Area towns look — cautiously — to spend large ARPA allocations

By Shawn Cunningham
© 2021 Telegraph Publishing LLC

There’s a lot of extra money in the bank accounts of town governments across the state with more coming next year. But most towns are taking cautious steps in deciding how to spend the funds.

That’s because the money comes from the federal government’s American Rescue Plan Act — ARPA — and that program has complex and still changing rules for how the cash can be used. And spending outside those rules could put a town on the hook for paying money back to the feds.

But with that caution in mind, the ARPA funds give towns a rare opportunity to get projects – big and small – done and area towns are collecting ideas and getting them vetted for eligibility under the law. The towns have until Dec. 31, 2024 to obligate the money (through contracts for example) and until Dec. 31, 2026 for the money to be “out the door.”

To help with this, the Vermont League of Cities and Towns hired Katie Buckley to help towns to find their way through process. Buckley had been Guilford town administrator for eight years and commissioner of Vermont’s Department of Housing and Community Development in addition to working for a time as a developer in the areas of affordable housing and historic preservation.

“My job is reading and interpreting the Interim Final Rule, which is pretty gray and not very clear,” said Buckley, referring to the document that spells out the details around the legislation. “I understand the funding and especially the compliance part  — which can be daunting if you have never touched federal funds before.” Buckley’s position with the league is funded until the end of April 2024.

“The league is working with partners to pull together the resources to help towns understand what they are undertaking, to navigate the process and to keep the money,” said Buckley. “Tell me what you want to do, I’ll give you the guardrails.”

According to Buckley, VLCT is encouraging towns to commit to public engagement to build a comprehensive list of possible projects, then to prioritize them. And if some projects are not eligible, the town should keep an eye out for other funding that may be coming along with different requirements. Buckley notes that $600 million of funding remains on the table still be be earmarked during the 2022 legislative session in Montpelier.

When The Telegraph looked at this in July, area towns were expecting a healthy amount of money. For example, Chester was expecting a bit more than $300,000. But then the Treasury Department changed the way it would disburse money to Vermont by sending funds destined for counties to towns since the counties are not full governmental entities. See Chester Telegraph July 29, 2021: In policy shift  That pushed Chester’s ARPA funding total up to $900,000 and added to the possibilities.

Towns ponder multitude of uses for ARPA windfalls

Chester Town Manager Julie Hance’s attitude toward the process is to solicit ideas and “throw them all on the list” for the Select Board to consider later. Hance has asked all the the town’s department heads to weigh in with ideas and she expects to do some public outreach — including meetings and possibly a survey — in the new year.

The current list of ideas includes several water and sewer projects, upgraded radio equipment for the ambulance and fire services, repairs to the tennis court, digitizing town records,  improvements to The Green and to the green space in front of Town Hall, an outdoor space at the library, a walking circuit at the Jeffrey Well site and a dedicated generator for Town Hall.

Londonderry is taking a different approach according to Town Administrator Shane O’Keefe. That Select Board has put the subject on its old business agenda for every meeting and will take in ideas and thoughts about how that town should spend its $495,000.

Discussions have included affordable housing and a housing needs assessment as well as funding several non-profit service organizations such as The Collaborative, Neighborhood Connections and My Community Nurse. As O’Keefe learned more about ARPA, he suggested that the board reverse a vote to use $7,000 in ARPA funds to be used for a paving study since the allocations are not to be used for infrastructure.

Andover Town Clerk Jeanette Haight says that a number of ideas for spending that town’s $140,794 allocations have been put forward but she would like to have some brainstorming with the public, perhaps at Town Meeting.

“I’d like to have the thoughts that people might have that may not have occurred to us,” said Haight.

Ideas put forward so far include an auto-start generator for the Town Office, a website, digitizing land records and upgrades to Town Hall to make it an emergency shelter but also to correct acoustical problems and make the place easier to use for hybrid meetings.

