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Maximizing American Rescue Plan Investment in
Water and Sewer Infrastructure
Seth Robertson, PE
Vice President – Director of Funding and Asset Management
WithersRavenel
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AgendaAmerican Rescue Plan Overview
Eligibility
Investments in Infrastructure
Timelines for Use of Funds
Reporting
What Can You Do Right Now?
State Funding Update
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American Rescue Plan Overview
• H.R. 1319 – American Rescue Plan Act of 2021
• Allocates $1.9 trillion to COVID-19 relief and economic recovery
• Signed into Law March 11, 2021
• Interim Rule Published to Federal Register May 17, 2021 and receiving comments until July 16, 2021
• First tranche of funds currently being distributed
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American Rescue Plan Overview
Totals:
NC Cities $1.4 Billion
NC Counties $2.0 Billion
NC State Government $5.5 Billion
Total NC Allocation $8.9 Billion
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American Rescue Plan Eligibility
1) RESPONDING TO COVID-19 - Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff;
2) RESPONDING TO NEGATIVE ECONOMIC IMPACTS - Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector;
3) PREMIUM PAY - Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and,
4) REVENUE LOSS - 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;
5) INVESTMENTS IN INFRASTRUCTURE - 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.
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Not Eligible for American Rescue Plan
1) Deposit into Pension Funds
2) Offset of a Reduction in Net Tax Revenue
3) Debt issuance or debt service, legal settlements or judgements, deposits to rainy day funds or other financial reserves, or general infrastructure spending outside of necessary water, sewer, and broadband investments, and special infrastructure projects that are necessary to deal with pandemic-specific issues
4) Non-Federal match for Federal programs
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Investments in Infrastructure
• Eligible uses within each category, allow for a broad range of necessary investments in projects that:
• Improve access to clean drinking water
• Improve wastewater and stormwater infrastructure systems
• Provide access to high-quality broadband service
• Necessary investments include projects that are required to maintain a level of service that, at least, meets applicable health-based standards, taking into account resilience to climate change, or establishes or improves broadband service to unserved or underserved populations to reach an adequate level to permit a household to work or attend school, and that are unlikely to be met with private sources of funds.
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Water and Sewer Infrastructure
• Provides governments with wide latitude to identify investments in water and sewer infrastructure that are of the highest priority for their own communities, which may include projects on privately-owned infrastructure.
• The Interim Final Rule does this by aligning eligible uses of the Fiscal Recovery Funds with the wide range of types or categories of projects that would be eligible to receive financial assistance through the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF).
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Water and Sewer Infrastructure
• The types of projects eligible for CWSRF assistance include projects to:• Construct, improve, and repair wastewater treatment plants
• Control non-point sources of pollution
• Improve resilience of infrastructure to severe weather events
• Create green infrastructure
• Protect waterbodies from pollution
• The primary use of DWSRF funds is to assist communities in making water infrastructure capital improvements, including the installation and replacement of failing treatment and distribution systems. In administering these programs, States must give priority to projects that:
• Ensure compliance with applicable health and environmental safety requirements
• Address the most serious risks to human health
• Assist systems most in need on a per household basis according to State affordability criteria
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Water and Sewer Infrastructure
• Intended to preserve flexibility for award recipients to direct funding to their own particular needs and priorities and would not preclude recipients from applying their own additional project eligibility criteria.
