HARLINGEN — Can federal CARES Act funds be used for economic development needs?
That depends, city officials said this week.
The CARES Act is the massive $2.2 trillion emergency aid bill passed by Congress in March, and Austin allocated $3.7 million from the state’s share to the City of Harlingen, which has already received its first tranche of the federal COVID-19 relief money, some $752,000.
The city spent some of the money on personal protective equipment for city workers, as well as hazard pay bonuses for police and firefighters. Another $225,000 went into a fund to help Harlingen residents with rent, mortgages and utility bills.
Mickey Boland, a member of the Harlingen Economic Development Corp. board, asked Mayor Chris Boswell this week at a meeting of the HEDC if any of those funds should be targeted by the economic development agency.
The mayor said the HEDC potentially could seek out those funds, but just how government entities can use the federal emergency funds remains unclear.
“ It’s kind of a work in progress and it has been changing and evolving over the last couple of months,” Boswell said. “We now think that we’re going to be able to use more of that funding for some operational needs that we didn’t think we were going to be able to use it for, including things like hazard pay for police and fire, which we did implement.”
“ A couple of things that we need that I think clearly it can be used for are small business programs like the HELP program (zero-interest loans to small businesses), so there’s a potential for perhaps some type of reimbursement to the development corporation from some of that money,” the mayor added. “I said ‘potential’ because I still need to get a good handle on where we think we’re going to be directing the majority of it.”
The mayor was candid in telling the HEDC board that trying to pin down just what the federal funds can and cannot be used for has been difficult.
“ At the beginning it was very restrictive. We weren’t sure how we were going to be able to use that money,” Boswell said. “The restrictions are starting to loosen up a little bit and it looks like there are perhaps more opportunities.”
“ All of it is guided by the Treasury Department regulations regarding the CARES Act,” he added. “So whatever the Treasury Department says we can use the money for, we can use the money for. And I’ll tell you, it’s been very confusing.”
The mayor said U.S. Rep. Filemon Vela (D-Brownsville) was aware of some of the frustrations of municipal officials in how CARES Act money can be spent and is trying to help.
“ One of the things that we talked to Congressman Vela about, and he’s very interested in, he’s aware of these issues related to restrictions on the use of the CARES Act money, and he’s trying to help with opening that up and also extending the ability to use that money past the end of the year, which would also be helpful because we clearly can find uses for it if we can have a longer period of time,” the mayor said.
But one critical need of the city — practically any city in the nation — is how to reduce revenue losses due to COVID-19 disruptions, shutdowns and stay-at-home directives.
In this area, cities are out of luck when it comes to CARES Act money.
“ One other thing we cannot use it for is we cannot use it for revenue shortfalls, I want to point that out,” said City Manager Dan Serna. “It’s been very clear and that has not changed.”
“ The information from the Treasury has evolved, as the mayor pointed out, but one of the things that has not changed is use of the money for revenue shortfalls,” he added.