoring and other extended learning opportunities, providing differentiated instruction, implementing activities to meet the comprehensive needs of students, expanding and improving language access for parents and families, providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment, improving student engagement in distance education, and administering and using high-quality assessments to assess students’ academic progress, among others. In designing services under this eligible use, recipients may wish to reference guidance from the Department of Education on strategies for addressing lost instructional time.151 The final rule also maintains a separate enumerated eligible use for addressing educational disparities in disproportionately impacted communities. This eligible use includes services to address disparities in educational outcomes that predate the pandemic and amplified its impact on underserved students; these include, for example, enhanced funding to high-poverty

150 Verlenden JV, Pampati S, Rasberry CN, et al. Association of Children’s Mode of School Instruction with Child and Parent Experiences and Well-Being During the COVID-19 Pandemic — COVID Experiences Survey, United States, October 8–November 13, 2020. MMWR Morb Mortal Wkly Rep 2021;70:369–376. DOI:
http://dx.doi.org/10.15585/mmwr.mm7011a1external icon.
151 U.S. Department of Education, Strategies for Using American Rescue Plan Funding to Address the Impact of Lost Instructional Time, August 2021. Retrieved from https://www2.ed.gov/ documents/coronavirus/lost- instructional-time.pdf.
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districts and providing evidence-based services to address the academic, social, emotional, and mental health needs of students.

Finally, as described in the section Public Health, recipients can provide a broad range of behavioral health services, including services for children and youth in schools, to respond to the impacts of the pandemic on mental health and other behavioral health issues. When providing behavioral health services, recipients may presume that the general public was impacted by the pandemic and provide behavioral health services to members of the general public, including children and youth in schools, without any further analysis of impacts of the pandemic on those individuals and whether the service is responsive.

10. Promoting long-term housing security: affordable housing and homelessness. Under the interim final rule, recipients may use SLFRF funds to provide a set of housing services to communities that have been disproportionately impacted by the pandemic. Specifically, the interim final rule provided that programs or services that address housing insecurity, lack of affordable housing, or homelessness, were responsive to the negative economic impacts of the pandemic when provided to disproportionately impacted households and communities. The enumerated uses included supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless and development of affordable housing to increase supply of affordable and high-quality living units. Many recipients have already announced plans to use SLFRF funds for affordable housing interventions in all of these categories. Treasury received many comments asking for additional clarity or flexibility in these uses.
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As detailed below, based on multiple public comments and questions and Treasury’s subsequent analysis, Treasury has determined that supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless, and the development of affordable housing to increase supply of affordable and high-quality living units are responsive to the needs of impacted populations, not only disproportionately impacted populations. This final rule reflects this clarification and builds on the objectives stated in the interim final rule to improve access to stable, affordable housing, including through interventions that increase the supply of affordable and high-quality living units, improve housing security, and support durable and sustainable homeownership.

Finally, note that “emergency housing assistance,” or assistance for responses to the immediate negative economic impacts of the pandemic through services like financial assistance for rental arrears or mortgage payments, is also an eligible use category for assistance to households under the final rule; see the eligible use for “emergency housing assistance” above.

The provision of housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity remains an eligible use under assistance to disproportionately impacted households; for discussion, see the eligible use for “housing vouchers and assistance relocating” below.

Background: Affordable Housing: It is clear that the ongoing pandemic and resulting economic crisis are having a profound, long-term negative effect on the pre-existing affordable housing crisis facing low-income households.152 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

152 Consumer Financial Protection Bureau, Housing insecurity and the COVID -19 pandemic (March 2020), https://files.consumerfinance.gov/f/documents/cfpb_Housing_insecurity_and_the_COVID -19_pandemic.pdf. 104

increase in the sale price of homes.153 Meanwhile, many low-income renters and homeowners are struggling with lost employment and income and are behind on their housing payments.154 Public Comment: Affordable Housing Outside of Low-Income Geographies: A major theme in comments was that affordable housing interventions, especially development of affordable housing, should be allowed outside of QCTs, as concentrating the supply of affordable housing in low-income geographies can have the effect of increasing both concentrated poverty and racial and economic segregation, while locking lower-income households in need of housing support out of high-opportunity neighborhoods with access to employment and amenities.

Treasury Response: Affordable Housing Outside Low-Income Geographies: As previously stated, affordable housing is not confined to low-income geographies under the interim final rule. As discussed elsewhere, the interim final rule presumed that QCTs, as well as communities served by Tribal governments, were disproportionately impacted for administrative convenience, but recipients may identify other populations, households, or geographic areas with disparate impacts of COVID-19 and provide affordable housing services to them. For example, under the interim final rule, a city could determine that its low-income residents faced disproportionate impacts of COVID-19 and develop affordable housing targeted to these households. Such a scenario could include, for example, affordable projects in higher-income neighborhoods that would allow residents to live closer to jobs and well-resourced schools.

153 Joint Center For Housing Studies Of Harvard University, The State of the Nation’s Housing (June 2021), https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2021.pdf. 154 Davin Reed and Eileen Divringi, Household Rental Debt During COVID-19: Update for 2021, Federal Reserve Bank of Philadelphia (2020), available at: https://www.philadelphiafed.org/community-development/housing-and- neighborhoods/household-rental-debt-during-covid-19-update-for-2021. Further, some research suggests that liquidity may be a more important predictor of default than other factors, including inco me or equity. See Trading Equity for Liquidity (June 2019), available at https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan -chase- and-co/institute/pdf/institute-trading-equity-for-liquidity.pdf. 105

Additionally, as noted above, Treasury is finalizing the rule with some changes to the treatment of affordable housing development designed to clarify that permanent supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless, and the development of affordable housing to increase supply of affordable and high-quality living units, are responsive to individuals and households that were impacted by the pandemic in addition to those that were disproportionately impacted. This shift is in line with commenters’ recommendations and consistent with the facts described above, which demonstrate that lack of supply of affordable housing units contributed to the pandemic’s impact on housing insecurity and unsustainable housing cost burdens and that these impacts were experienced broadly across the country.

