Treasury Issues Interim Final Rule on Coronavirus Local Fiscal Recovery Fund and Opens Process for Eligible Governments to Request Funding from the Fund
On Monday, May 10, the Treasury Department issued the Interim Final Rule (Rule) concerning the operation of the Coronavirus Local Fiscal Recovery (CLFR) Fund and opened the portal through which qualified governmental entities, including metropolitan cities and counties, may to apply to Treasury for the direct payment of such funds.
Note: In our April 16 Special Bulletin, we discussed pre-award requirements that governmental entities must complete before applying to the Treasury Department for payments from the CLFR Fund and, in our March 8 Special Bulletin, we provided the eligible uses for CLFR Fund payments. In our April 16 Special Bulletin, we indicated that governmental entities, such as special districts and joint powers authorities, may qualify as “consolidated governments” and for receipt of CLFR funding directly from Treasury. While Treasury has not issued regulations concerning the CLFR or defined the term “consolidated government”, the Frequently Asked Questions provides that such entities are “special-purpose units of government” and not qualified to receive such direct payments.
The Rule provides extensive information on the four (4) uses of CLFR funds for which qualified governmental entities may apply, including:
- To respond to the public health emergency or its negative economic impacts;
- To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;
- For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency; and
- To make necessary investments in water, sewer, or broadband infrastructure.
Each of the relevant sections describes the eligible uses of payments from the CLFR Fund, provides a non-exclusive list of programs or services that may be funded under that section, identifies uses outside the scope of the specific category, and provides questions and answers concerning the application of that section.
LCW recommends that, before applying for CLFR Fund payments, qualified governmental entities familiarize themselves with the scope of coverage under each of the applicable sections. We further recommend that applications be tailored to request funding for uses within the scope of the section and, to the extent possible, based on specific examples provided by Treasury.
LCW will be monitoring additional information provided by Treasury concerning the operation of the CLFR Fund and will be providing additional updates as circumstances require. LCW will also be monitoring information from the State concerning the allocation of funds from the Coronavirus State Fiscal Recovery Fund and how qualified entities may apply for such funding.
 See American Rescue Plan Act (ARPA), Sec. 9901, amending 42 U.S.C. 801, et seq., to add Section 603 creating the CLFR Fund (hereinafter referred to as “Section 603”).
 “Metropolitan cities” are entitled to approximately $45.6 billion in CLFR Fund payments that the Treasury Department will directly allocate and pay to such entities. (See Sec. 603(b)(1).)
 Counties are entitled to approximately $65.1 billion in CLFR Fund payments that the Treasury Department will directly allocate and pay to such entities. (See Sec. 603(b)(3).)
 The ARPA provides that “consolidated governments” may receive direct payment from Treasury, but does not clearly define the term. (See Sec. 603(b)(4)) The Rule also does not define the term, and only provides that “consolidated governments” include “city-county consolidated governments” (e.g., the City and County of San Francisco) (See Rule, p. 110). However, the Frequently Asked Questions state that “special-purpose districts perform specific functions in the community, such as fire, water, sewer or mosquito abatement” and such districts “will not receive funding allocations” directly from Treasury. (See Treasury, Frequently Asked Questions, No. 3). Therefore, governmental entities that are neither cities nor counties (e.g., special districts and joint powers authorities) may consider requesting the transfer of CLFR funds from governmental entities with transfer authority (i.e., the state, cities, and counties) (See Secs. 602(c)(3); 603(c)(3).)
 See Sec. 603(c)(1).
 Sec. 603(c)(1)(A); Rule, pp. 10-45.
 Sec. 603(c)(1)(B); Rule, pp. 45-51.
 Sec. 603(c)(1)(C); Rule, pp. 51-61.
 Sec. 603(c)(1)(D); Rule, pp. 62-78.