NLC REPORT: ARPA Funds: Best Practices for Small Communities

Katherine Hueston, Intern on NLC’s Federal Advocacy Team

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The American Rescue Plan Act (ARPA) granted municipalities of all sizes flexible, extensive federal grant funding, a first for many of America’s smallest municipalities. As smaller municipalities, also known as non-entitlement units of local government (NEUs), work to implement ARPA spending plans, it is key to keep a few things in mind to ensure every municipality can utilize their ARPA funds as effectively as possible.  

Update on Next Tranche of Funding 

Half of each NEU’s ARPA funding was made available in 2021 and the second half will be available in 12 months after the first disbursal. For some communities that could be as late as November 2022. The second tranche of funding still falls under the guidelines and reporting requirements defined in Treasury’s final rule. For more information and to sign up for regular updates, visit Treasury’s website. 

Treasury Scam Warning 

On April 7, 2022, the U.S. Department of the Treasury notified the National League of Cities of a scam targeting NEUs. The scam emails are requesting funds from NEUs to pay for SAM.gov renewal. However, there is no fee for renewal and this email should be disregarded. Any request to pay a fee for SAM.gov renewal is fraudulent. 

NLC will continue to update NEUs if there are any further potential threats identified and  we advise all NEUs remain vigilant.  

How NEU Funds Are Being Used 

Earlier this year, NLC released an analysis of how 30 NEUs are spending their ARPA funds to better gauge spending trends. The flexibility and availability of funds allocated to NEUs through ARPA has already led to a diversity of spending across seven main spending buckets, including: 

  • Infrastructure 
  • City operations investments 
  • Community aid 
  • Housing 
  • Public health 
  • Economic and workforce development 
  • Public safety 

Since NEUs began allocating their ARPA funds, nearly 78% of the funding analyzed by NLC has gone to infrastructure projects. More broadly, NEUs have begun projects across various sectors, including funding for water and sewer projects, improving city facilities, assisting those hit hardest by the pandemic, prioritizing affordable housing, and enhancing local workforce opportunities.  

NEUs Should Continue to Use ARPA Funds 

Small municipalities have access to rare federal funding that can be used for a wide range of pandemic-related recovery projects. NLC wants to ensure every municipality has access to ARPA funds and can use them to fulfill the needs of their city, town or village. Moving forward, as a new allocation of money becomes available, we want NEUs to be aware of the resources available to assist with the allocation and implementation of ARPA dollars, especially with such a wide variety of acceptable uses for the funds. For more examples on how small communities have used ARPA funds, view our report here.  

Katherine Hueston serves as an intern on NLC’s Federal Advocacy team.