Economic Development Funding Toolkit

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American Rescue Plan Act of 2021: How Local Governments Can Fund Economic Development Projects

Ideas for Using ARPA to Support Economic Development in Communities across Missouri

Ideas for local governments to consider in using their ARPA Local Recovery Funds related to economic development opportunities are outlined below. These ideas have been drawn directly from available guidance from the U.S. Department of Treasury. A complete listing of current guidance is available on the U.S. Department of Treasury’s website. Please be sure to check the Treasury’s website frequently to stay up to date on current guidance and funding requirements.

Please note the U.S. Department of Treasury has specific compliance and reporting requirements associated with the use of ARPA fiscal recovery funds. For more information, please refer directly to the U.S. Treasury’s website.

Of note, all ARPA fiscal recovery funds must be encumbered by December 31, 2024 and all projects must be completed and all funds expended by December 31, 2026.

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Eligible Use of Funds – Economic Development

Small businesses

Assistance to small businesses, including loans, grants, in-kind assistance, technical assistance or other services, that responds to the negative economic impacts of the COVID-19 public health emergency.1

Nonprofits

Assistance to nonprofit organizations, including loans, grants, in-kind assistance, technical assistance or other services, that responds to the negative economic impacts of the COVID-19 public health emergency.2

Aid to impacted industries

Aid to tourism, travel, hospitality, and other impacted industries that responds to the negative economic impacts of the COVID-19 public health emergency.3

Expenses to improve efficacy of public health or economic relief programs

Administrative costs associated with the recipient’s COVID-19 public health emergency assistance programs, including services responding to the COVID-19 public health emergency or its negative economic impacts, that are not federally funded.4

Local governments may use payments from the Fiscal Recovery Funds to improve efficacy of programs addressing negative economic impacts, including through use of data analysis, targeted consumer outreach, improvements to data or technology infrastructure, and impact evaluations.5

Disproportionately impacted populations and communities

A program, service, or other assistance that is provided in a qualified census tract, that is provided to households and populations living in a qualified census tract, that is provided by a Tribal government, or that is provided to other households, businesses, or populations disproportionately impacted by the COVID-19 public health emergency, such as:

  • Programs or services that facilitate access to health and social services, including:
    • Assistance accessing or applying for public benefits or services;
    • Remediation of lead paint or other lead hazards; and
    • Community violence intervention programs;
  • Programs or services that address housing insecurity, lack of affordable housing, or homelessness, including:
    • Supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless;
    • Development of affordable housing to increase supply of affordable and high-quality living units; and
    • Housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity and to reduce concentrated areas of low economic opportunity.6

186 Fed. Reg. 26804-26806 (May 17, 2021) Interim Final Rule 31 CFR 35.6(b)(6)
286 Fed. Reg. 26804-26806 (May 17, 2021) Interim Final Rule 31 CFR 35.6(b)(7)
386 Fed. Reg. 26804-26806 (May 17, 2021) Interim Final Rule 31 CFR 35.6(b)(9)
486 Fed. Reg. 26804-26806 (May 17, 2021) Interim Final Rule 31 CFR 35.6(b)(10)
586 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II(A)(2), p. 26794
686 Fed. Reg. 26804-26806 (May 17, 2021) Interim Final Rule 31 CFR 35.6(b)(12)

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Other Ideas

Technical assistance, counseling, or other services to assist with business planning needs

  • These services should respond to the negative economic impacts of COVID–19.

  • 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 disadvantaged communities.

  • Recipients should consider local economic conditions and business data when establishing such criteria.7

Assistance with implementing COVID-19 mitigation and infection prevention measures to enable safe resumption of tourism, travel, and hospitality services

Examples include:

  • improvements to ventilation;

  • physical barriers or partitions;

  • signage to facilitate social distancing;

  • provision of masks or personal protective equipment; and

  • consultation with infection prevention professionals to develop safe reopening plans8


786 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II(A)(2), p. 26795
886 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II(A)(2), p. 26795

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Notable Requirements Associated with the Use of Funds for These Purposes

Of particular note, the Supplemental Information in the Interim Final Rule9 provides a number of limitations in the use of recovery funds for these purposes, including:

Aid may be considered responsive to the negative economic impacts of the pandemic if it supports businesses, attractions, business districts, and Tribal development districts operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic. For example, a recipient may provide aid to support safe reopening of businesses in the tourism, travel, and hospitality industries and to business districts that were closed during the COVID-19 public health emergency, as well as aid for a planned expansion or upgrade of tourism, travel, and hospitality facilities delayed due to the pandemic.

When considering providing aid to industries other than tourism, travel, and hospitality, recipients should consider the extent of the economic impact as compared to tourism, travel, and hospitality, the industries enumerated in the statute. For example, on net, the leisure and hospitality industry has experienced an approximately 24 percent decline in revenue and approximately 17 percent decline in employment nationwide due to the COVID-19 public health emergency.

Recipients should also consider whether impacts were due to the COVID-19 pandemic, as opposed to longer-term economic or industrial trends unrelated to the pandemic. To facilitate transparency and accountability, the interim final rule requires that State, Local, and Tribal governments publicly report assistance provided to private-sector businesses under this eligible use, including tourism, travel, hospitality, and other impacted industries, and its connection to negative economic impacts of the pandemic.

Recipients also should maintain records to support their assessment of how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and how the aid provided responds to these impacts.


986 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II(A)(2), p. 26795

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Other ARPA for Economic Development Resources

U.S. Economic Development Administration’s ARP Programs:

The U.S. Small Business Administration's (SBA) COVID-19 Relief Programs:

The U.S. Small Business Administration's (SBA) Local Assistance Programs:

The Missouri Department of Economic Development Community Programs:

The Missouri Department of Economic Development Services for Rural Communities:

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ARPA Resources

 

Disclaimer:   The U.S. Department of Treasury has not published the Final Rule on the State and Local Fiscal Recovery Funds. Information shared in this toolkit is subject to change pending final rulemaking and subsequent guidance and/or FAQs published by Treasury.