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Water and Sewer Infrastructure Eligibility
• Recipients may use Fiscal Recovery Funds to invest in a broad range of projects that improve drinking water infrastructure, such as building or upgrading facilities and transmission, distribution, and storage systems, including replacement of lead service lines
• Recipients may use Fiscal Recovery Funds to construct publicly owned treatment infrastructure, manage and treat stormwater or subsurface drainage water, facilitate water reuse, and secure publicly owned treatment works, among other uses
• Fiscal Recovery Funds may be used for cybersecurity needs to protect water or sewer infrastructure, such as developing effective cybersecurity practices and measures at drinking water systems and publicly owned treatment works
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Timelines for Use of Funds
• Payments from the Fiscal Recovery Funds can be used only to cover costs incurred by the State, territory, Tribal government, or local government beginning March 3, 2021, and ending December 31, 2024
• Treasury is interpreting the requirement that costs be incurred by December 31, 2024, to require only that recipients have obligated the Fiscal Recovery Funds by such date
• The period of performance will run until December 31, 2026, which will provide recipients a reasonable amount of time to complete projects funded with payments from the Fiscal Recovery Funds
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Reporting
• States (defined to include the District of Columbia), territories, metropolitan cities, counties, and Tribal governments will be required to submit one interim report and thereafter quarterly Project and Expenditure reports through the end of the award period on December 31, 2026
• The interim report will include a recipient’s expenditures by category at the summary level from the date of award to July 31, 2021 and, for States and territories, information related to distributions to nonentitlement units
• Nonentitlement units of local government are not required to submit an interim report.
• The quarterly Project and Expenditure reports will include financial data, information on contracts and subawards over $50,000, types of projects funded, and other information regarding a recipient’s utilization of the award funds
• Nonentitlement units of local government will be required to submit annual Project and Expenditure reports until the end of the award period on December 31, 2026
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Encouraged but not required
• Engagement of constituents and communities in the development of plans to use payments
• Provide assistance to those households, businesses, and non-profits in communities most disproportionately impacted by the pandemic
• Ensure that water, sewer, and broadband projects use strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions
• Promotes effective and efficient delivery of high-quality infrastructure projects
• Supports the economic recovery through strong employment opportunities for workers
• Consider projects to replace lead service lines
• Consider green infrastructure investments and projects to improve resilience to the effects of climate change
• Consider ways to integrate affordability options into their broadband program design
• Prioritize support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives
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What can you do right now?
• Identify Eligible Needs (Be Flexible)• Public Input
• Elected Officials
• Capital Improvement Plans
• Identify Gaps Between Direct Funds and Potential State Funds
• Prepare for Additional Guidance and Clarification before Appropriating Funds
• Prepare for State Funding• Review Existing Priorities and Monitor Proposals
• Get “Shovel-Ready”
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State Water and Sewer Funding Update
• Governor Cooper released recommendations for spending of ARP funds on May 19, 2021
• Recommends $800 million in water and wastewater investments to be administered by DEQ
• $440 million for distressed and “at-risk” water and wastewater units
• $360 million for all other units
• No match for “distressed” units and regionalization projects
• 75/25 match for “at-risk” units
• 50/50 match for all other units
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State Water and Sewer Funding Update
• $440 million for “distressed” and “at-risk” units• $85 million for action-planning, asset assessments, rate studies and
training (MAY NOT BE ELIGIBLE UNDER ARPA)
• Capped at $400,000 per unit for a period of three years (DOESN’T MATCH ARPA DEADLINES OR IDENTIFIED UNITS)
• $180 million for “distressed” units to complete water and wastewater infrastructure improvements including infrastructure rehabilitation, regionalization or decentralization, emergency grants for operating deficits (OPERATING EXPENSES NOT ELIGIBLE UNDER ARPA).
• $175 million for “at-risk” units for the same items as above.
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State Water and Sewer Funding Update
• $360 million for water, sewer and stormwater projects• Eligible grant activities include planning, design, and construction of
critical water and wastewater infrastructure.
• Grants are capped $15 million per system for individual projects. The cap is $20 million per system for regional partnerships. Funding cap can be exceeded if funds are available.
• To encourage long-term solutions, systems that engage in regional collaboration with at least one distressed or at-risk unit to create long-term viable solutions for the system would be eligible for a 100% “super match.” The LGC and SWIA will develop program criteria and guidelines defining eligibility for this super match.
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Questions
Seth Robertson, PE
(252) 239-3623