Public Comment: Eligible Activities: Many commenters asked for clarity on what types of activities (e.g., land acquisition, construction, pre-construction costs, operating costs, etc.) are eligible uses of SLFRF, and what affordability criteria must be applied to affordable housing development. Commenters encouraged Treasury to allow the full array of affordable housing activities, including particular requests for broad flexibility for Tribal communities, and to specify that “development” should include construction, preservation, rehabilitation, and operation. Other commenters requested clarification about permissible program administration approaches for affordable housing, such as contracting methods and distribution of funds.

Some commenters asked that Treasury require SLFRF funds to be focused on the lowest- income households, who suffer the most severe rent burdens and risks of housing instability, and whose housing situation has left them particularly vulnerable to COVID-19. For example, one commenter argued that SLFRF funds should only be used to support affordable housing for households making 50 percent of AMI or less and that recipients should be required to set aside 106

significant portions of any developments for renters making 30 percent of AMI or less and persons with physical and sensory disabilities. Other commenters requested a more flexible approach to affordable housing definitions.

Treasury Response: Eligible Activities: The final rule clarifies eligibility of affordable housing development for recipients; these uses were eligible under the interim final rule, but Treasury is providing further guidance to enhance clarity and respond to recipient and commenter questions.

As with all interventions to address the negative economic impacts of the pandemic, affordable housing projects must be responsive and proportional to the harm identified. This test may be met by affordable housing development projects – which may involve large expenditures and capital investments – if the developments increase the supply of long-term affordable housing for low-income households. While there may be less costly (or non-capital) alternatives to affordable housing development, a comprehensive response to the widespread housing challenges underscored by the pandemic will require the production of additional affordable homes, and targeted affordable housing development is a cost-effective and proportional response to this need.

For purposes of this test, Treasury will presume that any projects that would be eligible for funding under either the National Housing Trust Fund (HTF) or the Home Investment Partnerships Program (HOME) are eligible uses of SLFRF funds. Note that these programs use different income limits than the definition of low- and moderate-income adopted by Treasury.

Given the severity of the affordable housing shortage, and the ways in which the pandemic has exacerbated the need for affordable, high-quality dwelling units, Treasury has determined that the households served by these federal housing programs have been impacted by the pandemic 107

and its negative economic impacts and that development of affordable housing consistent with these programs is a related and reasonably proportional response to those impacts. Additionally, affordable housing projects provided by a Tribal government are eligible uses of SLFRF if they would be eligible for funding under the Indian Housing Block Grant program, the Indian Community Development Block Grant program, or the Bureau of Indian Affairs Housing Improvement Program. Alignment with these programs, which define “affordable housing” in a manner consistent with a proportionate response to the affordable housing challenges faced by low- and moderate-income households as a result of the negative economic impacts of the pandemic, is intended to give recipients comfort and clarity as they design a 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 108

subsidies) and wraparound services such as behavioral health services, employment services, and other supportive services, are eligible responses to the public health crisis or its negative economic impacts.

Treasury Response: The final rule maintains the eligibility of permanent supportive housing as an enumerated use. Treasury is also clarifying that other affordable housing developments targeted to specialized populations are also eligible, for example recovery housing for individuals in recovery from substance use.

Public Comment: Operating Expenses: Commenters specifically asked that Treasury allow the use of SLFRF funds for operating expenses of affordable housing units, as operating subsidies are typically required to reach extremely low-income households, whose affordable rents may be lower than the ongoing cost of operating their unit.

Treasury Response: Operating expenses for eligible affordable housing were an eligible use of funds under the interim final rule and the final rule maintains this treatment. This may include capitalized operating reserves.

Rehabilitation and repair of public housing will also be considered an eligible use of SLFRF funds.

Public Comment: Affordable Housing Loans and Revolving Loan Funds: Some commenters requested that loans with maturities beyond the period of performance or revolving loan funds that revolve beyond the period of performance be eligible uses of SLFRF funds if used for affordable housing. Some commenters pointed out that for-profit developers of low- income housing through the Low-Income Housing Tax Credit (LIHTC) may be deterred from accepting grants to bridge funding gaps in current LIHTC deals by the treatment of grants to for- profit entities in the calculation of eligible basis for the LIHTC. 109

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 110

across jurisdictions and populations, are eligible under the interim final rule as assistance to households and continue to be so under the final rule, as outlined below.

11. Paid sick, medical, or family leave.

Public Comment: Some commenters argued that the pandemic increased the need for paid sick or medical leave, as staying home when ill is recommended by the CDC to prevent spread of the virus but lack of access to paid sick leave often prevents workers from staying home. Other commenters recommended paid family leave as an eligible use, arguing that shortages in access to childcare or home health assistance, as well as school closures, may increase the need for family members to serve as caretakers.

Background: The COVID-19 pandemic highlighted the importance of paid leave as well as the number of workers who do not have access to paid sick and/or family leave. When workers have access to paid leave, they are less likely to report to work sick, and therefore less likely to spread illnesses in the workplace: one study demonstrates that the emergency sick leave provision of the Families First Coronavirus Response Act (FFCRA) reduced the spread of COVID-19.155
The lack of paid leave exacerbates financial hardships experienced as a result of the public health emergency. A 2018 survey by the Department of Labor found that two-thirds of employees that took unpaid or partial-paid leave experienced financial hardship.156 Furthermore, because the Family and Medical Leave Act (FMLA) excludes small employers, part-time

155 Stefan Pichler, Katherine Wen, and Nicolas R. Ziebarth, COVID-19 Emergency Sick Leave Has Helped Flatten The Curve In The United States: Study examines the impact of emergency sick leave on the spread of COVID -19, Health Affairs 39, no. 12 (2020): 2197-2204, https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.00863. 156 Scott Brown et al., Employee and Worksite Perspectives of the Family and Medical Leave Act: Results from the 2018 Surveys, Abt Associates (July 2020),
https://www.dol.gov/sites/dolgov/files/OASP/evaluation/pdf/WHD_FMLA2018SurveyResults_FinalReport_Aug20

20.pdf.
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workers, and workers who have been with their employer for less than a year, 44 percent of workers do not have access to even unpaid leave.157 Workers of color and workers with lower incomes are less likely to have access to paid leave.158,159 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 child.160 COVID-19 has also increased the levels of “caregiving intensity”161 and “caregiving burden”162 for those providing care to seniors or older family members.163,164 When surveyed, more than half of caregivers reported that COVID-19 increased both the amount of

