ARPA Funding Coming Down the Pipe for North Carolina Local Governments and Utilities
The North Carolina Department of Environmental Quality’s (NC DEQ) Division of Water Infrastructure anticipates administering approximately $1.6 billion in American Rescue Plan Act (ARPA) of 2021 funds. The funds will be dispersed through North Carolina’s Viable Utility Reserve, Drinking Water Reserve and Wastewater Reserve (State Reserves), and Local Assistance for Stormwater Infrastructure Improvements Fund. All funds must be spent by the federal government's deadline of December 30, 2026.?
How to Get Started
News about the ARPA and the amount of funding state and local governments will receive is prevalent is at the top of today’s news cycle. For municipal and county governments and utilities, the promise of allocated funds from a large, complex federal government bill can be daunting. Local leaders may find themselves asking “how can we be sure our community gets the help we need?” Thomas & Hutton has a proven track record of obtaining and managing state-awarded grants, and we look forward to assisting local governments and utilities to apply for ARPA funding. Most application due dates are May 2, 2022, and will be available on the DEQ’s website soon. Get a head start on preparing for the application rollout for funding opportunities. Grant applications will require a variety of supporting documents that will determine eligibility. Some of the project criteria to anticipate include:?
Cost and Budget – A cost estimate will provide state reviewers with an idea of the total projected costs. A budget will put a dollar amount to the number of resources and time a project will need over time. This will help prove the applicant’s understanding of what it will take to get the project through to completion.
Capital Improvement Plan – Having a project within your capital improvement plan indicates that some design work is already complete and demonstrates a defined need within the community, as well as a vision for how the new improvements will operate within your government’s framework.?
Matching Funds – Although not definite, leveraging matching funds may be required for applications. Matching funds can be in the form of bonds, loan programs, LOST, or local fiscal recovery funding. Verifying those existing funds are earmarked for a project can boost an application. This establishes dedication on the part of the applicant to bring the project to reality by securing preliminary funding.
Approximately $839,600,000 has been allotted by the North Carolina General Assembly to 115 local government recipients for water and wastewater projects and 11 recipients for stormwater projects. The remaining $758,000,000 have not been earmarked and will be allocated through the following programs:
Viable Utility Reserve
Viable Systems are utilities that function as long-term, self-sufficient enterprises that require appropriate levels of maintenance and operation to provide reliable water resources for residents and businesses in the long run. The state’s Viable Utility Program aims to assess and support those under distress through the Viable Utility Reserve.?
What counts as distress? Any water or wastewater system that serves the public or is operated by a local government that is unable to address financial or operating needs. This may keep the water or wastewater system from adequately funding management and operations, or not keeping up with maintenance.?Click here for a full list of North Carolina local government units designated as distressed by the State Water Infrastructure Authority (SWIA) and Local Government Commission (LGC). Your local government must be designated as distressed by SWIIA and LGC before applying for funding. Do not see your unit on the list? The next evaluation is scheduled for April 2022.?
If your local government has already been awarded loans from the Drinking Water State Revolving Fund and/or Clean Water State Revolving Fund (SRFs) for Viable Utility Reserve-eligible water and wastewater projects but has not yet started construction or drawn down on loans, the Viable Utility Reserve will offer to replace the awarded loan amount with up to $15,000,000 in ARPA funding before construction or disbursement tied to the SRFs, depending on SWIA and LGC approval. This would allow distressed units to take advantage of the more favorable funding offered by ARPA and expedite the start of construction using the planning and pre-construction activities that have already taken place for the SRF loan.?
All remaining non-earmarked ARPA funding in the Viable Utility Reserve will be awarded through the competitive funding process as grants to local government units designated as distressed. Local government units hoping to receive a portion of the non-earmarked funds must meet the following criteria:?
Grants are limited to $15,000,000 to any single local government unit. If two or more local government units are merging into a single utility, the total grant awarded will not exceed $30,000,000. Previously-awarded Viable Utility Reserve grants, including amounts for directly- allocated projects from the Viable Utility Reserve, and loan replacements described above, will count towards the limit.
The NC Division of Water Infrastructure proposed to accept Spring 2022 ARPA funding applications through May 2, 2022. Awards will be determined as early as July 2022.
