ARPA funds come with footnotes, says law firm

Government entities seeking American Rescue Plan Act (ARPA) funds for demolition projects may be best served paying close attention to the U.S. Treasury’s “laundry list of enumerated eligible uses of ARPA funds,” says an attorney who serves as counsel to economic development agencies.

In an early May blog post, Columbus, Ohio-based attorney Jeffry D. Harris of Bricker & Eckler LLP says ARPA, within its final rule, does indeed offer “clarifying guidance [regarding] an express authorization to use funds to address vacant and abandoned buildings, including commercial and industrial structures.”

Counties with existing land banks have an advantage, Harris says. He writes, “Congress took care to specify under the Act that state and local governments could transfer stimulus funds to certain types of entities to implement spending plans, which include county land banks.”

Even land banks, however, must demonstrate that targeted properties pose “a negative public health or economic impact resulting from or exacerbated by COVID; and the response must be designed to address the identified health or economic impact.”

Perhaps fortunately for demolition contractors, the Treasury Department helps “by expressly listing certain services for vacant or abandoned properties to satisfy the two-part test when such services are undertaken in so-called disproportionately impacted communities,” Harris writes.

Thus eligible uses of ARPA funds likely includes property acquisition, rehabilitation, remediation or demolition “across the residential, commercial, and industrial land use spectrum” Harris writes. The odds of a demo project being funded also improve if such properties are then converted to affordable housing, he adds.

Disproportionately impacted communities are defined by the Treasury Department as those “that experienced a disproportionate, or meaningfully more severe, impact from the pandemic,” the attorney says. That status can be tied to certain U.S. Census tracts, or local governments based on the percentage of residents who qualify for low household income benefits.

The funding may prove a good fit for abandoned industrial or commercial properties—such as for an abandoned warehouse in Toledo, Ohio, or a vacant shopping mall near St. Louis.

Recently occupied residential buildings may not be viable candidates for APRA demolition funding, with Harris writing that projects that result in a “net reduction in occupiable housing units for low- and moderate-income individuals” may not win favor from ARPA funding decision-makers.