157 Id.
158 Ann P. Bartel et al., Racial and ethnic disparities in access to and use of paid family and medical leave: evidence from four nationally representative datasets, U.S. Bureau of Labor Statistics (BLS) (January 2019), https://www.bls.gov/opub/mlr/2019/article/racial-and-ethnic-disparities-in-access-to-and-use-of-paid-family- andmedical-leave.htm.
159 U.S. Bureau of Labor Statistics, Employee Benefits in the United States (March 2019), https://www.bls.gov/ncs/ebs/benefits/2019/ownership/civilian/table31a.pdf. 160 Maya Rossin-Slater et al., Local exposure to school shootings and youth antidepressant use, Proceedings of the National Academy of Sciences, vol 117(38), pages 23484-23489 (2020), https://www.pnas.org/content/117/38/23484; Ariel Marek Pihl and Gaetano Basso, Did California Paid Family Leave Impact Infant Health?, Journal of Policy Analysis and Management, https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.2210. 161 J. C. Jacobs, A. Laporte, C. H. Van Houtven, P. C. Coyte, Caregiving intensity and retirement status in Canada.

Social Science & Medicine, 102, 74–82 (2014),
https://www.sciencedirect.com/science/article/abs/pii/S0277953613006631. 162 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), https://www.tandfonline.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 health -related quality of life of informal caregivers.
164 SA Cohen, ZJ Kunicki, MM Drohan, ML Greaney, Exploring Changes in Caregiver Burden and Caregiving Intensity due to COVID-19, Gerontology and Geriatric Medicine (January 2021), doi:10.1177/2333721421999279. 112

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 illness or hospitalization due to COVID-19 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 insurance.166 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.167 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;

165 Id.
166 Jennifer Tolbert et al., Key Facts about the Uninsured Population, Kaiser Family Foundation (November 6, 2020), https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/. 167 Joshua Aarons et. 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/publication/covid -19-recession-extended-summer-2020- more-3-million-adults-lost-employer-sponsored-health-insurance-coverage-and-2-million-became-uninsured. 113

Medicaid and CHIP enrollment increased by 9 percent from February to September 2020168 and

8.3 million people enrolled in insurance through the ACA marketplace.169 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
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.

168 Centers for Medicare and Medicaid Services, Medicaid and CHIP Enrollment Trends Snapshot through September 2020 (Washington: 2021), available at https://www.medicaid.gov/sites/default/files/2021-01/september- medicaid-chip-enrollment-trend-snapshot.pdf.
169 Centers for Medicare and Medicaid Services, 2021 Federal Health Insurance Exchange Weekly Enrollment Snapshot: Final Snapshot (January 12, 2021) available at https://www.cms.gov/newsroom/fact-sheets/2021-federal- health-insurance-exchange-weekly-enrollment-snapshot-final-snapshot. 170 Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia, U.S. Health Insurance Coverage in 2020: A Looming Crisis in Affordability (New York: Commonwealth Fund, 2020), available at https://www.commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-health-coverage-2020- biennial.
171 Id.
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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, 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

172 Federal Deposit Insurance Corporation, FDIC National Survey of Unbanked and Underbanked Households (2015), https://www.fdic.gov/householdsurvey/2015/2015execsumm.pdf. 173 Federal Deposit Insurance Corporation, How America Banks: Household Use of Banking and Financial Services 2019 FDIC Survey, https://www.fdic.gov/analysis/household-survey/2019report.pdf. 115

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 pre-paid 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,

174 Board of the Governors of the Federal Reserve System, Report on the Economic Well -Being of U.S. Households in 2018 - May 2019, https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in- 2018-banking-and-credit.htm.
175 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/B978-0-12-824313-8.00008-5. 116

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 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 117

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 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,

176 Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey: Concepts and Definitions, https://www.bls.gov/cps/definitions.htm (last visited November 9, 2021). 177 Id.
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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 workers during the pandemic.178 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,

178 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.
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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 SLFRF 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 SLFRF 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 the recipient concurrently expands benefits. Finally, one commenter suggested a cap on the amount of funds that can be used for this purpose.
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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 SLFRF funds. Finally, while, in the absence of the SLFRF, trust fund deposits would likely be funded through increases on employer payroll taxes, the eligibility of uses of SLFRF funds does not depend on how obligations would otherwise be satisfied if the SLFRF 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, SLFRF 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 SLFRF funds would flow to unemployed workers. As such, through December 31, 2024, recipients that deposit SLFRF funds into an unemployment insurance trust fund or use SLFRF 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 a way that results in a reduction of average weekly benefit amounts or the number of weeks of benefits payable (i.e., the maximum benefit entitlement).
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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 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 SLFRF 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 SLFRF funds for contributions to unemployment insurance trust funds and repayment of the principal amount due on advances

179 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, https://home.treasury.gov/system/files/136/IFR-Explainer.pdf. 122

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 of January 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 SLFRF 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 SLFRF interim final rule sets a cap on the amount of SLFRF funds a recipient may use for trust fund contributions and repayment of principal on Title XII advances. Further, a recipient that deposits SLFRF funds into its unemployment insurance trust fund to fully restore the pre-pandemic balance may not draw down that 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 123

disproportionately lost their jobs during the COVID-19 pandemic and experienced disproportionate rates of negative health outcomes.180, 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 disasters.182 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 household income of $6,100 (measured in 2018 dollars).184

180 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/migrated_legacy_files//199901/covid -economic-equity-brief.pdf. 181 Adelle Simmons et 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/default/files/migrated_legacy_files//199516/covid -equity-issue-brief.pdf. 182 Perry, Brea L., Brian Aronson, and Bernice A. Pescosolido, Pandemic precarity: COVID-19 is exposing and exacerbating inequalities in the American heartland, National Academy of Sciences (Febuary 2021), https://www.pnas.org/content/118/8/e2020685118.
183 Id.
184 Jesse Bennet & Rakesh Kochhar, Two Recessions, Two Recoveries, Pew Research Center (December 13, 2019), https://www.pewresearch.org/social-trends/2019/12/13/two-recessions-two-recoveries-2/. 124

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 color.185 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.186 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

185 Darrick Hamilton et al., Building an Equitable Recovery: The role of Race, Labo r Markets, and Education, The New School’s Institute on Race and Political Economy (February 2021). 186 Adhikari S, Pantaleo NP, Feldman JM, 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.

