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Qualification for Coronavirus Local Fiscal Recovery (“CLFR”) Fund Payments for Local Governmental Entities and Pre-Award Requirements for Such Payments
On April 15, 2021, the Department of Treasury released information concerning the pre-award requirements in order for certain local governmental entities to receive payments from Coronavirus Local Fiscal Recovery (“CLFR”) Fund for “covered costs”  related to COVID-19 and for other limited purposes.
Note: For agencies unfamiliar with the CLFR Fund, we recommend that you review the March 8 Special Bulletin that Liebert Cassidy Whitmore provided concerning the Senate passage of the American Rescue Plan Act (“ARPA”), including the CLFR Fund and the covered purposes for payments to local governments.
Before we discuss the pre-award requirements for CLFR Fund payments, it is necessary for local governmental entities to understand the types of entities that are covered by the CLFR Fund and qualified to receive payments from the fund.
Covered Local Governmental Entities
The ARPA provides that the Department of Treasury may make payments from the CLFR Fund to four (4) types of local governmental entitles: (1) “Metropolitan cities”; (2) Counties; (3) “Nonentitlement units of local government; and (4) “Consolidated governments”.  We will review each of the applicable definitions in turn:
The ARPA defines “metropolitan city” to have the same meaning as that term is used under the Housing and Community Development Act.  That Act defines a “metropolitan city” to mean either: (1) A city within a metropolitan area which is the central city of such area, as defined and used by the Office of Management and Budget; or (2) Any other city, within a metropolitan area, which has a population of fifty thousand or more. 
A city that satisfies either of these definitions may therefore qualify as a “metropolitan city” under the ARPA and for CLFR Fund payments if they satisfy the pre-award requirements discussed and have incurred “covered costs.”
The ARPA defines “county” to mean “a county, parish, or other equivalent county division (as defined by the Bureau of the Census).” 
Each of California’s 58 counties therefore qualify as a county under this definition and should complete the pre-award requirements in order to receive CLFR Fund payments.
“Nonentitlement units of local government”
The ARPA defines the term “non-entitlement units of local government” to mean “a ‘city’, as that term is defined in … the Housing and Community Development Act … that is not a [‘]metropolitan city[’],” as defined above. 
The Housing and Community Development Act defines the term “city” to mean either:
(1) Any unit of general local government which is classified as a municipality by the United States Bureau of the Census; or
(2) Any other unit of general local government which is a town or township and which, in the determination of the Secretary [of Housing]:
(a) Possesses powers and performs functions comparable to these associated
(b) Is closely settled, and
(c) Contains within its boundaries no incorporated places as defined by the United States Bureau of the Census which have not entered into cooperation agreements with such town or township to undertake or to assist in the undertaking of essential community development and housing assistance activities. 
Cities that are not “metropolitan cities”, and towns and townships that satisfy each of the three (3) criteria provided above may therefore qualify as “nonentitlement units of local government” under the ARPA and for the receipt of CLFR Fund payments after completing the pre-award requirements.
The ARPA defines the term “consolidated government” to mean either: (1) “[a] unit of general local government that has formed a consolidated government, or [(2) a unit of general local government] that is geographically contained (in full or in part) within the boundaries of another unit of general local government.” 
The ARPA then defines a “unit of general local government” to have the same meaning as that term is used under the Housing and Community Development Act,  which defines the term to mean “any city, county, town, township, parish, village, or other general purpose political subdivision of a State.” 
While the definition of a “unit of general local government” is broad and would cover all political subdivision of the state (e.g., special districts, joint powers authorities, community college districts and public school districts), in order to qualify as a “consolidated government”, such unit of general local government must satisfy either of the following two (2) criteria:
(1) Have formed a consolidated government; or
(2) Be geographically contained (in full or in part) within the boundaries of another unit of general local government
The first criteria uses the term “consolidated government” in order to define “consolidated government,” and is not, therefore, particularly instructive as to the intended meaning of the term or which local governmental entities will qualify thereunder. 
