[caption id="attachment_235290" align="alignnone" width="2282"]
Delaware got more than $1 billion from the American Rescue Plan Act, ranking among the largest stimuluses ever received. | PHOTO BY NATALIE NEWHART[/caption]
WILMINGTON – In January 2021, with a resurgent coronavirus leading to a spike in deaths and fears that additional shutdowns could send the economy into a recession, President-elect Joe Biden detailed plans for a $1.9 trillion stimulus.
Meant to address continued testing and response to the public health crisis as well as putting Americans to work to stave off an economic downturn, the American Rescue Plan Act (ARPA) became the second largest infusion of federal cash into states in the nation’s history, surpassed only by the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed a year earlier at the outset of the pandemic.
While the impact of the CARES Act was largely exhausted after a year through stimulus checks, Paycheck Protection Program loans, health care response and more, the impact of ARPA will linger for years after its approval.
Each state received direct assistance from the stimulus bill, with Delaware receiving more than $1 billion, allocated to state and county governments, the cities of Wilmington and Dover, and even directly to nonprofits around the state. The funding came through two different programs, the State and Local Relief Fund (SLRF) and the Capital Projects Fund, with a December 2024 deadline to declare the spending targets and a September 2026 deadline to have dollars out the door or risk returning them to the federal government.
The largest sum in Delaware of more than $925 million from the SLRF was controlled by Gov. John Carney, whose administration had the sole discretionary authority to allocate the funds within some prescribed limits of the federal program – namely that spending responded to pandemic-inflicted needs, built a stronger and more equitable community after COVID, provide economic stabilization for impacted households or businesses, or address systemic public health, safety or economic challenges.
A strategy emerges
When a divided Congress narrowly approved ARPA by an essentially party-line vote of Democrats on March 10, Carney said that he was largely still distracted by the day-to-day management of the pandemic in Delaware.
The unprecedented level of federal support came into focus as his team, including federal funding coordinator Greg Patterson, special assistant Claire DeMatteis and Delaware Emergency Management Agency Director A.J. Schall, began to investigate the details of the bill though.
“It’s not a cure-all, it's an opportunity,” Carney told Delaware Business Times last month. “It's an opportunity to do things that we otherwise couldn't have done. It's an opportunity to write down your liabilities. It's an opportunity to make investments in our communities and basic infrastructure. It's an opportunity to make investments and facilities that were important during the pandemic; and it's an opportunity to focus on disadvantaged communities.”
Notably, SLRF funds were not required to be spent on capital projects, but the Carney administration chose to spend about three-quarters of its funding on such one-time expenditures. Its No. 1 priority was investing in state facilities, particularly those that dealt with public health, earmarking about 40% of funds for such projects.
“We looked to use, when allowed and appropriate, ARPA money to complement our state bond bill money,” the governor said.
[caption id="attachment_235280" align="alignright" width="300"]
The replacement of the Delaware Home for the Chronically Ill is among the largest capital projects for the state's ARPA funds. | PHOTO COURTESY OF DHSS[/caption]
The replacement of the state’s Hospital for the Chronically Ill, which cares for those elderly without a home or income, and the development of the Edgemoor Container Port both received $50 million from the state’s ARPA funds, making them the largest physical capital projects under ARPA and two of the single largest expenditures overall.
“Without ARPA, it’s unlikely that we would have gotten to the Hospital for Chronically Ill soon,” Carney noted. “It has kept slipping [in recent bond bills’ priorities], but in the context of COVID, it's one of the most threatened facilities as a long-term care facility for the elderly.”
Carney also earmarked $41 million toward the University of Delaware’s Building X, a new multidisciplinary research lab in Newark, $19.6 million toward Delaware Technical Community College’s Allied Health Center of Excellence in Wilmington, and $10.6 million toward a new Early Childhood Innovation Center at Delaware State University’s Dover campus.
The spending wasn’t limited to buildings though, as $43 million was invested to finish a goal of connecting all Delaware homes to broadband internet – a feat that would make it the first state in the nation to do so. The largest expenditure anywhere in the program for Delaware was $60 million to overhaul and modernize the state’s unemployment insurance system, including technology upgrades in combination with upcoming rate structure streamlining.
[caption id="attachment_235281" align="aligncenter" width="1200"]
Gov. John Carney announces a $26.4 million investment in affordable housing in Wilmington's Riverside community in 2021. | DBT PHOTO BY JACOB OWENS[/caption]
Housing ‘needs to move’
One area that worries the governor is the speed of assistance being spent on building or retaining affordable housing, the second largest target of the state’s ARPA funding at $117 million. Of more than $31 million allocated to the Delaware State Housing Authority’s Accelerator, Preservation or Catalyst funds, only $225,000 has been spent to date.
“We've been pushing them hard,” Carney said, noting that he had met with DSHA leaders recently about the approach to the programs.
The Catalyst Fund will fund the acquisition and rehabilitation of vacant homes through a partnership with Cinnaire, while the Accelerator Fund will incentivize developers to provide affordable rental units in their market-rate projects by offering upfront payment to offset construction costs. The Preservation Fund will offer incentives to ensure nearly 1,000 existing affordable rental units on the market.
The lack of progress on those programs a year after their announcement comes as recent reports have highlighted the dramatic need for affordable housing in Delaware and the clock to the ARPA spending deadline has now ticked to less than three years.
“DSHA claims that they can get a [request for proposals] on the street pretty quickly and that they have developers that are willing, ready to go with projects,” Carney said.
While the state programs have been slow to start, investments in private projects have moved faster, such as a $26.4 million investment in REACH Riverside’s Imani Village community and millions more in housing projects around the state by nonprofits have largely claimed their funding already.
Logan Herring Sr., who oversees REACH Riverside as CEO of the nonprofit WRK Group, previously said that the ARPA funding “sped up their timeline tremendously.” It allowed his organization in Wilmington’s northeast community to more than double its initial building plan and finish the project in just five years rather than decades.
[caption id="attachment_232337" align="aligncenter" width="1200"]
Building X, a $184 million replacement of the former McKinly Labs, is set to open in the fall of 2024. | DBT PHOTO BY JACOB OWENS[/caption]
Long-term impact
The timeline for the ARPA funding comes at a politically complicated time for Carney, who is term-limited as governor and will exit in January 2025. That means he is required by the federal law to lay out the spending plan for the state’s nearly $1 billion just weeks before he leaves office, leaving the impacts of his choices to fall to his successor.
“[ARPA] is a huge benefit to whoever the next governor is. The construction on these buildings won't even be done by the time I leave office, but it will put people to work during the next governor's term, paying taxes that will enable that governor to run the government,” he added.
The ability to push federal funds into local projects over the next few years will also help to fulfill the goal envisioned by the stimulus bill nearly three years ago, according to Carney. To date, only about $300 million of the state’s $924 million has been spent.
“As the economy softens and state revenues decline, it will prop up construction employment, which will help buffer a little bit of that decline. It will write down some of your liabilities with new buildings that don’t have the same operating costs as an old facility. It will ultimately put the state in a better fiscal position,” he said.