JAMA Netw Open. 2020;3(7):e2016938. doi:10.1001/jamanetworkopen.2020.16938. 125

benefits and services, affordable housing development, healthy childhood environments, and addressing lost instructional time in K-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 QCT, to families and individuals living in QCTs, by Tribal or territorial governments, or to low-income 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 126

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. Community health workers. Treasury received few comments on community health workers, though one 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

187 See, e.g., Centers for Disease Control and Prevention, Community Health Worker (CHW) Toolkit, https://www.cdc.gov/dhdsp/pubs/toolkits/chw-toolkit.htm (last visited November 9, 2021). 127

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 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 SLFRF 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-

188 Environmental Protection Agency, 40 CFR 141.80(c)(1), https://www.ecfr.gov/current/title -40/chapter- I/subchapter-D/part-141/subpart-I/section-141.80.
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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 mobility.189 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

189 See, e.g., Opportunity Insights, Creating Moves To Opportunity (August 2019), https://opportunityinsights.org/policy/cmto/.
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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 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 health191 and includes “creat[ing] 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

190 U.S. Department of Health and Human Services, Neighborhood and Built Environment, https://health.gov/healthypeople/objectives-and-data/browse-objectives/neighborhood-and-built-environment#cit1 (last visited November 9, 2021).
191 Social determinants of health are “the conditions in the places where people live, learn, 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), https://www.cdc.gov/socialdeterminants/about.html (last visited November 9, 2021). 130

amenities in a community192 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 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 pre-existing 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

192 In public health, this is referred to as “built environment,” or the man-made physical aspects of a community (e.g., homes, buildings, streets, open spaces, and infrastructure). 193 J Beaulac, E Kristjansson, S Cummins, A systematic review of food deserts, 1966 -2007, Prev Chronic Dis 2009;6(3):A105, http://www.cdc.gov/pcd/issues/2009/jul/08_0163.htm. 194 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 Hohl, MC Kondo, JM Mac Donald, CC Branas, Effect of Greening Vacant Land on Mental Health of Community-Dwelling Adults: A Cluster Randomized Trial, JAMA Netw Open. 2018;1(3):e180298 (2018), available at: doi:10.1001/jamanetworkopen.2018.0298. 131

streetlights, greening or cleanup of public spaces or land, and other efforts to revitalize public spaces would support improved public safety.195,196
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 mortality and illness and increased well-being.197 Urban park use during the COVID-19 pandemic may have declined among lower-income individuals.198 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.199 Parks, recreation facilities, and sidewalks can promote healthier living environments by allowing for safe and socially distanced recreation during the COVID-19 pandemic.

195 See, e.g., Yanqing Xu, Cong Fu, Eugene Kennedy, Shanhe Jiang, Samuel Owusu-Agyemang, The impact of street lights on spatial-temporal patterns of crime in Detroit, Michigan, Cities, Volume 79, Pages 45 - 52, ISSN 0264-2751 (2018), https://doi.org/10.1016/j.cities.2018.02.021. 196 A. Chalfin, B. Hansen, J. Lerner et al., Reducing Crime Through Environmental Design: Evidence from a Randomized Experiment of Street Lighting in New York City, Journal of Quantitative Criminology (2021), https://doi.org/10.1007/s10940-020-09490-6.
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-health-policy-statements/policy- database/2014/07/08/09/18/improving-health-and-wellness-through-access-to-nature. 198 LR Larson et al., Urban Park Use During the COVID-19 Pandemic: Are Socially Vulnerable Communities Disproportionately Impacted?, Front. Sustain. Cities 3:710243 (2021), https://doi.org/10.3389/frsc.2021.710243. 199 JP Després, Severe COVID-19 outcomes — the role of physical activity. Nat Rev Endocrinol 17, 451–452 (2021). https://doi.org/10.1038/s41574-021-00521-1.
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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 lower-income 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 pre- existing disparities that contributed to COVID-19’s disproportionate impacts on low-income communities.

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,

200 Caroline George and Adie Tomer, Beyond ‘food deserts’: America needs a new approach to mapping food, Brookings Institution (August 17, 2021), https://www.brookings.edu/research/beyond-food-deserts-america-needs-a- new-approach-to-mapping-food-insecurity/.
201 However, Treasury cautions recipients that general infrastructure development, including street or road construction, remains a generally ineligible use of funds under the final rule. 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.
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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 neighborhood environments to public health and economic outcomes. Treasury agrees with commenters that high rates of vacant or 134

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
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Vacant or abandoned properties are generally those that have been unoccupied for an extended period of time or have no active owner.202 Such 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.

As noted above, demolition and greening (or other structure or lot remediation) of vacant or abandoned properties, including residential, commercial, or industrial buildings, is an eligible use of funds. Treasury encourages recipients to undertake these activities as part of a strategy for neighborhood revitalization and to consider how the cleared property will be used to benefit the disproportionately impacted community. Activities under this eligible use should benefit current residents and businesses, who experienced the pandemic’s impact on the community.

Treasury encourages recipients to be aware of potential impacts of demolition of vacant or abandoned residential properties. Demolition activities that exacerbate the pandemic’s impact on housing insecurity or lack of affordable housing are not eligible uses of funds. This risk is

202 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, https://www.hudexchange.info/programs/relocation/overview/#overview - of-the-ura (last visited November 9, 2021) and other state and local requirements like condemnation and code enforcement.

U.S. Department of Housing and Urban Development, What is the definition of vacant properties as referenced in NSP Eligible Use E - Redevelop Demolished or Vacant Properties? (October 2012), https://www.hudexchange.info/faqs/programs/neighborhood-stabilization-program-nsp/redevelopment/what-is-the- definition-of-vacant-properties-as-referenced-in-nsp-eligible/.

