02/03/2023 | News release | Distributed by Public on 02/03/2023 10:57
The American Rescue Plan Act (ARPA), enacted in March 2021, contained economic development funding to invest in locally driven projects aimed at securing long-term regional growth. Proposals for these ARPA grants were solicited among American communities through six separate programs to address regional economic goals such as harnessing new industries, supporting workforce development, and enabling infrastructure. Through September 2022, $3 billion was ultimately awarded across 780 projects through a competitive process by the U.S. Economic Development Administration (EDA).
This article examines the reach and potential impact of the ARPA community grants throughout the Fifth District. We will start with an overview of the ARPA grant programs and then summarize the 112 grants that were awarded to communities in the Fifth District. Our analysis reveals that projects in rural areas received higher funds per capita where they are projected to have a higher impact on job growth and further private investment.
The EDA made investments through six ARPA programs:
ARPA funded 112 projects in the Fifth District for a total investment of $440 million. The largest share of funds was distributed to projects within the Build Back Better Regional Challenge (28 percent), Economic Adjustment Assistance (27 percent), and Travel and Tourism (21 percent). Additionally, West Virginia, which received 29 percent of the funds allocated in the Fifth District, was the largest recipient of EDA funding, followed by Virginia and North Carolina (18 percent each), Maryland (13 percent), the District of Columbia (11 percent), and South Carolina (9 percent). Lastly, the majority of the EDA's total investment in the district were made to projects located in urban areas (70 percent), while 30 percent was invested in rural1 projects.
Map of Fifth District Counties Awarded ARPA Grants
Source: U.S. Economic Development Administration
Despite receiving less than a third of total Fifth District ARPA investments, rural projects received a much higher dollar investment per capita2. The median rural project in the Fifth District received a $40 per capita investment, while the median urban project received a $9 per capita investment.
The ARPA funding is also likely to have a stronger impact on employment in rural areas. The median rural project in the Fifth District is estimated to support 2.8 jobs per thousand residents, while the median urban project is estimated to support zero3.
Finally, federal spending on projects in rural areas is projected to deliver a higher return. For every dollar spent by the EDA, the median rural project in the Fifth District is estimated to encourage $1.23 in private investment, while the median urban project is estimated to encourage $0 in private investment.
Of the 520 regions in the United States that participated in the Build Back Better Challenge, the EDA selected 21 proposals - six in the Fifth District - as winners. The largest recipient of Build Back Better funding in the Fifth District was the Appalachian Climate Technology (ACT) Now Coalition - a coalition of West Virginia cities, economic revitalization organizations, academic institutions, and private sector firms. The coalition was awarded $62.8 million. The lead applicant for the ACT Now Coalition was Coalfield Development, a community-based not-for-profit organization based in southern West Virginia. Coalfield Development CEO Brandon Dennison remarked that "ACT Now means nearly $100 million invested in renewable energy, sustainable mine land reclamation, clean manufacturing, and entrepreneurship throughout our hills and hollows. This is a once-in-a-generation opportunity for transformational progress in our communities."
The federal grant award will support eight separate ACT Now projects:
Dennison added, "For decades, we've known the economy of southern West Virginia needs diversification. Some progress has been made on this goal, but not nearly enough. ACT Now constitutes a tangible opportunity to take a major leap forward in this generational challenge to become a vibrant, growing, diversified economy. In the wake of continued coal-job losses, nothing could be more important for our region."
The EDA's ARPA grant programs provided over $3 billion for economic development projects across the United States with $440 million of it landing in the Fifth District. Although rural areas received only 30 percent of the district's ARPA investments, these projects are estimated to result in higher employment gains per capita and private investment than in more urbanized areas. Studying how these communities plan to use these federal grants may provide a glimpse of their economic futures, such as the ACT Now Coalition's strategy to revitalize southern West Virginia coal country.
At the Richmond Fed, we refer to rural and small-town counties as those with a USDA 2013 Rural-Urban Continuum Code of 3 through 9. For simplicity, we will refer to these counties as "rural" throughout the article.
These per capita investment figures are calculated using the population of the encompassing county or county-equivalent entity of the grant recipient. For example, we would calculate the per capita investment for a grant recipient in Annapolis, Maryland, by using the population of Anne Arundel County in the denominator.
Numbers of estimated jobs created/saved/placed and private investment dollars secured are estimates provided by each applicant proposal. Good Jobs Challenge grantees have not yet reported any jobs created/retained or private investment dollars. All estimates are subject to change based on future data collection. See https://www.eda.gov/funding/programs/american-rescue-plan/impact for more information.