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Icon showing a virus next to a dollar sign to represent COVID-19 Relief.Post by Elsemarie Mullins and Kimberly Kirkhart

Since the EFC’s last blog post about Federal Funding for Coronavirus relief, more guidance has been released regarding how funds will be distributed and what utilities can expect. Although the previous fact sheets and blog highlighted how funds can be used for bill assistance, this post and updated fact sheets will highlight the other possible uses of various funds.

Download our updated one-page factsheets about each of these funds and how they relate to assistance for water bills.

Additionally, the EFC has created a webpage which hosts other important resources and links to program pages that will be updated by the administering agency.

For an overview of funding sources as well as where customers can go for bill payment assistance, see the previous blog post.

American Rescue Plan Act funding (State and Local Fiscal Recovery Funds)

The American Rescue Plan Act was signed in March of 2021 and provided funds for several existing programs as well as designated $350 billion for State and Local Fiscal Recovery Funds, which are distributed to states, local municipalities, and tribal governments in two equal amounts—one sometime after May 2021, and another 12 months later. While there is a lot of flexibility in how state and local governments use ARPA funds, governments and utilities must still abide by their local and state statues for receiving and distributing funds.

The current possible uses for ARPA funds in utilities have been outlined into four spending categories:

  • COVID response and adaptation, which addresses negative economic impacts by providing assistance to household utilities
  • Premium pay for essential workers, which cannot have already been paid from other funds (I.e. a local government cannot reimburse itself for premium pay already paid). Premium pay using ARPA funds can be calculated based on the start of the pandemic.
  • Replacement of revenue loss in the public sector, which includes wastewater but not water revenues
  • Necessary investments is water and wastewater infrastructure.

The EFC has received many inquiries regarding how ARPA funding can be used for infrastructure projects. For now, Treasury guidance regarding eligible infrastructure projects points to the EPA’s Drinking Water SRF (DWSRF) and the Clean Water SRF (CWSRF) handbooks.

Some eligible types of projects include, but are not limited to:

  • new treatment units for drinking water that don’t increase capacity
  • replacement of mains, meters, and/or pump stations
  • consolidation of a system
  • projects that treat stormwater to increase water quality
  • projects that increase water efficiency (which may address Inflow & Infiltration issues, increase water conservation)
Ineligible projects include expansion of a drinking waster system—replacement projects must not increase capacity.

Many states SRF programs have specific guidance for how the EPA’s handbooks are interpreted and which projects are eligible. Reach out to your staff SRF staff and/or technical assistance providers in your state if you have questions about the eligibility of a project. The Treasury FAQs are also a great resource and include many more questions and detailed answers.  Since the Treasury has not yet released the Final Rule, some of the guidance may change.

In addition to determining the eligibility of a project for ARPA funding, it is important to consider the long-term financial impact of the project. Will water and/or wastewater revenue cover the operation, maintenance, and replacement of the asset in the years to come? As federal grant opportunities for utilities have decreased since the 1980s utilities need to carefully consider how to make investments for the future without relying on federal grant funds to replace key infrastructure. For drinking systems serving under 10,000 customers, there is free technical assistance available at the UNC EFC and through the EFC Network that can help utilities plan for current and future capital needs.

Finally, there are compliance and reporting requirements associated with ARPA funds. These requirements are different for the recipient based on the population and award amount. Here is the Treasury page on compliance and reporting, which is being updated regularly.

 

Low Income Household Water Assistance Program (LIWHAP)

Since the Low Income  Household Water Assistance Program was originally funded in the Consolidated Appropriations Act (December 2020) with $638 million, an additional $500 million was added from the American Rescue Plan Act, for a total of $1.38 billion dollars. These funds are designated to assist low-income households that pay a high proportion of household income for drinking water and wastewater services. Payments will go directly to the water and wastewater utilities, with the goal of reducing outstanding debt so customers who are disconnected can be reconnected as well as reducing the risk of disconnection for customers with outstanding debt. For more information on the program details, see the previous blog post and/or the updated factsheets.

