American Rescue Plan Act funding can be used in four ways.
Months after ARPA became law in spring 2021 and the federal government began distributing the COVID recovery funds to local governments, the U.S. Department of the Treasury released guidelines for how the money could be spent: to replace lost revenue, improve infrastructure, provide pay for essential workers or support public health initiatives.
But many ARPA-funded projects fall into more than one of those categories. That’s been the case for Morganton, where city officials plan to use some of the pandemic relief dollars on a sewer system expansion.
Sewer work clearly falls under the “infrastructure” bucket, but the project also can be categorized as “public health,” since expanded sewer access will likely invite real estate development to Morganton’s west side. This development, according to City Manager Sally Sandy, could mean an increase in the city’s housing opportunities.
“I think that, like everywhere, we are struggling in this community for housing, and that is housing across the spectrum,” Sandy said.
“Whether it’s multifamily, whether it’s affordable, whether it’s market rate, whether it’s single family — you name it, and we need it.”
A project that checks several boxes
ARPA’s “public health” bucket, like the three other categories, is broad and gives governments “substantial flexibility” in choosing how to spend the money, according to Treasury’s description of the funds.
Vaccination clinics, for example, are an acceptable “public health” ARPA expenditure — so is funding a nonprofit-led project to build a new domestic violence shelter, as Jackson County is doing.
That’s because ARPA isn’t just intended to fix pandemic-related issues but also to address problems worsened during COVID, when many people were financially burdened.
“The purpose of the funds, yes, is COVID pandemic relief, but it’s also to help state and local governments continue to function and do the things they need to do to take care of their communities,” a Treasury official told Carolina Public Press earlier this year.
Census data shows housing in Morganton, as it has throughout the state, has become less available and more expensive in recent years. A five-year estimate from 2011-15 showed Morganton with about 1,000 more housing units than in 2016-20 — a noticeable decrease despite the city experiencing only “flat population growth,” as Sandy described it.
Further, more than 40% of Morganton’s renters used 35% or more of their income on housing costs from 2016-20, according to the census. That was higher than the state’s rate of about 37% of renters spending that much.
Using a portion of its roughly $4 million ARPA allotment on sewer expansion, the city could not only mend its housing burdens, Sandy said, but also allow room for population growth.
“(The sewer project) just really is a product of, you know, it’s time to upgrade, time to build that capacity,” she said.
Dogwood Health Trust is matching Morganton’s $1.7 million ARPA commitment to the sewer expansion, which is currently in design. Sandy said the city hopes the project will be completed in 2023.
Morganton has also pledged ARPA funds to repave roads and improve the washing station for city vehicles.
Small cities, big projects
Morganton is not the first Western North Carolina government to devote ARPA funds to sewer projects, but it is the largest.
Only surpassed by Asheville, Morganton is the second-most populous city in North Carolina’s 18 westernmost counties. Neither Asheville nor any of the region’s counties have committed to funding major infrastructure projects through ARPA — making Morganton the largest government to do so.
Many smaller cities and towns, however, have dedicated the federal recovery funds to infrastructure improvements. Lake Lure used its ARPA dollars to start construction on a $60 million system, and Marion is also considering spending the money on sewer improvements.
Smaller governments are more likely to embark on structural projects because they take longer and are more expensive for large areas, Yancey County Manager Lynn Austin said. All ARPA money must be allocated by December 2024 and spent by December 2026, per the federal Treasury Department.
Yancey County, which has only about 2,000 more residents than the city of Morganton, is using the federal dollars to clear up room in its operating budget rather than taking on infrastructure projects.
“It’s a good thing to have more money than you know what to do with, I guess,” Austin said.
“But for the smaller (governments), that’s never been a problem.”