How Cities Can Equitably Spend the American Rescue Plan Funds
Over the past year, the United States has experienced its highest rates of unemployment in the 21st century.
In addition, the global COVID-19 pandemic has led to significant pressures on the nation’s healthcare sector, raising immediate concerns about food security, housing stability and access to education. In 2020, the Trump administration and the U.S. Congress distributed stimulus checks to support low- and middle-income households; however, the continued spread of COVID-19 and the need for economic recovery meant that more needed to be done.
Under the new Biden administration, Congress passed the American Rescue Plan bill (ARP), a landmark piece of legislation intended to provide $1.9 trillion to support states, local municipalities, small businesses, public schools, community clinics, renters, homeowners and homeless individuals. While this article is not exhaustive, it considers the benefits of this comprehensive bill, while also noting how implementation of the bill can be improved. The constructive feedback offered here may provide a guidepost for local governments seeking equitable implementation recommendations. This article’s federal recommendations may be considered for future legislation—like the infrastructure plan currently being debated—to ensure equitable distribution and collaboration between government entities.
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Economic Recovery and Job Creation
As a result of the global pandemic, more than 13 million Americans became unemployed. Thousands of businesses were forced to close and are unable to reopen even now that COVID-19 restrictions are relaxed. In addition, over 1 million jobs in state and local governments had to be cut during the pandemic.
The American Rescue Plan’s provision of stimulus checks supports those families and individuals still experiencing unemployment as a result of COVID-19. These stimulus checks provided an additional $1,400 per qualifying individual for households to buy food, pay rent or take care of any emergency expenses. Overall, this stimulus check may only provide enough money to offset one’s budget for a month. However, when these checks are considered alongside other ARP initiatives, they are one of the many efforts being taken to support Americans during the recovery.
Beyond the individual employee, the grants and loans made available to small businesses through ARP funding will allow hard-hit small businesses to reopen, rehire workers and buy the sanitation equipment they need to safely operate. In total, the ARP provides over $60 billion of financial support so that small businesses can remain in their communities and in their cities. These funds will ensure economic recovery and long-term stability during a time of uncertainty. While these funds provide much needed relief, unless loans are distributed with a targeted focus toward minority communities, loans may disproportionately favor large organizations with priority status through traditional banks.
Suggestions for local implementation: Based on previous stimulus bills, local governments should confirm that their local distribution plan includes grant and loan distribution through CDFIs and MDIs, which open up access to capital to vulnerable groups who often do not qualify for bank loans. This is one way to achieve equitable economic recovery.
Housing Stability
For cities with pre-existing affordable housing crises, COVID-19 was inimical. Prior to COVID-19, the 2020 Point-In-Time count showed an increase in homelessness by 2.2% since 2019: “This marked the fourth consecutive annual increase in homelessness, following sustained reductions between 2010 and 2016.” 1
While this rise in homelessness in 2020 seems significant, it is estimated that due to COVID-19 homelessness will rise by 49% over the next four years. The homelessness crisis is expected to increase in 2023 with an additional 603,000 working age adults becoming unhoused. This estimation means that subsidies and programs need to be created, or expanded, to provide housing for Americans. ARP supports these efforts by providing nearly $50 billion to maintain and create housing for homeless and near homeless households. Funds will be used to provide emergency rental assistance ($24.7 billion) to those households making less than 80 percent of the Area Median Income (AMI), as well as to those individuals qualifying for unemployment benefits, or incurring significant costs due to the pandemic. In order to provide support to those hit hardest by the pandemic, states and localities are required to prioritize distributing emergency rental assistance to those households below 50 percent of AMI.
The ARP bill sets aside $5 billion in emergency housing vouchers. This funding is intended for individuals who are, or at risk of, experiencing homelessness and individuals fleeing, or attempting to flee, domestic violence, dating violence, stalking, sexual assault or human trafficking.
With homelessness becoming more of a reality for many Americans, ARP provides vulnerable communities with the ability to stay in their homes longer than they may have expected. Through the ARP, housing stability can lead to a stronger economy, better educational outcomes for children and youth and better health outcomes for families who continue to have access to running water, electricity and protection from the elements.
Suggestions for local implementation: While making emergency rental payments available, work with non-profit or housing authority providers to outline long-term sustainable housing options. These alternative options will be essential once the emergency rent program ends.
Increase Healthcare Capacity
The ongoing global pandemic has exacerbated existing challenges related to accessing health care and education. As a result of COVID-19, more patients are seeking care for respiratory related illnesses and there are delays in non-COVID-19 care. There has also been a reduction in hospital staff due to illness, caregiving responsibilities and increases in mental health concerns. In an effort to ensure social distancing and keep patients safe, telehealth services have been expanded.
While this can be helpful, those households with limited to no internet access are unable to use telehealth for non-COVID-19 related health concerns. This lack of internet access means that patients have to visit hospitals and increase the likelihood of putting themselves and their families at risk or, worse, receive no care at all due to diminished capacity.
In addition to challenges with accessing health care, the pandemic has highlighted gaps in health insurance coverage. With over 20 million workers becoming unemployed, many Americans have lost their employer-sponsored insurance. While some individuals who lost their jobs will become eligible for Medicaid or other plans, a significant number will likely become uninsured.
This precarious situation adds to the staggering pre-pandemic numbers where 31 million Americans were uninsured and over 40 million Americans were underinsured. On top of these existing health care challenges, employment in the health care system is down by more than 1 million jobs through May, 2021. In light of these and other public health concerns, the ARP has allocated over $85 billion to maintaining and expanding access to health care. Some of the efforts that this funding will go towards include improving public health departments’ ability to detect, diagnose and trace COVID-19, effectively distributing vaccines and expanding the public health workforce.
