Federal funding allocated to states and localities through the American Rescue Plan Act (APRA) offers potentially transformational resources for local communities and their public utilities. According to the Treasury Department, over $100 billion in funds is allocated for local governments across the country, including over $5 billion for cities, counties, and towns in North Carolina and Virginia.
Equally significant is that the Treasury Department specifically highlighted water and wastewater infrastructure projects as intended priorities for these funds.
Since the legislation passed earlier this year, there have been a lot of questions about how this money can be spent. Localities and public utilities have faced challenges identifying eligibility and reporting requirements. Our team is here to help!
We spoke with Adrianna Dimperio, Utilities Division Manager, and Brian Houston, Utilities Project Manager, about ARPA funding specifically for water and wastewater projects. Adrianna and Brian are our resident experts on this topic and have spoken extensively with officials at the Treasury Department about ARPA funding. They’re here to provide insights on the most important questions
Q: What type of projects are eligible for these funds?
ARPA resources flow through localities to public utilities and other departments. Localities will allocate a percentage of ARPA funds to a variety of eligible departments and utilities. All water and wastewater infrastructure projects must fit within one of the Expenditure Categories outlined in the Treasury Department’s Compliance and Reporting Guidance. These categories are aligned with the existing criteria for the EPA Clean Water State Revolving Fund (CWSRF) and the EPA Drinking Water State Revolving Fund (DWSRF). Eligible projects include design and construction, planning and assessment, and administrative costs. This broad level of eligibility provides significant flexibility. A chart of the categories is below:
Q: Do projects need pre-approval?
Notably, recipients do not need pre-approval from federal or state governments to determine if a project is eligible. Rather, the recipient may make that determination based on all available information.
Q: When must funds be incurred, obligated, and expended by?
ARPA funds must be incurred or obligated between March 3, 2021 and December 31, 2024. All ARPA funds must be expended by December 31, 2026. For projects that began before March 3, 2021, ARPA funds can be used for expenses related to these projects as long as the expenses were not incurred until after that date. Expenses incurred prior to receipt of ARPA funds but after March 3, 2021 are eligible for reimbursement as well.
Q: What type of reporting is required in connection with these funds?
There are three primary reports required related to ARPA funds: Interim Report, Project and Expenditure Report, and Recovery Plan Performance Report. A one-time report that was due on August 31, 2021, the Interim Report summarizes all funds spent between March 3, 2021 and July 31, 2021. This report was required of all recipients EXCEPT non-entitlement units (NEUs) of government. The first Project and Expenditure Report is required for NEUs by April 30, 2022 covering the period between award date and March 31, 2022. For all other recipients, the first Project and Expenditure Report is required by January 31, 2022 covering the period between award date and December 31, 2021. The frequency of subsequent reports is determined by population size and amount of funds received. More details about the Recovery Plan Performance Report are expected, although we know that this report will only be required for states, U.S. territories, and cities and counties with greater than 250,000 residents. Additional information on all the reports is available in the Treasury Department’s Compliance and Reporting Guidance.
Q: How should we identify which projects to prioritize?
This question is among the most frequent we receive. It’s important to note that there’s not a one-size-fits-all approach. Each locality will have specific needs and urgencies. We recommend working with an experienced utilities consultant that can provide an external perspective, whether that’s helping you identify and prioritize infrastructure projects, establish or refresh an asset management system to rank projects, or assist with designing project implementation if you already know what issues need to be addressed first. The one common theme we see across all localities – big or small, urban or rural – is the recognition that water and wastewater infrastructure needs improvements and upgrades. ARPA funding can be transformational in helping localities tackle system-wide issues and a growing backlog of projects.