In Grafton, Town Administrator Bill Kearns says that the Grafton Select Board has already decided to go forward with upgrades to the meeting space on the second floor of Town Hall. Since 2017, the Select Board has been using the meeting/break room at the town garage on Tom Bell Road for its meetings, but out of concern for the health of the road crew the board stopped using that site during the pandemic.

The second floor meeting room has been unused because it is only accessible by stairs. But the project that the town envisions will add a limited use/limited application lift for those unable to climb the stairs.

Kearns said the space was full of “junk” that has been cleared away and when the lift and a new ventilation system are installed, the space will be also be usable as a warming/cooling area during harsh weather. The town also envisions the space being used for regional meetings and health and wellness programs as it was in the past.

Kearns noted that Grafton checked in with VLCT about the eligibility of the project and he expects that the project will use about half of the town’s $201,784 ARPA allocation. He adds that there is “plenty of time” to figure out what to do with the rest. Kearns said there hasn’t been public input yet, other than discussions at the Select Board meetings.

Weston Select Board member Jim Linville told The Telegraph that it’s still very early for the town and that the board is trying to understand what it can spend the money on. Linville said that they had not thought about it much yet, but the addition of the county share, which brings Weston’s share up from about $57,000 to over $162,000, “changes the landscape.”

“We will be looking for some clarity on that,” said Linville.

The Cavendish Select Board has had some discussion about the funds, according to Town Manager Brendan McNamara, “…but we haven’t jumped full force into it yet.”

With its focus on funding for water and wastewater projects, ARPA funds could be used for a number of projects in Cavendish, but McNamara said that there are a limited number of water users and he would like to see some projects that would benefit everyone in town. He said he is looking into whether stormwater projects might qualify.

McNamara said that one priority could be replacing the town’s four sewage pumping stations that are out of date. He added that two pumps are one model, the other two a different model and it would be good to have all of them the same.

Another ARPA priority is broadband, which is a sore spot in the town. But McNamara said that furnishing “last mile” service is very expensive and might take even more than the $421,485 that the town will receive. Like several other towns, McNamara said Cavendish would probably put some money toward digitizing land records, noting that with Covid-19, there is limited access to the records for land transactions.

Filling town revenue shortfalls a big no, maybe

From the beginning, one part of ARPA was to provide funds to replace shortfalls in town revenue that were due to the Covid-19 pandemic, but the rules around eligible shortfalls were complex. But according to Buckley, VLCT with consultant Sarah Macy came up with a calculator to help Vermont towns who use the New England Municipal Resource Center’s accounting software and services, to arrive at a revenue shortfall number and NEMRC has signed on to the effort.

Hance said that using the calculator, it’s expected that most towns will have some kind of shortfall and the ARPA funds to reimburse such shortfalls are not constrained by the rules that govern spending the rest of the ARPA funds. The shortfall funds have to be spent for the “provision of government services.” So a project that might not tick all the boxes for ARPA funding might be funded with shortfall replacement dollars

“I’m a little afraid of it,” said Hance, who has a lot of experience with federally funded projects. “But when we get past the budget for next year, I’m going to take a look at it.”

The problem with any of the ARPA funds is that the rules are not final — and are currently referred to as the “Interim Final Rule”  —  and if a town spends money on ineligible projects, the federal government has up two three years from the time the funding is finally “closed out,” to ask for money back. To give a sense of how long closeouts can take, FEMA closed out Chester’s Irene funding from 2011 just two years ago.

Buckley agreed, noting that for Irene FEMA only had to account for the spending of a number of Vermont towns while the ARPA closeout will involve most states, cities, counties and towns in the United States.

“I’m not even going to guess how long that will take,” said Buckley, “this is huge. The compliance and monitoring is an enormous thing to consider.” Final reports on town’s ARPA spending are due March 30, 2027.

“It’s great to have it at the end of the day,” said Hance. “But towns can get into trouble with this.” Like the officials from several other towns, Hance said she would be working with VLCT and the Regional Planning Commission to be sure they get it right.