Increase Education Capacity
The U.S. education system experienced significant changes since January 2020. Children and teenagers shifted from in-person to online learning within a matter of days. Those students that did not have a computer, reliable internet access, or any internet access at all, now had to learn from home. Research has shown that those students without consistent access to the internet or computers were at a disadvantage during this period of virtual learning. Those students that are more likely to have their virtual learning hindered are low-income students, and students with learning disabilities.
The ongoing digital divide in the United States means that some students will have to take additional courses or repeat grade levels. In order to mitigate the disadvantages and inequalities that exist in this new virtual learning environment, there will need to be an increase in “both the amount and quality of learning time.” Learning opportunities can be enhanced and made more equitable through ARP funding.
The ARP provides approximately $150 billion to expand access to the internet and holistic K-12 education. This funding assists with implementing and maintaining summer enrichment programs, extended learning, after-school programs, and extended school year programs. These funds also assist homeowners with paying for internet services and provide states with resources to expand broadband access. These funds can remedy some of the challenges posed by the ongoing digital divide and the need for improved access to education.
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Federal Recommendations
Equitable Distribution of Funds
As with any funding mechanism, concerted efforts need to be made to ensure that ARP dollars are received by the households and families that need them most. Recent data from the U.S. Center for Disease Control and Prevention “reveals that Black Americans are five times more likely than white Americans to get COVID-19, and Latino Americans are four times more likely.”
In addition to being more likely to contract COVID-19, Blacks and Latinos experienced more negative impacts due to the pandemic than other racial demographics. These negative consequences are due to decades of inequities that are being exacerbated during a health crisis. These inequities have been particularly evident in the nation’s housing landscape. Recent data shows that in America’s 50 most populous cities, African-Americans make up the majority of the homeless population. When considering the entire homeless population in the United States, “nearly 40 percent of people experiencing homelessness identify as Black, 22 percent as Latinx, 3 percent as Native American and 2 percent as Pacific Islander.”
In addition to this homelessness data, the pandemic has led to higher losses in employment amongst people of color. As a result, African American and Latinx renters are “less confident in their ability to pay rent” and more concerned about imminent eviction.
As a result of the pandemic, individuals living in low-income households are more likely to get COVID-19. This may be due to members of the household being essential workers and not having the privilege of working from home. The need to work in person, as well as their higher rates of taking public transportation, put them at greater risk of having COVID-19. The lack of resources available to public schools has meant that they have faced challenges with both virtual and in-person learning.
A strain on funds for these schools leads to having few, if any, school nurses, a limited number of counselors, unreliable internet and inadequate space for students. Insufficient funding coupled with the stress of the pandemic creates challenges for students attempting to learn while at home or in school.
While it is up to states and cities to strategically use these funds to limit existing burdens on low-income households and communities of color, the federal government can use explicit guidelines and guardrails to ensure that equity outcomes are achieved. Equitable funding distribution looks like developing affordable housing in cost-burdened Latinx communities, upgrading public schools that serve African American students and creating homeless shelters in areas that are easily accessible to people of color. If these ARP dollars are effectively distributed, we will begin to see a reversal of the inequities caused by the pandemic and a mitigation of future injustices.
Collaboration Across Tiers of Government
Although the ARP provides guidelines for distributing funds to various levels of government, there is little indication of collaboration between federal, state and local agencies. Collaboration between these tiers of government would be helpful for the effective distribution and use of funds. In addition, collaboration between these three government tiers and non-profit organizations would allow for the thoughtful use of funds for a myriad of urban projects.
While collaborative efforts may be delayed for the ARP, this approach is encouraged for Biden’s proposed infrastructure plan. Multi-tier collaboration amongst government agencies can lead to unique projects that cross over state borders, provide benefits to numerous counties and have cities working in partnership to improve utilities for their residents.
Gentrification and Continued Displacement
Over the past two decades, gentrification has become one of the major concerns for urban centers. As a result of the pandemic, low-income and unemployed renters have experienced harassment by their landlords and unexpected displacement. While some states have placed a ban on evictions, over 30 states have not established this tenant protection measure. As a result, the demographics and culture of communities has shifted.
As renters leave communities, their units are then occupied by middle-or high-income households desiring to spend less money on housing. Research conducted in New York shows a correlation between COVID-19 cases and rising rents: “In neighborhoods that saw the most COVID-19 cases in 2020, rents rose 22% over the last six years. In areas with the fewest COVID-19 cases, rents rose only 10% over the last six years.” Those neighborhoods that had higher cases and higher rents had mostly people of color.
In addition to rising rents and eviction rates, the cost of owning a home has also increased during the pandemic, especially in communities of color. These rising home prices were also experienced more in low-income communities. While these rising home prices are beneficial for existing property owners, they also lock low- and middle-income households out of the housing market.
A family that was seeking to buy a home in a community of color prior to the pandemic, may now be unable to afford a home in any urban area. This reality creates challenges for low-income renters and renters of color who desire to own a home and build wealth. The destabilization of Black, Latinx and Asian communities continues; however, the equitable distribution of ARP funding can change this. Through homeownership and renter assistance programs, the ARP can reduce the amount of gentrification and displacement that occurs in cities and towns across the United States.
But this is only possible if ARP dollars reach the people and communities that need it most.
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Chanel Williams, AICP, currently works in The Bahamas as an Urban Planning Consultant for the Department of Environmental Planning and Protection, where she is helping to create land use plans that will guide development on two islands. She received a BA in Growth and Structure of Cities from Bryn Mawr, and a Master’s in Urban Planning from Harvard’s Graduate School of Design. She has worked for the City of Philadelphia as a policy analyst, where she focused on mixed-income housing and development incentives.