Using ARPA/CSLFRF Funds for Hurricane Helene Disaster Response (Outside of Revenue Replacement Category)

In the wake of Hurricane Helene, which has brought historic damage to many western North Carolina communities, local governments will be looking for available funding to help repair, restore, and rebuild public infrastructure and to provide direct assistance to their affected citizens. One immediate source of funding available for some counties and municipalities is their unobligated American Rescue Plan Act Coronavirus State and Local Fiscal Recovery Funds (ARPA/CSLFRF). There are still many North Carolina local governments who have not fully obligated their funds and who are running up against the December 31, 2024 deadline. And with 2023 changes to Treasury’s rules implementing the ARPA/CSLFRF grant, these funds can be spent to respond to a natural disaster. The ARPA/CSLFRF funds may be used to cover many disaster-related expenditures that will not be reimbursed by the Federal Emergency Management Agency (FEMA) or other external sources. A local government may substitute these disaster-response projects for other projects it intended to use the funding for but are now infeasible or impractical to carry out by the deadline. The post walks through the allowable disaster-related expenditures and compliance requirements.

As detailed in previous posts, the ARPA/CSLFRF grant stemmed from the third federal stimulus package arising from the COVID-19 pandemic. It was enacted in March 2021 and provided funding to the State and every county and municipality. Local governments have until December 31, 2024, to fully obligate the grant funds and until December 31, 2026, to fully expend them. Originally, the monies could be expended for projects that fall into four general categories, consistent with state law authority. In August 2023, US Treasury, which administers the grant, added a fifth category which, among other things, authorizes certain disaster response and mitigation projects. That amendment is referred to by Treasury as the 2023 IFR.

Under this fifth category, a local government may use its ARP/CSLFRF funds to provide emergency relief from qualifying natural disasters or the negative economic effects of natural disasters.

(Note that a local government also may use its Revenue Replacement category funds to cover any disaster-response expenditures authorized by state law, except for those related to debt financing. But because most local governments have maxed out their Revenue Replacement expenditures, this post is focused on expenditures in the Disaster Response/Mitigation category.)