Rules for rescue funds allow for demolitions
The U.S. Treasury clarifies, broadens how cities can spend dollars.
A decrepit home sits vacant and neglected in north Dayton.
Diane Shannon, Dayton’s director of procurement, management and budget, talks to City Manager Shelley Dickstein before a finance committee briefing.
By Cornelius Frolik
Staff Writer

The U.S. Treasury has issued final rules for how communities can spend their federal rescue funds, and Dayton and other cities and organizations are relieved to see that demolition and some of their other spending priorities are now allowable expenses.

“We are encouraged by the release of the final rule and will be conducting our due diligence over the next several weeks to ensure compliance with the final guidance,” said Diane Shannon, Dayton’s director of procurement, management and budget.

Dayton developed a spending plan for its $138 million in federal American Rescue Plan Act funds that included a variety of investments that were not explicitly permitted by Treasury’s interim final rule released eight months ago.

Last summer, then-Dayton Mayor Nan Whaley and City Manager Shelley Dickstein submitted a letter to the Treasury asking it to expand qualifying expenses to include blight removal, repairing sidewalks, property acquisition and community infrastructure investments.

The Treasury received more than 1,500 responses from cities and organizations across the nation about its spending eligibility guidelines, and many asked for changes and additions to the rules.

Whaley and Dickstein also urged the Treasury to allow communities to use rescue funds to construct public safety facilities, support and redevelop existing business districts and assist businesses, especially those owned by minorities or that are located in underserved communities.

The Treasury recently released its final rule, which the federal government and other groups say provides broader flexibility and more clear and simple eligibility rules.

“The changes in the final rule provide greater certainty in many areas where the (National League of Cities) and its members sought clarity, and will help cities, towns and villages have more confidence as they spend their (State and Local Fiscal Recovery Funds) funds,” said Clarence Anthony, CEO and executive director of the NLC.

The final rule says eligible projects include improvements to vacant and abandoned properties through demolition, rehab, remediation of environmental issues and other investments.

The final rule also says funds can be used to help small businesses that have been impacted by the pandemic with loans, grants, technical assistance, counseling or other services.

Dayton has proposed spending about $15.8 million of its rescue funds to demolish about 850 housing units and $18.7 million on repairing, rehabbing and constructing new housing.

The city also plans to put $7 million toward a fund for loans for first-floor businesses in its business districts, and it also expects to offer $3.1 million to Black- and brownowned businesses for capital investments.

“The final rule provides broader flexibility in response to over 1,500 public comments, including comments that the city submitted,”

Shannon said. “The final rule enumerates several eligible uses not explicitly contained in the earlier interim rule.”

Shannon said city staff are still reviewing the entire 437- page final rule document to determine if all of the proposals in the Dayton Recovery Plan are eligible.

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