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  • Sophia Zheng

Allowable Uses in the American Rescue Plan: What You Need to Know

The American Rescue Plan is the largest influx of funding towards cities since FDR’s New Deal and LBJ’s Great Society. For economic development teams, it offers an incredible opportunity to directly stimulate the economies of their cities and counties, as well as upgrade existing systems.

While the CARES Act was largely focused on getting money into the pockets of Americans, the ARP is designed for the sole purpose of stimulating a sharp recovery. Of specific note to cities and counties is the Coronavirus State and Local Fiscal Recovery Fund. The ARP has allotted around $350 billion is directed towards state and local aid – of that $130.2 billion will be going directly towards cities and counties.

  • CSLFRF will be split half between counties and cities (65.1 billion apiece).

  • Every county and city will receive direct federal aid, rather than having it distributed by the state.

  • Of the cities receiving funding, $45.57 billion will go to cities with populations above 50,000, while $19.53 billion will go to cities below that number based on their share of the state’s population, not exceeding 75% of its most recent budget as of January 27, 2020.

  • Cities and counties have until December 31, 2024 to spend this money.

  • See how much funding your city is getting here.

The CSLFRF differs from the CARES Act substantially in scope and intent. It allows government bodies to make solid long-term investments to furnish their local economies with resources, as well as invest in their infrastructure. However, some confusion remains around what is actually stated in this bill, as well as its intended application. This blog seeks to clarify the intent of the ARP, and how it can benefit your jurisdiction specifically.

Language Around Allowable Uses in the American Rescue Plan

The CSLFRF contains a small list of intended “use of funds” that contains relatively broad language around its applications: “to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.”

The legislative intent of this list isn’t considered exhaustive, but rather as examples as to what these funds can be allocated towards. It is believed that the language gives cities license to help improve their local economies, rather than simply getting back to their pre-pandemic service level. It gives cities greater leeway to govern more effectively and allows cities to plan for future needs.

The CARES Act contained explicit language that it could not be used to replace forgone revenue – under the CSLFRF, you now can use ARP money “for the provision of government services to the extent of the reduction in revenue of such metropolitan city, nonentitlement unit of local government, or county due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year.”

It remains unclear what is meant by what regulations are included in “government services” – the treasury is expected to provide more specific guidance around usage. Because the language remains vague, every jurisdiction will have to determine the extent to which they use this money. However, given that this act contains language that was previously restricted by the CARES Act, many experts believe it is intended to be used liberally.

Investing in Your Economic Development

Unlike grants, the American Rescue Plan doesn’t require cities and counties to determine ahead of time how they plan to spend their money – they are essentially being handed a check, and will be expected to be transparent and carefully document and audit how this money is spent.

With money on the table, there has never been a better time for cities to invest in your technology. When it comes to economic development, the traditional ways of spreadsheets or non-industry CRMs often fall short to help your team effectively keep track of data and information. As you consider what solutions to invest in to boost the efficiency and impact of your team, there are two critical aspects to consider:

Data – A significant hurdle that economic developers often face is accessing and maintaining data. Data is critical for economic development strategies and outreach. Without having a good understanding of the businesses in the community, it is difficult to devise the best support or offer the relevant resources.

While generic solutions place the burden on each city to populate the necessary data, Bludot acutely understands the challenge this poses to the often small economic development team. To address this, Bludot makes significant technological investment in its data processes and is the only economic development CRM platform that comes pre-populated with data for each city’s local businesses. That means from the very first time that a city user logs in, the workspace already has all of their local businesses’ relevant data including industry sectors, numbers of employees, age, and revenue size, and is ready to be put to use.

Access – The other critical aspect is having a channel to easily reach out to the local businesses. Whether it be sending an update to all the restaurants, an alert to businesses in an area, or resources to businesses of certain criteria, it is important that an economic development team is empowered to do so easily and effectively.

Bludot is built to enable communication. Targeted group messages can be sent directly from the platform to any select set of businesses. Your team’s interactions with each business are logged so that any team member can see the history and latest status. Analytics are tracked to give your team added insights, plus a robust dashboard that summarizes the progress and helps you tell your story to your stakeholders.

The ARP isn’t only intended to patch up damage in the wake of the COVID-19 pandemic – it is meant to sharply invigorate the economy. That starts from the ground up at all of our local communities, such as yours. The funds offer cities a once-in-a-lifetime opportunity to not just invest in tools, but invest in the team and empower the team to do the best work in your local economy. If Bludot may be a fit for your city, contact us today for more information on why more cities are switching to our economic development solution.


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