 

Where does the program stand right now?

The Administration of Children and Families (ACF) agency is tasked with administering the Federal LIHWAP program. States were required to submit a model plan by August 9th to this agency. The same state departments that administer the Low Income Home Energy Assistance Program (LIHEAP) are responsible for LIHWAP. These departments may have requested a two-week extension. After ACF staff review and approve the model plan, state departments administering LIWHAP will then carry out the plan. ACF required all plans to be posted for at least five days for public comment and many are still online. It’s still unknown when payments will be made to water and wastewater providers, but it will vary by state and likely not happen for several months.

 

What can water and wastewater utility staff do now?

Water and wastewater utility staff can ask their state LIHEAP staff about the LIHWAP model program for the state as well as their local Department of Social Services or non-profit that distributes LIHEAP funding. Thoroughly reading the model plan can give staff an idea of how distribution of LIWHAP funds will be accomplished, what will be required from utilities, and what data will need to be collected.

To receive payments, water and wastewater utilities will need to sign a vendor agreement with their state. In some states, the vendor agreement is available and can be signed now. If your utility charges for more than just water and/or wastewater (e.g. stormwater, solid waste, recycling), investigate if there is a way to separate out the different charges and take payments just for water and/or wastewater charges in order to reconnect water and/or wastewater services. If there is not a way to separate funds, then LIHWAP funds can be used to pay stormwater and/or solid waste charges if in doing so the customer’s water and/or wastewater service will be restored or continued.

Additionally, utility staff can track the number of customers disconnected from water and/or wastewater service, the amount of bills past due, the number of customers on payment plans, and any other data that will be reported per the state’s model plan.

 

Emergency Rental Assistance Program

The Emergency Rental Assistance Program was created with the Consolidated Appropriations Act with a designation of $25 billion (ERA1) and supplemented with $21.5 billion from the American Rescue Plan Act (ERA2). Funds are distributed by the Department of Treasury (ERA page here) to states, territories, large (>200,000 people) local governments, and tribal governments. These funds are to assist eligible renters (not homeowners or businesses) that are unable to pay rent and utilities due to the COVID-19 pandemic. The Treasury defined utilities that can be paid with ERA funds as separately-stated electricity, gas, water and sewer, trash removal, and energy costs. Utilities covered by the rent will also be treated as rent through this program.

The ERA program can provide up to 18 months of assistance total (using funds from ERA1 and ERA2) to renters, paying rent and utilities as far back as March 13, 2020. Payments for utilities will be made directly to the utility from the program administrator. Utility staff can find out which state and/or local agency is administering the ERA program at the Treasury website here, and connect with their program administrator to learn more about the program in their area and how to direct customers to receive bill payment assistance.

 

Summary

With all the different programs and funds coming from federal funds for coronavirus relief, it can be overwhelming to keep up with all of them. However, there are many great resources that provide some useful information. Continue to watch for further guidance, and in the meantime, there are some things utility staff can do to get ready.

-Utility staff, in conversation with local government staff, can plan for potential infrastructure projects that are eligible for ARPA funds. However, it is best to wait for the final guidance from the Treasury regarding usage of funds before spending the funds.

-Utility staff can track information on number of customers who are disconnected, number of customers with past due balances, amounts of past due balances, number of customers on payment plans, payments made (or not made) on payment plans, and other information that will be relevant to their state’s LIHWAP model plan.

-Utility staff can start or continue conversations with assistance providers in your service area, whether non-profits or local government services. In some cases, utilities may be able to provide a list of customers who are eligible for disconnection (or are already disconnected) to an organization that can target assistance to help those customers. The better the communication and understanding between a utility and an assistance provider, the more quickly funds can flow to the utility and the more likely it is that customers will get prompt assistance.

As programs continue to evolve and further guidance is released, the EFC will update the resource page and blog. Many of the resources linked here are updated regularly and the best sources of information are from the agencies administering each program. If you have updates to share or questions regarding this information, feel free to email mullins@sog.unc.edu.

 

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