How to Invest ARP Funds in Utilities

Struggling to figure out how to best spend your American Rescue Plan funds? Here is a sampling of eligible spending areas explicitly referenced by the U.S. Treasury.

1. Own a utility? Upgrade your system’s operations.

» Local ARP funds are eligible to be spent on any project that is eligible under the federal Clean Water and Drinking Water State Revolving Funds. Access the eligibility handbooks for those programs here. Examples of eligible project categories include water treatment, water transmission and distribution, and centralized wastewater treatment.

2. Don’t own a utility? Work with your utility provider or explore stormwater projects.

» Two options for those that don’t directly provide utility services:

a. Transfer funds to your utility provider for a project that benefits your town. U.S. Treasury guidance allows for the transfer of funds to other entities. Some municipalities are already exploring transferring their funds to their utility provider for a project that directly benefits their citizens. Example contracts and memoranda of understanding are forthcoming.

b. Complete a stormwater project. Stormwater projects can protect against natural disasters like flooding and improve municipal resiliency. The federal DWSRF allows for a variety of stormwater projects that improve water quality.

3. Utility projects not an option?

» Is any part of your municipality in a Qualified Census Tract?

a. If yes, certain expenditures are presumed to be eligible if made to benefit a QCT, including:

  • Affordable housing development;
  • Responding to increases in gun violence during the pandemic, including funding Community Violence Intervention programs; and
  • Investing in parks and public outdoor recreation spaces to promote healthier living environments.

b. If no, improve ventilation or increase opportunities for social distancing in publicly-owned facilities and congregant settings to mitigate the spread of COVID-19.

The U.S. Treasury spending guidance says governments may spend funds on “adaptations to public buildings to implement COVID-19 mitigation tactics.” Municipalities may consider spending funds on public facility projects that reduce the risk of spreading the pandemic.

This is a non-exclusive list of eligible expenditure categories under existing guidance from the U.S. Treasury. For the latest U.S. Treasury guidance on all possible ways municipalities may expend ARP funds, visit