U.S. Department of Housing and Urban Development, What are the definitions of abandoned and foreclosed? (October 2012), https://www.hudexchange.info/faqs/programs/neighborhood-stabilization-program-nsp/program- requirements/eligible-activitiesuses/what-are-the-definitions-of-abandoned-and-foreclosed/. 136

generally more acute in jurisdictions with low or reasonable vacancy rates and less acute in jurisdictions with high or hyper-vacancy.203
Treasury presumes that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for low- and moderate-income individuals in an area where the availability of such housing is lower than the need for such housing would exacerbate the impacts of the pandemic on disproportionately impacted communities and that use of SLFRF funds for such activities would therefore be ineligible. This includes activities that convert occupiable housing units for low- and moderate-income individuals into housing units unaffordable to current residents in the community. Recipients may assess whether units are “occupiable” and what the housing need is for a given area taking into account vacancy rates (as described above), local housing market conditions (including conditions for different types of housing like multi-family or single-family), and applicable law and housing codes as to what units are occupiable. Recipients should also take all reasonable steps to minimize the displacement of persons due to activities under this eligible use category, especially the displacement of low-income households or longtime residents.

Recipients engaging in these activities and other construction activities with SLFRF funds should be mindful of the provisions of the Uniform Relocation Assistance and Real

203 For analysis of vacancy rates considered low or high, see, e.g., page 12 of Alan Mallach, The E mpty House Next Door, Lincoln Institute (May 2018), https://www.lincolninst.edu/publications/policy -focus-reports/empty-house- next-door#:~:text=%E2%80%9CAlan%20Mallach%20is%20the%20sage,through%20data%20and%20model%20 practices.

Recipients may determine the appropriate geographic unit for which to analyze vacancy rates (e.g., county, census tract) based on their circumstances. As needed, recipients may refer to the Current Population Survey/Housing Vacancy Survey data series on Housing Vacancies and Homeownership as one data source to assess vacancy rates.

See https://www.census.gov/housing/hvs/index.html. Other data sources include the American Community Survey five-year estimates, for smaller geographic areas, or tabulations by the Department of Housing a nd Urban Development based on United States Postal Service Vacancy Data. See, respectively, https://data.census.gov/cedsci/table?q=DP04&tid=ACSDP5Y2019.DP04&hidePreview=true or https://www.huduser.gov/portal/datasets/usps.html.
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Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. 4601, and the Department of Transportation’s implementing regulations, 49 CFR Part 24, that apply to projects funded with federal financial assistance, such as SLFRF funds. Recipients should also be aware of federal, state, and local laws and regulations, outside of SLFRF program requirements, that apply to this activity. Recipients must comply with the applicable requirements of the Uniform Guidance regarding procurement, contracting, and conflicts of interest and must follow the applicable laws and regulations in their jurisdictions. Recipients must also comply with all federal, state, and local public health and environmental laws or regulations that apply to activities under this eligible use category,204 for example, requirements around the handling and disposal of asbestos- containing materials, lead paint, and other harmful materials may apply, as well as environmental standards for any backfill materials used at demolition sites. Treasury encourages recipients to consult and apply best practices from the Environmental Protection Agency as well.

Recipients must evaluate each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward related to safely and properly conducting activities under this eligible use. This may include checking for any past violations recorded by state or local environmental, workplace safety, licensing, and procurement agencies, as well as regular reviews for suspensions, debarments, or stop work orders. Recipients must establish rigorous oversight and internal controls processes to monitor compliance with any applicable requirements, including compliance by subrecipients.

4. Addressing educational disparities. The interim final rule included an enumerated eligible use for addressing educational disparities in disproportionately impacted communities

204 See U.S. Environmental Protection Agency, Large-Scale Residential Demolition, https://www.epa.gov/large- scale-residential-demolition (last visited November 9, 2021) for a primer on requirements that may apply. 138

and outlined some enumerated eligible services under this use. These enumerated uses included early learning services, assistance to high-poverty school districts to advance equitable funding across districts and geographies, and educational and evidence-based services to address the academic, social, emotional, and mental health needs of students. Addressing the many dimensions of resource equity—including equitable and adequate school funding; access to a well-rounded education; well-prepared, effective, and diverse educators and staff; and integrated support services—can also begin to mitigate the impact of COVID-19 on schools and students and can close long-standing gaps in educational opportunity. As discussed above, in the final rule, early learning services and addressing the impacts of lost instructional time for K-12 students are enumerated eligible uses for impacted communities, not just disproportionately impacted communities.

Public Comment: Treasury received some comments in this category. Generally, commenters expressed agreement with the elements of the interim final rule regarding use of funds for addressing educational disparities. Some commenters had questions about whether a few specific uses of funds qualified under this category. For example, commenters inquired about whether the funds could be used for behavioral health in a school setting or cultural language classes.

Treasury Response: Treasury is maintaining these enumerated eligible uses in the final rule, which are now organized under the heading of “services to address educational disparities.” Treasury reiterates that these uses include addressing educational disparities exacerbated by COVID-19, including but not limited to: increasing resources for high-poverty school districts, educational services like tutoring or afterschool programs, summer education and enrichment programs, and supports for students’ social, emotional, and mental health needs. This also 139

includes responses aimed at addressing the many dimensions of resource equity—including equitable and adequate school funding; access to a well-rounded education; well-prepared, effective, and diverse educators and staff; and integrated support services—in order to close long-standing gaps in educational opportunity.

Further, Treasury is clarifying that improvements or new construction of schools and other educational facilities or equipment are eligible capital expenditures for disproportionately impacted communities. 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.

Treasury notes that services to promote healthy childhood environments, including childcare, early learning services, and home visiting programs that serve infants and toddlers, is a separate category of enumerated eligible uses for households impacted by the pandemic (see eligible uses for “promoting healthy childhood environments”). Similarly, education services to address the impact of lost instructional time during the pandemic are a separate eligible use category for households impacted by the pandemic; when providing these services, recipients may presume that any K-12 student who lost access to in-person instruction for a significant period of time has been impacted by the pandemic and is thus eligible for responsive services (see eligible uses for “addressing the impact of lost instructional time”).

