Treasury Guidance on the Coronavirus Capital Projects Fund

The Treasury Department has released Guidance on use by States, territories, freely associated states of funding from the Coronavirus Capital Projects Fund, a $10 billion fund enacted in the American Rescue Plan Act to carry out critical capital projects that directly enable work, education, and health monitoring in response to the coronavirus health emergency, with an emphasis on funding broadband infrastructure.  Treasury separately released Guidance for Tribal Governments.  Below is a summary of the guidance for States. 

Eligible Applicants/Recipients

Eligible states are each of the 50 states, the District of Columbia, and Puerto Rico.  The seven eligible territories and freely associated states are the United States Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.

Capital Projects Fund Recipients may award funds to Subrecipients, such as other levels or units of government (e.g., municipalities or counties), non-profits, or private entities. For example, for Broadband Infrastructure Projects, Subrecipients may include co-operatives, electric utilities, and other entities that build or operate broadband networks, including networks that are owned, operated by, or affiliated with local governments.

Although this is not a competitive grant program, States, territories, and freely associated states must submit an Application and a Grant Plan in order to receive funding.

Eligible Projects

For a Capital Project to be an eligible use of Capital Projects Fund grant funds, it must meet all of the following criteria:

1. The Capital Project invests in capital assets designed to directly enable work, education, and health monitoring.
2. The Capital Project is designed to address a critical need that resulted from or was made apparent or exacerbated by the COVID-19 public health emergency.
3. The Capital Project is designed to address a critical need of the community to be served by it.

Treasury has identified three types of “presumptively eligible projects” described below.  Any project that is not presumptively eligible must be approved on a case-by-case basis, and the applicant must demonstrate that the project meets each of the three statutory criteria listed above.  (The Guidance provides more details on the requirements of all three criteria.)

Presumptively eligible projects include:

• Broadband Infrastructure Projects
• The construction and deployment of broadband infrastructure projects are eligible for funding under the Capital Projects Fund program if the infrastructure is designed to deliver, upon project completion, service that reliably meets or exceeds symmetrical download and upload speeds of 100 Mbps. If it would be impracticable because of geography, topography, or excessive cost to deliver services at these speeds, the project must be designed so that it reliably meets or exceeds 100 Mbps download speeds and between 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for download and upload speeds.
• Recipients of funding for these projects must, among other things:
• Consider whether the broadband service options offered by recipients of the grant funding will be affordable to their target markets in the proposed service area and must publish the description of their process for considering affordability in their project selection process.
• Ensure the service provider for a completed project participates in federal programs that provide low-income consumers with subsidies on broadband internet access services.  This includes EBB, and once that terminates, other programs identified by Treasury.  (Treasury will not identify programs that would require the service provider to be designated as an eligible telecommunications carrier.)
• Explain why the communities they have identified to be served by the projects have a critical need for those projects as it relates to access, affordability, reliability, and/or consistency.
• Recipients are encouraged to, among other things:
• Focus on last-mile connections.
• Prioritize investments in fiber-optic infrastructure where feasible.
• Prioritize projects that involve broadband networks owned, operated by or affiliated with local governments, non-profits, and co-operatives.
• Address affordability as a barrier to full use of the internet.
• Consult with the community as part of the process they undertake to consider affordability and are encouraged to require that services provided by a Capital Projects Fund-funded project include at least one low-cost option offered at speeds that are sufficient for a household with multiple users to simultaneously telework and engage in remote learning.
• Prioritize projects that are designed to provide service to households and businesses not currently served by a wireline connection that reliably delivers at least 100 Mbps of download speed and 20 Mbps of upload speed. The Recipient should ensure that the funding will not be used for costs that will be reimbursed by the other federal or state funding stream(s).

• Digital Connectivity Technology Projects
• The purchase and/or installation of devices and equipment to facilitate broadband internet access are eligible for funding where affordability has been identified by the Recipient as a barrier to broadband adoption and use. Permitted devices and equipment include laptops, tablets, and desktop personal computers for distribution to members of the public through a short- or long-term loan program or to be made available for use in public facilities. Permitted equipment includes equipment installed as part of public wi-fi infrastructure (e.g., access points, repeaters, routers).
• Recipients of funding for these projects must, among other things:
• Ensure ownership of the equipment is maintained by the Recipient or a Subrecipient.
• Explain why the communities they have identified to be served have a critical need for those projects.

