Recent Blog Posts

  • American Rescue Plan: Local Government Funding for Affordable Housing Development

    Authored by: on Tuesday, June 1st, 2021

    The federal American Rescue Plan Act of 2021 (ARP) established Coronavirus State and Local Fiscal Recovery Funds (“FRF”), which will be distributed to state and local governments for the purpose of responding “to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality” (Part 8, Subtitle M of ARP). The amounts to be distributed are substantial. The U.S. Department of Treasury (“Treasury”) lists the county-by-county distributions here and the allocations for “entitlement” cities here.

    The Interim Final Rule, promulgated by Treasury and codified at Part 35 of Subtitle A of Title 31 of the Code of Federal Regulations, recognizes “a broad range of eligible uses” for FRF, and offers local governments “flexibility to determine how best to use payments.” Although the rule is still “interim” and therefore leaves some details to be finalized, public officials are beginning to plan how they will utilize the infusion of funding. This post is designed to inform those initial planning discussions at the local level, and it will be updated when/if the “interim final rule” is revised.

    UPDATE: In an “explainer” on the Interim Final Rule, Treasury confirmed that “Funds used in a manner consistent with the Interim Final Rule while the Interim Final Rule is effective will not be subject to recoupment.”

    There are many possible uses of FRF, ranging from premium pay for essential workers, to water, sewer, and broadband infrastructure. One particular category of potential FRF-eligible activities has generated a good deal of interest and questions from public officials: 31 C.F.R. 35.6(b)(12)(ii)(B) authorizes FRF to be used for “[d]evelopment of affordable housing to increase supply of affordable and high-quality living units.” Read more »

  • Implementing the ARPA COBRA Subsidy and Claiming Your Tax Credit

    Authored by: on Friday, May 28th, 2021


    When an employee separates from service, whether voluntarily or involuntarily, or has work hours reduced to the extent that the employee no longer qualifies for participation in the employer’s group health plan, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers—both public and private–to allow the employee (and beneficiaries) to continue their coverage under the plan for eighteen months if the employee pays the premium (actually 102% of the cost of the premium).  COBRA continuation coverage applies in a few other circumstances that are not relevant to this discussion.

    COBRA requires only the continuation of health insurance coverage; it does not require the employer to continue to pay the premiums for coverage. The employee pays the premium.  But that’s where the APRA makes its big change.  The employee, from April 1 through September 30, does not have to pay the premium. Read more »

  • We Don’t Prorate in Our State (Well, Sometimes We Do)

    Authored by: on Thursday, May 20th, 2021

    How many taxpayers have asked you this question: “Can I get a partial refund on my property taxes if I sell the property in the middle of the year?”  The short answer is normally, “No, we don’t prorate property taxes.”  But that’s not the complete answer.

    Under the Machinery Act (the odd name for the portion of North Carolina General Statutes Chapter 105 that governs local property taxes), property taxes are a bit like pregnancy; property is either taxable for the full year or it’s not taxable for any of the year. There is usually no in-between.

    The are only three situations in which taxes are prorated based on the number of months the property is taxable: Read more »

  • IRS Issues Guidance on COBRA Premium Assistance

    Authored by: on Wednesday, May 19th, 2021

    On May 18, 2021, the Internal Revenue Service published Notice 2021-31, Premium Assistance for COBRA Benefits. This 41-page document makes clear that in the case of fully-insured health plans, the IRS will treat the employer as the entity providing the premium credit and the employer will be the entity entitled to the tax credit for the premium assistance. The language of the American Rescue Plan Act implied that fully-insured employers would not be entitled to the tax credit and that only insurers and self-insured employers would be entitled to the tax credit. That was the interpretation provided by the author in a previous blog post. Look for a new blog post summarizing the IRS guidance sometime during the week of May 24th.

  • American Rescue Plan Act of 2021: Funding Updates for NC Local Governments

    Authored by: on Thursday, May 13th, 2021

    AMENDED May 14, 2021: Note that the post has been updated to provide more information on why a local government’s governing board must vote to accept the federal grant. There also have been a number of upload glitches, but this should reflect the final version. I apologize for any inconvenience.

    As detailed in a previous post, the federal American Rescue Plan Act of 2021 (ARP) includes substantial aid for state and local governments. See Part 8, Subtitle M—Coronavirus State and Local Fiscal Recovery Funds of H.R. 1319 American Rescue Plan Act of 2021. This post includes some important updates about the funding process and expenditure parameters. (Note that many entities refer to these provisions as the Coronavirus State and Local Fiscal Recovery Funds, CSFRF, CLFRF, or Fiscal Recovery Funds. For consistency with my previous post, I refer to them as ARP Funds. All of these references are to the same federal grant funds.) Read more »

  • Raising the Federal Micro-Purchase Threshold: Self-Certification for Units of Local Government in North Carolina

    Authored by: on Friday, April 23rd, 2021

    [6/17/21 Update: This post and resolution has been updated to clarify that for contracts subject to the Mini-Brooks Act (Article 3D of Chapter 143 of the General Statutes), a unit is advised to establish a micro-purchase threshold of $0 in the event that it fails to exercise the exemption to the Mini-Brooks Act contained in G.S. 143-64.32.  In that case, the generally applicable micro-purchase threshold contained in the FAR ($10,000, as adjusted for inflation) is less restrictive than the threshold contained in North Carolina law.  Therefore, units failing to exercise the exemption should follow the qualifications-based selection process of the Mini-Brooks Act in all cases.]

    On August 13, 2020, the Office of Management and Budget (“OMB”) published revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 C.F.R. Part 200) (the “Uniform Guidance”).  Among other things, the revisions to the Uniform Guidance allow some non-Federal entities to raise, via annual self-certification, the generally applicable micro-purchase threshold of $10,000 to a “higher threshold consistent with State law.”

    This post provides background information for units of local government in North Carolina interested in self-certifying micro-purchase thresholds above $10,000, and contains a link to a sample resolution that a governing board may use to self-certify such higher thresholds. Read more »

  • Assessing and Collecting System Development Fees (SDFs): It’s All About the Timing

    Authored by: on Monday, April 12th, 2021

    As detailed in previous posts (here,  here, and here), the General Assembly has granted local government utilities (including municipalities, counties, water and sewer authorities, sanitary districts, county water and sewer districts, metropolitan water districts, metropolitan sewerage districts, metropolitan water and sewerage districts, and local government water and wastewater providers established pursuant to G.S. 160, Art. 20 or local act of the General Assembly, collectively “local utility”) explicit authority to charge capacity fees, referred to as system development fees, on “new development” to fund certain water and wastewater capital. See G.S. 162A, Art. 8. As more local utilities adopt and implement system development fees (SDFs), issues have arisen related to when the fees apply and when they must be collected. The difficulties are partially due to the fact that, by law, the fees are collected at a different time than they are assessed. But there are also questions about triggers for SDFs. This blog post walks through the circumstances under which SDFs may be assessed and when they must be collected. It also discusses what happens when the SDF law does not apply. The post incorporates recent legislative changes from S.L. 2020-61. Read more »