Proposed Additional Enumerated Eligible Uses Not Incorporated 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 disproportionate public health or negative economic impacts of COVID–19 on low-income populations and communities. 140

In response, commenters proposed a wide variety of additional recommended enumerated eligible uses to assist disproportionately impacted households, ranging from general categories of services (e.g., long-term investments to remediate long-term disparities) to highly specific examples of services (e.g., a specific type of healthcare equipment). As discussed above, Treasury is including several additional categories of enumerated eligible uses in the final rule in response to public comments.

Given the large number and diversity of SLFRF recipients, Treasury’s approach to assistance to households in disproportionately impacted communities in the final rule aims to provide enumerated eligible uses that respond to disproportionate impacts of the pandemic experienced widely in many jurisdictions across the country and are intended to simplify and clarify these enumerated eligible uses. At the same time, Treasury recognizes that the impacts of the pandemic vary over time, by jurisdiction, and by population; as such, the final rule provides flexibility for recipients to identify additional disproportionate impacts to additional households or classes of households and pursue programs and services that respond to those disproportionate impacts.

In the final rule, Treasury has not chosen to include as enumerated uses all uses proposed by commenters; given the significant range, and in some cases highly specific nature, of the proposed uses Treasury was not able to assess that the proposed uses would respond to disproportionate impacts experienced in many jurisdictions across the country, supporting an enumerated eligible use available to all recipients presumptively. However, the final rule continues to provide a framework to allow recipients to identify and respond to additional disproportionate impacts (for details, see section General Provisions: Structure and Standards). 141

Some types of proposed additional enumerated eligible uses for assistance to households in disproportionately impacted communities were recommended by several commenters:
• Capital expenditures. Many commenters recommended that capital expenditures on many different types of public and private facilities be enumerated eligible uses. For clarity, Treasury has addressed all comments on the eligibility of capital expenditures on property, facilities, or equipment in one section (see section Capital Expenditures in General Provisions: Other).
• Equity funds. Several commenters recommended that Treasury permit SLFRF funds to be deposited into an equity fund to support long-term racial and economic equity investments. The eligibility of such use would depend on the specific structure and uses of funds. Under the statute, SLFRF funds can only support costs incurred until December 31, 2024; see section Timeline for Use of SLFRF Funds in Program Administration Provisions. Further, recipients may calculate the cost incurred with respect to investments in revolving loan funds based on the methodology described in section Treatment of Loans in Program Administration Provisions. Projects funded by a revolving loan fund using SLFRF funds would also need to be eligible uses of SLFRF funds. • Environmental quality and climate resilience. Several commenters recommended eligible uses to enhance environmental quality, remediate pollution, promote recycling or composting, or increase energy efficiency or electrical grid resilience. Whether these projects respond to the disproportionate impacts of the pandemic on certain communities would depend on the specific issue they address and its nexus to the public health and economic impacts of the pandemic.

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b. ASSISTANCE TO SMALL BUSINESSES

Background
The pandemic has severely impacted many businesses, with small businesses hit especially hard. Small businesses make up nearly half of U.S. private-sector employment205 and play a key role in supporting the overall economic recovery as they are responsible for two-thirds of net new jobs.206 Since the beginning of the pandemic, however, 400,000 small businesses have closed, with many more at risk.207 Sectors with a large share of small business employment have been among those with the most drastic drops in employment.208 The negative outlook for small businesses has continued: as of November 2021, approximately 66 percent of small businesses reported that the pandemic has had a moderate or large negative effect on their business, and over a third expect that it will take over 6 months for their business to return to their normal level of operations.209
This negative outlook is likely the result of many small businesses having faced periods of closure and having seen declining revenues as customers stayed home.210 In general, small

205 Board of Governors of the Federal Reserve System, Monetary Policy Repo rt (June 12, 2020), https://www.federalreserve.gov/monetarypolicy/ 2020-06-mpr-summary.htm. 206 U.S. Small Business Administration, Office of Advocacy, Small Businesses Generate 44 Percent of U.S.

Economic Activity (Jan. 30, 2019), https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u- s-economic-activity/.
207 Joseph R. Biden, Remarks by President Biden on Helping Small Businesses (Feb. 22, 2021), https:// www.whitehouse.gov/briefing-room/speechesremarks/2021/02/22/remarks-by-president-bidenon-helping-small- businesses/.
208 Daniel Wilmoth, U.S. Small Business Administration Office of Advocacy, The Effects of the COVID-19 Pandemic on Small Businesses, Issue Brief No. 16 (Mar. 2021), available at https://cdn.advocacy.sba.gov/wp- content/uploads/2021/03/02112318/COVID-19-Impact-On-Small-Business.pdf. 209 U.S. Census Bureau, Small Business Pulse Survey, https://portal.census.gov/pulse/data/ (last visited December 7, 2021).
210 Olivia S. Kim et al., Revenue Collapses and the Consumption of Small Business Owners in the Early Stages of the COVID-19 Pandemic (Nov. 2020), https://www.nber.org/papers/w28151. 143

businesses can face greater hurdles in accessing credit,211 and many small businesses were already financially fragile at the outset of the pandemic.212 While businesses everywhere faced significant challenges during the pandemic, minority- owned and very small businesses have faced additional obstacles. Between February and April 2020, the number of actively self-employed Black business owners decreased by 41 percent.213 During that same time period, Asian and Latino business owners decreased by 26 and 32 percent, respectively, compared to a 17 percent decrease in white business owners.214 Female business owners also saw significant impacts, with businesses owned by women falling by 25 percent.215 Many of the disparities in how minority business owners experienced the pandemic are rooted in systemic issues present even before the pandemic. For example, before the economic downturn, only 12 percent of Black-owned businesses and 19 percent of Hispanic-owned businesses had annual earnings of over $1 million compared to 31 percent of white-owned businesses.216 Minority-owned businesses were also overrepresented in industries hit hardest by the economic downturn (e.g., services, transportation and warehousing, healthcare and social assistance, administrative and support and waste management, and accommodation and food