Drinking Water Reserve and Wastewater Reserve (State Reserves)?
At-Risk Systems
North Carolina will roll out approximately $191,300,000 in competitive grants for public water systems and wastewater systems projects that NC DEQ categorizes as at-risk. This does not include grants for already earmarked projects. Thinking of applying for a grant? Grants must be used for public water systems, wastewater collection systems, and wastewater treatment works.
If your public water or wastewater system is not designated as distressed, but at-risk of becoming distressed by the SWIA, you may also be eligible under the following criteria: ?
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Local government water and/or wastewater utilities providing service to residential, non-bulk customers, that are not designated as distressed by SWIA and the LGC, and that:
or
The remainder of funding that has not been previously earmarked in the State Reserves for at-risk systems will go through a competitive funding process. The proposed limit for State Reserves funds is up to $15,000,000 per utility. Where two or more local government units are merging into a single utility, the total grant awarded will not exceed $15,000,000 per utility in the project. Applications through State Reserves in Spring of 2022 will also be due May 2022, with award decisions as early as July 2022.
All Other Systems
If you operate a public water or wastewater system that is not designated as distressed or at-risk, there will be approximately $54,100,000 available in grants for project construction. This excludes grants for directly allocated (earmarked) projects.
Interested in applying? Grants must be used for construction projects for public water systems, wastewater collection systems, and wastewater treatment works. All applications will be reviewed according to the SWIA’s Priority Rating System. Similar to at-risk systems, there will be a limit of up to $15,000,000 per utility. Where two or more local government units are merging into a single utility, the total grant awarded will still not exceed $15,000,000 per utility in the project. Applications for Spring 2022 will also be due May 2, 2022, and awards determined as early as July 2022.
Planning and Study Grants
Outside of construction, local governments, utilities, and water corporations interested in studies or planning activities are eligible for a specific tranche of ARPA funding. Approximately $77,600,000 has been set aside for asset inventory and assessment grants, rate studies merger/regionalization feasibility grants, training grants, and planning grants to conduct project engineering, design, or other preconstruction activities.
Grants are limited to $400,000 per recipient for the 2021-2023 biennium. Grants will be awarded for Asset Inventory and Assessment (AIA) and Merger/Regionalization Feasibility (MRF) studies through the State Reserve’s competitive funding process. Applications for AIA and MRF grants will be reviewed and evaluated according to the Priority Rating Systems established by SWIA for AIA and MRF grants. Like the other programs, applications are due May 2, 2002, with award determination as early as July.?
If your entity is applying for grants to cover training, rate studies, and preconstruction planning activities, they can be included in applications for other construction and planning projects from the State Reserves and Viable Utility Reserve described above, but are subject to the aforementioned funding limits. Training-specific expenses will be limited to $2,000 per utility for registration and mileage costs to attend training events for utility staff and governing board members.
Anticipated Timeline for Drinking and Wastewater Projects
Local Assistance for Stormwater Infrastructure Investments Fund
The final portion of North Carolina’s ARPA funding will be dedicated to the improvement of stormwater infrastructure. Approximately $82,000,000 will be available for cities and counties and their regional councils of government and nonprofit partners for projects that will improve or create infrastructure for controlling stormwater quantity and quality. This does not include grants for directly allocated (earmarked) projects. Funding will be broken down into 70% for construction grants and 30% for planning grants. Unlike water and wastewater, a rating system has not yet been established. SWIA anticipates a rating system to be developed within the first half of this year. Applications will be accepted until September 30, 2022, and awarded as early as February 2023.
Anticipated Timeline for Stormwater Projects
Next Steps
There are no scheduled plans for a second funding round, however, the state has communicated that an additional application window will open next year if all funding is not spent this year. Thomas & Hutton’s funding assistance team can help identify current projects that would be a good fit for the ARPA funding. Along with our in-house civil engineers, we will work with you to develop cost estimates, schedules, budgeting, and preliminary engineering reports that will help bolster future applications. Preparing elements of the grant application well in advance can make the difference for submission windows, especially when it comes to timely requirements such as surveys and inspections. Once grants are awarded, we can assist with compliance with all federal regulations, track spending, and adherence to timelines. Contact us today to learn more.