• Multi-Purpose Community Facility Projects
• Projects to construct or improve buildings that are designed to jointly and directly enable work, education, and health monitoring are eligible for funding.  Examples include projects to:
• Construct or improve full-service community schools that provide a comprehensive academic program to their students and adult education in the community at large; health monitoring to their students and the community; and workforce training or career counseling services that provide community members with the knowledge needed to engage in work, including digital literacy training programs.
• Construct or improve libraries that provide public access to the internet for purposes including work, education, and health monitoring such as offering digital skills programs and support for community members engaging in virtual learning.
• Construct or improve community health centers that, in addition to engaging in health monitoring, provide a broader range of services to the communities they serve, including activities such as access to job counseling employment services, as well as health education classes or internship programs for medical professionals.
• Recipients of funding for these projects must, among other things:
• Ensure projects are designed to jointly and directly enable work, education, and health monitoring, but these activities need not be the exclusive function or purpose of the project. For example, a building, such as a library or community center providing the public with access to computers with high-speed internet service, can meet this criterion even if the completed project is also used for other functions, such as community recreational activities.
• Explain why the communities they have identified to be served have a critical need for such projects.

Ineligible Projects

General infrastructure projects, such as highways, bridges, transit systems, and ports are ineligible under the Capital Projects Fund program. General construction and improvement of hospitals and traditional schools are not presumed to be eligible, although there may be opportunities for such projects to receive funding if they meet the project eligibility criteria. As noted above, such projects will be reviewed on a case-by-case basis.

Eligible and Ineligible Costs

Allowable costs are determined in accordance with the cost principles identified in 2 C.F.R. Part 200, Subpart E.10.  Project costs are not limited to new construction. For example, project costs can involve improvements and repairs to buildings to permit the buildings to be used for eligible purposes.  The Guidance includes a non-exhaustive list of eligible project costs. Cost sharing is not a requirement for the use of these funds.

Federal funds committed to an award may only be used to cover allowable costs incurred during the period of performance and for allowable closeout costs incurred during the grant closeout process. A Recipient may use funds to cover costs incurred during the period beginning March 15, 2021, for one or more eligible projects. Pre-award costs incurred after March 15, 2021, but prior to execution of the Grant Agreement are allowable only to the extent they would have been allowable if incurred after the date of the Capital Projects Fund award and only with the written approval of Treasury.

Ineligible Project Costs. Unless otherwise permitted by Treasury, Capital Projects Fund grant funds may not be used for the following purposes:

• Acquisition of spectrum licenses;  
• Operating expenses, other than grant administration costs;
• Short-term operating leases;
• Payment of interest or principal on outstanding debt instruments, or other debt service costs incurred prior to March 15, 2021;
• Fees or issuance costs associated with the issuance of new debt;
• Satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring plan in a judicial, administrative, or regulatory proceeding; or
• To support or oppose collective bargaining. (This does not affect the ability to use funds to comply with 41 C.F.R. 60-1.4.)

Performance Period/Timeline for Spending Funds

All funds must be expended by December 31, 2026, which is the end of the period of performance. Recipients must return to Treasury any grant funds that are not used by the end of the period of performance. Treasury may, in its sole discretion, grant extensions to the period of performance upon request from Recipients.

Applications

The Guidance includes detailed information and instructions on submitting applications.  Eligible Applicants must complete the Application by December 27, 2021 to receive funding. Treasury will post the specific dates on its website during which it will accept Capital Projects Fund Applications.  Detailed plans for deploying Capital Projects Fund grant funding (called “Grant Plans”) are due within 365 days following the date that Treasury begins accepting Applications via its Capital Projects Fund Portal.  Only eligible entities may apply, and only one Application shall be accepted from each eligible entity.

The Grant Plan must include at least one “Program Plan.”  Each Program Plan is intended to provide more detailed information on a particular type of Capital Project the Recipient intends to undertake, and constitutes an Eligible Applicant’s request for funding for those Capital Projects. For example, a State might file a Grant Plan that indicates that it intends to spend funding on broadband deployment throughout the State, and a Program Plan that provides detailed information on its deployment plan for only some of the counties in the State. Later, it could file Program Plans detailing its deployment plans for other counties in the State.  After submitting a Grant Plan that includes at least one Program Plan, Recipients may submit additional Program Plans on a rolling basis throughout the 365-day submission window so that Recipients can seek funding for a particular Capital Project (or Projects) when the Recipient is ready. Treasury will assess and approve each Program Plan separately and will separately provide access to funds for each Program Plan when approved.

Again, the Guidance includes much more detail on these and other issues so please review that document for more information.