211 See, e.g., Board of Governors of the Federal Reserve System, Report to Congress on the Availability of Credit to Small Businesses (Sept. 2017), available at https://www.federalreserve.gov/publications/2017-september- availability-of-credit-to-small-businesses.htm.
212 Alexander W. Bartik et al., The Impact of COVID-19 on small business outcomes and expectations, PNAS 117(30): 17656-66 (July 28, 2020), available at https://www.pnas.org/content/117/30/17656. 213 Robert Fairlie, The impact of COVID-19 on small business owners: Evidence from the first 3 months after widespread social-distancing restrictions, Journal of economics & management strategy (August 27, 2020), https://doi.org/10.1111/jems.12400.
214 U.S. Small Business Administration, The Effects of the COVID-19 Pandemic on Small Businesses (March 2021), https://cdn.advocacy.sba.gov/wp-content/uploads/2021/03/02112318/COVID-19-Impact-On-Small- Business.pdf.
215 Robert Fairlie, supra note 199.
216 Federal Reserve Bank of Atlanta. 2019. Small Business Credit Survey 2019 Report on Minority-Owned Firms.

December. fedsmallbusiness.org/survey/2019/report-on-minority-owned-firms 144

services).217 Approximately 22 percent of all minority-owned business fell into the hardest hit industries compared to 13 percent of nonminority-owned businesses.218 Although disparities in annual revenue are not a direct indication of a business’s ability to weather an economic downturn, they do highlight other disparities that make it more challenging for these businesses to survive the effects of the pandemic. Black-owned startups, for example, face larger challenges in raising capital, including securing business loans.219

Summary of the Interim Final Rule and Final Rule Structure Summary of Interim Final Rule: As discussed above, small businesses faced significant challenges in covering payroll, mortgages or rent, and other operating costs as a result of the public health emergency and measures taken to contain the spread of the virus. Under Sections 602(c)(1)(A) and 603(c)(1)(A), recipients may “respond to the public health emergency or its negative economic impacts,” by, among other things, providing “assistance to . . . small businesses.” Accordingly, the interim final rule allowed recipients to provide assistance to small businesses to address the negative economic impacts faced by those businesses. A “small business” is defined as a business concern or other organization that:
(1) Has no more than 500 employees or, if applicable, the size standard in number of employees established by the Administrator of the Small Business Administration for the industry in which the business concern or organization operates; and

217 Ding, Lei, and Alvaro Sanchez. 2020. What Small Businesses Will Be Impacted by COVID -19? Federal Reserve Bank of Philadelphia. philadelphiafed.org/covid-19/covid-19-equity-in-recovery/what-small-businesses-will-be- impacted.
218 Lucas Misera, An Uphill Battle: COVID-19’s Outsized Toll on Minority-Owned Firms, Federal Reserve Bank of Cleveland (October 8, 2020), https://www.clevelandfed.org/newsroom -and-events/publications/community- development-briefs/db-20201008-misera-report.aspx.
219 Robert Fairlie, A Robb, D Robinson, Black and White: Access to Capital among Minority-Owned Startups, NBER Working Paper 28154 (November 2020), https://www.nber.org/papers/w28154. 145

(2) Is a small business concern as defined in section 3 of the Small Business Act (15 U.S.C. 632).

Specifically, the interim final rule provided that recipients may provide assistance to small businesses to adopt safer operating procedures, weather periods of closure, or mitigate financial hardship resulting from the COVID–19 public health emergency, including:
• Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure;
• Loans, grants, or in-kind assistance to implement COVID–19 prevention or mitigation tactics; and
• Technical assistance, counseling, or other services to assist with business planning needs.

The interim final rule further provided that recipients may consider additional criteria to target assistance to businesses in need, including small businesses. Such criteria may include businesses facing financial insecurity, substantial declines in gross receipts (e.g., comparable to measures used to assess eligibility for the Paycheck Protection Program), or other economic harm due to the pandemic, as well as businesses with less capacity to weather financial hardship, such as the smallest businesses, those with less access to credit, or those serving underserved communities. The interim final rule also indicated that recipients should consider local economic conditions and business data when establishing such criteria. Finally, the interim final rule posed a question on whether there are other services or costs that Treasury should consider as eligible uses to respond to the disproportionate impacts of COVID–19 on low-income populations and communities.

Final Rule Structure: Consistent with the interim final rule approach, the final rule provides a non-exhaustive list of enumerated eligible uses for assistance to small businesses that 146

are impacted or disproportionately impacted by the pandemic. Further, within Assistance to Small Business, a recipient may also identify a negative economic impact experienced by small businesses and design and implement a response to that negative economic impact, beyond the uses specifically enumerated in the final rule, according to the standard described in the section Standards: Identifying a Negative Economic Impact. A recipient may also identify small businesses that have been disproportionately impacted by the public health emergency and design and implement a program that responds to the source of that disproportionate impact.

Consistent with other eligible use categories to respond to the public health and economic impacts of the pandemic, recipients may identify and serve small businesses that experienced a negative economic impact or disproportionate impact due to the pandemic, as described in the section Standards for Identifying Other Eligible Populations. For example, to identify impacted small businesses, a recipient may consider whether the small businesses faced challenges in covering payroll, mortgage or rent, or other operating costs as a result of the public health emergency and measures taken to contain the spread of the virus. In order to ease administrative burden, the final rule presumes that small businesses operating in QCTs, small businesses operated by Tribal governments or on Tribal Lands, and small businesses operating in the U.S. territories were disproportionately impacted by the pandemic.

Reorganizations and Cross-References: As detailed above, Treasury has re-categorized some uses of funds in the final rule to provide greater clarity. For discussion of assistance to small businesses and impacted industries to implement COVID-19 mitigation and prevention strategies, see section COVID-19 Mitigation and Prevention in Public Health.

147

Small Businesses Eligible for Assistance
Public Comment: Treasury received many comments about the general benefits or drawbacks of use of SLFRF funds to provide assistance to small businesses. Some commenters suggested that SLFRF funds should be available to assist all small businesses, rather than only businesses that experienced direct negative economic impacts due to the public health emergency. Other commenters argued that aid to small businesses should be narrowed in the final rule, asserting that SLFRF funds should instead focus on assistance to households or building public sector capacity.