While the second criteria appears on its face to be more instructive (at least insofar as it does not use the term that it is intending to define in the definition), the criteria would not, in practice, limit the units of general local government that would qualify as consolidated governments. The criteria would not limit the units of general local government that would qualify because it requires only that the unit be “contained (in full or in part) within the boundaries of another unit,” which all units of general local government would satisfy by virtue of their physical presence in the state.
Given the vague and ambiguous statutory definition of “consolidated government” and the absence of regulations or interpretive guidance clarifying such definition, it remains unclear what type of governmental entities will qualify for CLFR Fund payments hereunder.
Despite the lack of clarity as to the criteria in order to qualify as a “consolidated government”, we recommend that local governmental entities that appear to qualify under the second criteria, including special districts, joint powers authorities, community college districts and public school districts, complete the pre-award requirements discussed below in order to be positioned if and when Treasury promulgates regulations or provides other interpretive guidance on this subject.
Pre-Award Requirements for “Metropolitan Cities” and Counties
Treasury advises that “metropolitan cities” and counties that which are eligible to receive direct CLFR Fund payments from Treasury under the ARPA, complete certain pre-award registrations in order to position themselves to receive such CLFR Fund payments in a timely manner when the CLFR Fund is formally launched.
To receive such CLFR Fund payments, “metropolitan cities” and counties must obtain the following: (1) a Data Universal Numbering System (“DUNS”) number ; and (2) an active registration with the System for Award Management (“SAM”) database. 
Treasury recommends that, if an eligible entity has not already completed the registration processes for the DUNS and SAM accounts, the entity start such process immediately as it may take several business days to complete the registration process.
Specifically, Treasury recommends that the “metropolitan cities” and counties undertake take the following steps in order to complete their respective registrations:
(1) Register for a DUNS number. A DUNS number is required prior to registering with the SAM database, which is outlined below. There is no charge to register for a DUNS. If a city or county does not have a valid DUNS number, they may call 1-866-705-5711 to begin the registration process.
(2) Register for a SAM account. There is no charge to register or maintain your entity SAM registration. If a city or county does not have an active SAM registration, they may visit https://www.sam.gov/SAM/ to begin the entity registration or renewal process. Please note that SAM registration can take up to three weeks; delay in registering in SAM could impact timely payment of CLFR funds. Treasury provides an overview for SAM registration here.
(3) Gather the city or county’s payment information, including the following:
(a) Entity Identification Number (“EIN”), name, and contact information;
(b) Name and title of an authorized representative of the entity; and
(c) Financial institution information (e.g., routing and account number, financial institution name and contact information)
Starting this process now will ensure that the “metropolitan cities” and counties are well positioned to avail themselves of CLFR Fund payments when those funds become available.
Non-Entitlement Units of Local Government
Treasury also advises that “non-entitlement units of local governments” that do not qualify for the receipt of CLFR Funds payments directly from Treasury, Treasury will distribute CLFR funds to the state, and the state will distribute funds to non-entitlement units of local government in proportion to population.
Non-entitlement units must also have a valid DUNS number to meet reporting the requirements under the program. Therefore, if such a city does not have a valid DUNS number, it should call 1-866-705-5711 to begin the registration process.
The Treasury release does not provide any reference to “consolidated governments” or any information as to the pre-award requirements that such local governmental entities that may qualify as “consolidated governments” must satisfy prior to the request for and receipt of CLFR Funds.
In the absence of such guidance, we recommend that local governmental entities that may qualify as “consolidated governments” also register for a DUNS number, so that, in the event that Treasury clarifies qualifications, such entities may apply for CLFR Fund payments.
LCW attorneys are familiar with the operation of the ARPA and its various provisions, and are available to help local governments assess potentially qualified CLFR costs and address any other issues that they may have about this law and the benefits available thereunder.
LCW will be monitoring Treasury releases on this subject and will be providing additional updates as circumstances require.