Main Spotlight: Funding Main Street Recovery through American Rescue Plan Act State and Local Dollars

Main Streets and small businesses are benefiting from the strategic use of ARPA State and Local Recovery Funds through the advocacy and innovation of local leaders and decision-makers.

An influx of recovery funding to states, counties, and cities through the American Rescue Plan Act has huge potential to spark the economic recovery of downtowns and commercial corridors. As guidance for eligible uses emerges, so have several key examples for funding downtown housing, small business support, and Main Street capacity. These examples offer Main Street programs a touchpoint for further dialogue and advocacy for downtown recovery.

In March, the $1.9 trillion American Rescue Plan Act (ARPA) was signed into law, including Coronavirus State and Local Fiscal Recovery Funds – $350 billion of flexible funding distributed to states, counties, and cities. These funds represent a monumental opportunity for pandemic recovery through an approach tailored to the specific needs in each community and geography and an emphasis on equity. In the six months since the package's passage, state and local leaders have been working to find the right balance between community-identified priorities and the Treasury Department's evolving guidance on eligible uses and reporting.

Treasury's Interim Final Rule, a document released in May giving initial guidance to state and local leaders, laid a foundation for how ARPA funds can help Main Street recover. Among eligible uses of ARPA funds to respond to negative economic impacts, the guidance explicitly allowed funding to support business districts. To best position downtown as the center of community recovery, many local Main Street programs leapt into action to advocate for a seat at the table in local decision-making, using data and talking points to convey the needs for investment in Main Street. At the state level, coordinating programs have sought to identify strategic projects to best position Main Street programs as agents of community recovery.

As recent a Brookings article indicates, the rollout of funding plans from large cities suggests a slower approach to allocating ARPA funds than initially anticipated. Many communities are awaiting Treasury’s next round of guidance while others are utilizing community feedback forms or grant application processes to determine local uses. Still, with the burst of advocacy for Main Street, several key examples of use from Main Street communities are percolating in a slow but growing drip. Learn more about a few of these initiatives below:

Iowa (statewide) – Slated among a full docket of housing investments across the state of Iowa, the Downtown Housing Grant Program is aimed at supporting the development of upper floor housing in rural Main Streets and downtowns across the state. Funded at $20M and coordinated in conjunction with the Main Street program, the grants will focus on quality preservation and rehabilitation that enhance the overall economic vitality of the district.

Macon, GA – With matching funding from the John S. and James L. Knight Foundation, NewTown Macon (a Georgia Main Street program) received $1M of ARPA funding from Macon-Bibb County to increase affordable housing and encourage entrepreneurship among current residents. This funding approach – combining ARPA and philanthropic investment – is aligned with Macon’s strategic plan and with ARPA’s focus on economic recovery through community engagement and equitable development.

Indiana (statewide) – Hoosier Enduring Legacy Program (HELP) is an innovative plan to assist communities in their use of ARPA funding. Rural Indiana communities participating in this program will receive specialized technical assistance, data training, and capacity building support (leveraged through existing Indiana Community Development Block Grant funds) to aid their decision-making for strategic investments in economic recovery. While not limited to Main Street, this program utilizes many core Main Street concepts to develop local capacity and plan strategically for the future.

San Marcos, TX – Working in collaboration with the city Economic & Business Development Manager, Main Street staff identified a list of programs with both downtown and citywide impact, including small business support grants, technical assistance, and funding to support downtown events. Importantly, their proposal to the city also included professional development funding for both Economic Development and Main Street staff, deepening the impact of these programs through additional education. In all, these programs represent $728 thousand commitment by the city of the initial tranche of $9 million.

Collaborating for Main Street Recovery: San Marcos, TX

Josie Falletta, Main Street coordinator for the city of San Marcos, TX, worked with colleagues to develop a plan for ARPA funds for economic recovery that meets the needs of both downtown and the city at-large. In her own words, hear about how her partnership approach worked.

What’s the value of your relationship with city Economic Development?
Falletta: I firmly believe that every Main Street Manager should have a strong relationship with their Economic Development partners! There are so many reasons why successful downtowns are integral to citywide economic development, and tons of overlap where it makes a lot of sense to combine forces and work together.

How did you work together on your request?
Falletta: Kelsee Lee Jordan (our Economic & Business Development Manager) and I sat down in my office and developed a list of what we needed to help our small businesses citywide to recover from the pandemic. Our goal is to develop blended programs where Main Street coordinates with downtown businesses and Economic Development coordinates with citywide businesses, but the approach and services remain the same no matter where the business is located. Think of it as a feeder program, where we’re coming from different directions but funneling people into the same support system.

How did you work to justify your funding under the ARPA guidance?
Falletta: Our Finance department helped us to categorize the “pots” of funding, both before we brainstormed ideas and after we submitted our list. They’ve been instrumental in making sure all of the project leads are in compliance with reporting requirements, etc. and have done a fantastic job of keeping everyone on track and organized. It truly takes a village!

While all communities need to consider their own context and localized pandemic impacts, examples like Josie and the San Marcos team can be a helpful blueprint for decision-makers when undertaking the task of allocating these important resources under the Treasury guidance. For Main Street leaders, ideas from the field help reinforce the potential of ARPA funds to aid in downtown recovery.

Next Steps

The anticipated Final Rule from Treasury will help clarify and confirm specific uses of funding, but in the meantime, Main Street leaders should continue to reach out to state, local and county leaders for programs and uses of ARPA that positively impact downtowns and commercial districts. Visit mainstreet.org/advocacy for more resources including tools to help you document your impact and a talking points template to utilize in outreach. We encourage you to share examples of how your state, county or city ARPA dollars are positively impacting downtown.