Treasury also received comments requesting clarification of the types of small businesses eligible for assistance. For example, some commenters requested clarification about whether microbusinesses were included in the definition of small business. Comments also suggested that self-employed individuals and Tribal enterprises be classified as small businesses, respectively.

Commenters argued that these types of small businesses are more common among low-income and minority businessowners and serve as important institutions in underserved communities.

Finally, some commenters suggested that Treasury permit broader enumerated eligible uses to assist small businesses in disproportionately impacted communities and generally strengthen economic growth in these communities. These commenters recommended that Treasury presume small businesses operating in QCTs are disproportionately impacted and eligible for broader enumerated uses.

Treasury Response: As discussed in the section Designating a Negative Economic Impact, in the final rule, recipients must identify an economic harm caused or exacerbated by the pandemic on a small business or class of small businesses to provide services that respond. 148

As discussed above, programs or services in this category must respond to a harm experienced by a small business or class of small businesses as a result of the public health emergency. To identify impacted small businesses and necessary response measures, recipients may consider impacts such as lost revenue or increased costs, challenges covering payroll, rent or mortgage, or other operating costs, the capacity of a small business to weather financial hardships, and general financial insecurity resulting from the public health emergency.

Recognizing the difficulties faced by small businesses in certain communities, the final rule presumes that small businesses operating in QCTs, small businesses operated by Tribal governments or on Tribal Lands, and small businesses operating in the U.S. territories were disproportionately impacted by the pandemic. This presumption parallels the final rule’s approach to assistance to households, reflecting the more severe pandemic impacts in underserved communities and creating a parallel structure across different categories of eligible uses to make the structure simpler for recipients to understand and navigate.

Treasury notes that recipients may also designate a class of small businesses that experienced a negative economic impact or disproportionate negative economic impact (e.g., microbusinesses, small businesses in certain economic sectors), design an intervention to fit the impact, and document that the individual entity is a member of the class. Additional information about this framework is included in the section General Provisions: Structure and Standards.

Further, Treasury is maintaining the interim final rule definition of “small business,” which used the Small Business Administration’s (SBA) definition of fewer than 500 employees, or per the standard for that industry, as defined by SBA. This definition includes businesses with 149

very few employees, self-employed individuals, and Tribally owned businesses.220 Finally, Treasury notes that recipients may award SLFRF funds to many different types of organizations, including small businesses, to function as a subrecipient in carrying out eligible uses of funds on behalf of a recipient government. In this case, a small business need not have experienced a negative economic impact in order to serve as a subrecipient. See section Distinguishing Subrecipients versus Beneficiaries for more detailed discussion of interactions with subrecipients, in contrast to beneficiaries of assistance.

Enumerated Eligible Uses for Assistance to Small Businesses Public Comment: Treasury received comments requesting clarification of the types of assistance available to small businesses. For example, one commenter suggested that outdoor dining be an eligible use for SLFRF funds as assistance to small businesses. Other commenters asked for clarification about how SLFRF funds could be used to support new businesses and start-ups.

Several commenters requested clarification of whether and how recipients may provide services to business districts or downtown areas, particularly those that exist in whole or in part within a QCT, and requested reduced documentation of the specific negative economic impact for the businesses operating within those areas. These commenters argued in favor of allowing redevelopment or other support, including capital investments, in business districts that were negatively impacted by COVID-19. Several commenters also argued that funds should be

220 In regard to counting employees, businesses owned and controlled by a Tribal government are not con sidered affiliates of the Tribal government and are not considered affiliates of other businesses owned by the Tribal government because of their common ownership by the Tribal government or common management, as described in 13 C.F.R. § 121.103(b)(2). This definition is consistent with the Small Business Administration (SBA) HUBZone definition of a “small business concern” relating to Tribal governments as well as how Tribal enterprises are defined for the State Small Business Credit Initiative (SSBCI). 150

available to support and grow microbusinesses, or businesses with five or fewer employees, which are more likely to be owned by women and people of color.

Treasury Response: In the final rule, Treasury is maintaining and clarifying the enumerated eligible uses of funds for assistance to small businesses that are impacted or disproportionately impacted by the pandemic.

Impacted small businesses. Specifically, Treasury is maintaining enumerated eligible uses from the interim final rule for assistance to impacted small businesses. These include but are not limited to:
• Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs; • Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics (see section Public Health for details on these eligible uses); and • Technical assistance, counseling, or other services to assist with business planning needs.

Treasury acknowledges a range of potential circumstances in which assisting small businesses could be responsive to the negative economic impacts of COVID-19, including for small businesses startups and microbusinesses and individuals seeking to start small or microbusinesses. For example:
• As noted above, a recipient could assist small business startups or microbusinesses with additional costs associated with COVID-19 mitigation tactics; see section Public Health for details on these eligible uses.
• A recipient could identify and respond to a negative economic impact of COVID-19 on new small business startups or microbusinesses; for example, if small business startups or 151

microbusinesses in a locality faced greater difficulty accessing credit than prior to the pandemic or faced increased costs to starting the business due to the pandemic or if particular small businesses or microbusinesses had lost expected startup capital due to the pandemic.
• The interim final rule also discussed, and the final rule maintains, eligible uses that provide support for individuals who have experienced a negative economic impact from the COVID-19 public health emergency, including uses that provide job training for unemployed individuals. These initiatives also may support small business start-ups, microbusinesses, and individuals seeking to start small or microbusinesses.

Disproportionately impacted small businesses. Additionally, Treasury agrees with commenters that disproportionately impacted small businesses may benefit from additional assistance to address the sources of that disparate impact.

As such, the final rule provides a broader set of enumerated eligible uses for disproportionately impacted small businesses and/or small businesses in disproportionately impacted business districts. Recipients may use SLFRF funds to assist these businesses with certain capital investments, such as rehabilitation of commercial properties, storefront improvements, and façade improvements. Recipients may also provide disproportionately impacted microbusinesses additional support to operate the business, including financial, childcare, and transportation supports.

Recipients could also provide technical assistance, business incubators, and grants for start-ups or expansion costs for disproportionately impacted small businesses. Note that some of these types of assistance are similar to those eligible to respond to small businesses that experienced a negative economic impact (“impacted” small businesses). However, because the 152