Community Progress Hails the American Rescue Plan Act Final Rule Issued by Treasury

The Final Rule provides important clarifications and expanded definitions that will enable local leaders to confidently fund ARPA recovery programs that include rehabilitation, demolition, deconstruction, greening, and maintenance.

WASHINGTON, D.C. – January 7, 2022 — The Center for Community Progress (Community Progress), America’s leading resource on issues of vacant, abandoned, and deteriorated properties, applauds the U.S. Treasury Department’s Final Rule on the American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Fund (SLFRF). In response to nearly a thousand public comments, yesterday’s Final Rule adopts and amends Treasury’s May 2021 Interim Final Rule to clarify that ARPA funds may be used by communities to address vacant, abandoned, and deteriorated properties in multiple ways. This $350 billion ARPA recovery package passed in March 2021 provides state, Tribal, territorial, county, and municipal governments flexible resources to respond to the pandemic and rebuild impacted communities.

“We thank the Treasury Department’s Office of Recovery Programs for listening to, considering, and adopting the recommendations submitted by Community Progress and our engaged local government and land bank stakeholders,” said Dr. Akilah Watkins, President and CEO of Community Progress. “As we set forth in our July 9, 2021 public comment letter, ‘the rehabilitation of blighted structures, demolition of unsafe, vacant, and abandoned properties, and greening and maintenance of vacant lots addresses not only negative economic consequences of the COVID-19 health crisis, but also addresses public health, promotes public safety, mitigates community violence, supports healthy living environments, and strengthens neighborhoods conducive to mental and physical wellness.’ We are encouraged that the Final Rule recognizes these and other strategies to address vacant and abandoned properties and keep vulnerable homeowners stably housed are critical tools to making struggling communities stronger, healthier, and more equitable.”

Vacant or Abandoned Properties

The Final Rule explicitly authorizes services to address vacant or abandoned properties as eligible ARPA SLFRF expenditures in areas disproportionately impacted by the COVID-19 health and economic crisis, stating, “Treasury agrees with commenters that high rates of vacant or abandoned properties in a neighborhood may exacerbate public health disparities . . . As such, certain services for vacant or abandoned properties are eligible to address the public health and negative economic impacts of the pandemic on disproportionately impacted households or communities.”

Eligible activities include costs related to rehabilitation, renovation, and securing of vacant or abandoned properties; remediation of environmental hazards; demolition or deconstruction of vacant or abandoned buildings; greening of vacant lots; conversion of properties to affordable housing, and more. For a full list of eligible activities, see the Final Rule here.

The Final Rule goes into detailed analysis of the positive health and economic benefits of greening vacant spaces and demolishing or deconstructing unsafe structures, and stipulates that the above activities should be used in ways that benefit existing residents and businesses.

“The Final Rule says ‘we’ve heard your concerns, we’re listening to the research, and we agree that addressing vacant and abandoned properties is critical to the long term health and economic stability of residents, small businesses, and communities as a whole,’” said Payton Heins, Community Progress’ Director of Michigan Initiatives, who has worked extensively with state and local leaders in Michigan as they have deliberated about how to allocate their ARPA SLFRF allocations to improve their communities. “Treasury has given state and local government leaders, as well as land banks and local nonprofits serving as eligible subrecipients, the reassurance they need to use this once-in-a-lifetime resource to invest in the tools we know work and will have a lasting positive impact on our communities.”

Municipal, county, and state leaders that have been awaiting the announcement of a Final Rule should now be able to confidently proceed with plans to address vacant and abandoned residential, commercial, and industrial properties in disproportionately impacted communities. Community Progress urges stakeholders and local leaders to review the Final Rule in detail to better understand the compliance requirements for these activities.

Other initial highlights from the Final Rule relevant to Community Progress’ stakeholders include:

Property Tax Assistance to Avoid Tax Foreclosure

Community Progress is also encouraged by the Final Rule’s clarification that financial assistance to households impacted by the COVID-19 crisis may include not only rent, mortgage, or utility payments, but also payments for homeowners to cover delinquent property taxes. Given the relationship between property tax foreclosure, displacement, and vacancy, ARPA SLFRF recipients that deploy funds to provide delinquent property tax relief payments will further strengthen their communities, protect vulnerable homeowners struggling to pay bills, and provide their local governments with much-needed property tax revenue.

Expanded Definitions of “Impacted” and “Disproportionately Impacted”

Treasury’s Final Rule details the circumstances under which a recipient government may designate certain geographies or households as “impacted” or “disproportionately impacted” by the health or negative economic consequences of the pandemic. Certain activities in the Interim Final Rule, such as the development of affordable housing, were categorized as presumptively eligible in low-income Qualified Census Tracts and Tribal governments. The Final Rule adds territorial governments to this list of areas and emphasizes that recipients may also designate other areas or households beyond these geographies as “disproportionately impacted” classes. Community Progress urges stakeholders to review the standards set forth by Treasury for designating additional “impacted” and “disproportionately impacted” classes in detail to determine how ARPA SLFRF funds can best serve these areas and populations.

The Final Rule contains numerous other clarifications, enumerated eligible uses, and expanded definitions, which Community Progress will endeavor to break down in a forthcoming blog post located in our ARPA Resource Center.

For interviews or more information on Community Progress, email [email protected] or call (877) 542-4842, ext. 153.

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About the Center for Community Progress

Founded in 2010, the Center for Community Progress is the national leader for building strong, equitable communities where vacant, abandoned, and deteriorated properties are transformed into assets for neighbors and neighborhoods. Today, Community Progress has affected change in more than 48 states and seven countries through leadership education and collaborative systems, policy, and practice reforms. Simply, we work to transform “Vacant Spaces into Vibrant Places.”  For more information, visit communityprogress.org.