CARES Act Funding Begins to Reach Cities and Counties

Under the CARES Act stimulus package, EDA grants are intended to help local governments, universities, and nonprofits respond to the pandemic and prevent further economic harm. Eligible entities can use EDA funds for a variety of purposes, including construction of water and water-related infrastructure, public buildings, telecommunications infrastructure, and other broad economic development projects including innovation grants and capitalization and recapitalization of revolving loan funds (RLFs).

EDA is a bureau within the U.S. Department of Commerce designed to help economically distressed communities establish job growth, develop regional economic activities and collaborations, and stimulate commercial and industrial development through a range of investment programs. EDA traditionally utilizes flexible funding and investment vehicles to allow communities to leverage their existing regional assets and support localized development strategies.

The funding under the CARES Act represents a significant increase to EDA’s typical annual budget for economic recovery programs, having originally been appropriated $333 million in Fiscal Year 2020. This expanded funding will open EDA programs to a much larger range of projects than previous EDA funding opportunities.

Under the program, entities eligible for funding include counties, cities, states, Indian Tribes, institutions of higher education, and public or private non-profit organizations dealing with the impacts of the COVID-19 pandemic. Consortiums of eligible organizations are also eligible to receive funding.

In many cases, EDA has supported funding to local governments to support infrastructure that will ultimately support economic development in the private sector. As such, companies and nonprofit organizations (including institutions of higher education) are encouraged to work with local governments and/or community organizations to apply for EDA funding, even if those companies or institutions are not the direct beneficiaries of funding. For example, in our team’s experience, EDA typically looks favorably on funding public infrastructure projects, such as roads, water/sewer, or fiber, that are “shovel-ready” and that will yield direct economic development in a community. In these cases, the grantee must be a unit of government or a nonprofit organization, but the end user of the infrastructure funded by the grant could be a company that is hiring new workers to construct/rehabilitate as well as ultimately occupy a new facility. Additionally, unlike traditional EDA-funding programs, the agency has determined that the COVID-19 pandemic constitutes a “special need,” giving nationwide eligibility to these communities without having to demonstrate additional economic distress.

Through EDA CARES Act funding, eligible recipients may use grant money for a broad array of pandemic response measures, including planning and technical assistance, broad economic development projects, innovation grants, capitalization and recapitalization of revolving loan funds (RLFs), and development and construction of infrastructure projects. Past EDA infrastructure projects include road and rail transportation development, water systems and flood prevention upgrades, developments of ports and industrial parks, and the construction of educational and job training facilities.

To be approved for funding, applicants must explain how any proposed project would fit under the stated objective to “prevent, prepare for, and respond to coronavirus” or otherwise respond to the economic injuries of the pandemic, and demonstrate that the project will meet all EDA investment priorities. The five EDA investment priorities are: 1) recovery and resilience, 2) critical infrastructure, 3) workforce development and manufacturing, 4) exports and foreign direct investments, and 5) opportunity zones, seek to support locally-devised strategies designed to spur economic development. That fifth investment priority—“Opportunity Zones”—refers to supporting the planning and implementation of projects that aim to attract private investment in certain low-income community census tracts.

EDA aims to fund at least 80% and up to 100% of eligible project costs, with no set minimum or maximum grant amount. When determining whether to fund projects above the 80% threshold, EDA will consider whether the applicant has exhausted its effective taxing or borrowing capacity, the extent of the economic impact of the COVID-19 pandemic on the region, and whether the region meets other thresholds for elevated need based on the relative economic distress of the region.

EDA CARES Act funds are currently being distributed on a rolling basis, and all funds must be approved and distributed by September 30, 2022. In order to apply for these grants, communities must apply to their applicable regional EDA office responsible for their state. EDA maintains regional offices in Atlanta, Austin, Chicago, Denver, Philadelphia, and Seattle. In our experience, applicants that communicate directly with their EDA regional representatives prior to submitting an application—and, indeed, sharing a draft of the application with the regional representative before submitting it—are often well positioned for success. Pillsbury’s public policy attorneys have worked frequently with EDA regional representatives in helping clients craft and refine their EDA applications.

As EDA begins reviewing submissions, proposals emphasizing long-term programs focusing on increased economic resiliency and stability through regional and community partnerships will likely be the most successful. EDA has indicated that CARES Act funds should be not only responsive to the existing COVID-19 pandemic, but should also help communities address and mitigate future economic harms. Developing broad local and/or regional support for proposed EDA projects, including support from local elected officials, community leaders, and congressional delegation members, often proves critical for successful applicants.

As local communities are facing significant budget shortfalls in the coming year due to the COVID-19 pandemic, the EDA CARES Act Recovery Assistance Program is an opportunity to find new funding sources for some of the most critical economic recovery initiatives. In our team’s experience, EDA typically prioritizes funding for public infrastructure projects that are “shovel-ready.” Communities interested in EDA funding should be identifying eligible projects, and move swiftly to apply for assistance in order to have applications considered in a timely manner.

Pillsbury’s bipartisan team of lawyer lobbyists applies a top-down approach to problem solving, combining technical and substantive knowledge with connections to influential leaders on Capitol Hill, in the Executive Branch, and in state governments. Our team advises clients doing business with the government, including helping them reduce regulatory risk, secure government grants and loans for worthy projects, and achieve compliance with relevant laws and regulations. We also represent clients facing “bet-the-company” government investigations and have successfully defended companies, associations, and executives before investigators from each of the oversight committees in Congress, including the Select Subcommittee on the Coronavirus Fund.

Pillsbury’s experienced, multidisciplinary COVID-19 Task Force is closely monitoring the global threat of COVID-19 and providing real-time advice across industry sectors, drawing on the firm’s capabilities in crisis management, employment law, insurance recovery, real estate, supply chain management, cybersecurity, corporate and contracts law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 (Coronavirus) Resource Center.