Coronavirus Local Fiscal Recovery FunD (CLFRF)

The City Council has allocated $3 million of the federal pandemic relief funding to provide recovery grants for small businesses, small social-service non-profits, and small non-profits in the areas of travel, tourism, hospitality, and the arts (TTHA). The program will offer micro-grants of no more than $25,000 to assist small businesses and non-profits that are in danger of ceasing operations. Grants must go towards arrears for rent, mortgage, and/or utility payments. The funds are not intended to replace revenues and are limited in scope based on state law.

The city held a virtual briefing at noon on Nov. 18 to discuss eligibility criteria, how grant requests will be prioritized, and how the grants will be administered. Watch the recorded briefing.

The recovery grants program sets aside $1 million for each area and includes these provisions:

  • All recipients must be located within the city corporate limits.
  • All recipients must have been conducting business prior to the onset of the pandemic (Jan.1, 2020)
  • Payments will only be made for obligations incurred before City Council approval.
  • Small businesses:
  • Must have fewer than 25 FTE (full-time equivalent) employees
  • Must be independently owned (no chains)
  • Non-Profits:
  • Must have an organizational budget under $1 million
  • Must show proof of service in QCTs or to similar populations
  • Must have board approval to apply

Recipients will be selected in two rounds. In round one, up to 25 grants in each category will be made to small businesses in qualified census tracts (QCTs) and to non-profits (social services and TTHA) in or serving QCTs. In the event that more than 25 applications are received in any category, grant awardees in that category will be chosen by lottery.

Those not selected through the lottery will be placed into round two for a second chance to be selected. In round two, small businesses and non-profits (social services and TTHA) in areas beyond QCTs that are in census tracts with median household incomes below $50,000 will be eligible. If more applications are received than funding available, a lottery method will be used to distribute funds to those eligible entities.

 The city is in the process of developing the grant application. When the city is ready to accept requests, the application will be posted on the city’s website and the public will be notified via this website, press outreach, and community outreach. 

 The recovery grants are part of the first phase for spending the federal relief money. In addition to the grants, this phase includes $1.35 million for crime prevention, $1.5 million in premium payments to city employees in jobs that required them to regularly interact with the public or coworkers during the COVID-19 pandemic and work in public during the pandemic, and a $100,000 matching grant to provide legal counsel to residents facing eviction due to the pandemic.

 A second phase could make more than $15.5 million available for outcome-based partnerships and programs with specific goals tied to the strategic priorities the mayor and City Council adopted earlier this year. The actual amount could vary as the council votes on specific allocations.

The city staff is recommending that up to $20 million be reserved for addressing the city’s housing needs, $7.75 million be reserved to make up for lost revenue due to the pandemic, and up to $2.55 million be reserved to cover administrative costs.

Details about the phase 1 are available in this PowerPoint presentation, or watch a video of the presentation to the City Council.

The city had been awaiting final guidance from the U.S. Treasury Department on how the money can be spent. However, in mid-September the department announced that the final rules would not be available for some time yet and that cities may begin allocating money based on interim final rules announced earlier this year.

Use this link to learn more about the interim final rules and how they are being interpreted by the city (pdf). Use this link to read the complete text of the interim final rules in the Federal Register.

Background

The city is slated to receive $51.7 million from the Coronavirus Local Fiscal Recovery Fund. Money for the fund was included in the $1.9 trillion American Rescue Plan Act of 2021 that Congress passed in March. The money is being delivered in two batches: half was delivered in May 2021; the other half is scheduled to be delivered in May 2022.

The Coronavirus Local Fiscal Recovery Fund is designed to give cities flexibility in responding to the health emergency and in funding projects, programs, or organizations that were economically impacted by the pandemic. In addition to programs specific to pandemic response and recovery, certain improvements to water, sewer and broadband infrastructure also can be funded, as well as programs or improvements for low-income census tracts.

Proposed Spending Principles

The city staff is recommending that allocation decisions be guided by these principles:

  • Transparency. The city will be open and transparent with all uses of ARPA funds, including holding public input sessions and creating public-facing dashboards.
  • Restoration. The city will use part of the funds to provide assistance to city operations and the local economy affected by COVID-19.
  • Transformation. The city will be outcome-oriented in the use of funds and will document progress made is specific and in strategic priority areas.
  • Fiscal Soundness. Because the funds are one-time in nature, the city will seek not to create recurring obligations using these funds.
  • Equity. All program and grant expenditures will undergo an equity review to ensure resources are equitably distributed throughout the community.

The staff is recommending that initial allocations be targeted at coronavirus response, mitigation, relief, and restoration efforts. Later the council could consider funding longer-term “transformative” initiatives to address such issues as affordable housing, workforce development, early childhood education and other underlying social and health conditions. 

These are the guidelines that the council must follow:

Spending Guidelines

Can be used for:  

  • Restoring local government revenue lost due to the pandemic, and government services affected by the loss of revenue.
  • Making up for the economic impact caused by COVID-19 by providing grants to small businesses, non-profits, households and tourism, hospitality and the arts.
  • Providing a pay supplement to local government workers performing essential work, or to provide grants to businesses with employees performing essential work.
  • Financing water, sewer and broadband projects.
  • Programs related to health, crime, housing, employment, and childhood education in low-income census tracts, also known as qualified census tracts (QCTs).

 Cannot be used for:

  • Cannot be used to reduce the tax rate.
  • Cannot be used to delay a new tax or tax increase.
  • Cannot be deposited into pension funds.

For additional information please visit the City of Winston-Salem .