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  5. Health Center Construction and Capital Improvements (ARP-Capital) FAQs

Health Center Construction and Capital Improvements (ARP-Capital) FAQs

If you have a question that is not addressed by these FAQs, by the ARP-Capital notice of funding opportunity (NOFO), or on the ARP-Capital technical assistance webpage, please submit it through the BPHC Contact Form. Go to the “Funding” category. Select “Supplemental Grant Award (e.g. COVID/ARP, PCHP, Capital." Select “COVID ARP Funding (H8C-F, L1C, L2C, C8E) supplemental grant award" and submit your inquiry.

For general COVID-19 information, including additional related FAQs, see the Health Center Program COVID-19 Frequently Asked Questions.


General Award Questions

Who should I contact with specific questions on my ARP-Capital (C8E) award?

Your ARP-Capital Award has two primary points of contacts: 1) Your Investment Oversight Advisor (IOA) who can respond to questions on project changes, drawings, or other general program office conditions. This person is also referred to as your Program Official Contact in Notices of Award and your Project Officer (PO) in the Electronic Handbooks; and 2) Your Grants Management Specialist (GMS) who can respond to budget questions, property questions (lease, deed, Landlord Letters of Consent, Notices of Federal Interest) and procurement questions related to 45 CFR part 75.

(Added: 1/18/2023)

Our health center has an opportunity to apply for an ARPA Community Grant issued by our county.  We would like to use the county-issued ARPA Community Grant. Our hope is to apply for the county grant to secure additional support for our C8E-funded project. 

There are no restrictions under the C8E award that would preclude your health center from using the ARPA funds issued by a county, local government, state, or federal program other than HRSA’s BPHC in conjunction with the C8E award to fund the C8E project. Note however that ARP-Capital funding may not supplant other resources (federal, state, local, or private funds), such as in-progress activity at a site that previously received HRSA capital funding.  Additionally, HRSA-funded capital projects must be separate and distinct from any other existing construction-related projects.

(Added: 1/18/2023)

Funding Purpose and Methodology

What is the purpose of ARP-Capital funding?

On Tuesday, September 28, HRSA awarded nearly $1 billion in funding provided by the American Rescue Plan Act (PDF) to support construction, expansion, alteration, renovation, and other capital improvements to modify, enhance, and expand health care infrastructure at HRSA-funded health centers.

(Updated: 12/2/2021)

How much ARP-Capital funding was available?

HRSA made nearly $1 billion available to health centers. Each health center was able to apply up to a maximum amount per the following funding formula:

  • Base value of $500,000, plus
  • $11 per patient reported in the 2019 Uniform Data System.

(Updated: 12/2/2021)

Could health centers apply for less than the maximum amount of ARP-Capital funding available?

Yes. Health centers could apply for an amount that was less than the maximum amount of ARP-Capital funding that was communicated to them by HRSA. Requested funding needed to be consistent with the scope and funding needs for the project(s) proposed within the ARP-Capital application.

(Updated: 12/2/2021)

How many projects were allowed per application and what types of projects were permitted?

One application could be submitted for up to five total projects, including the following project types:

  • Construction of a New Facility – creates a new building structure.
  • Construction/Expansion (C/E) of an Existing Facility – adds square footage to an existing facility.
  • Alteration/Renovation (A/R) of an Existing Facility – renovations/modifications to an existing facility without adding square footage.
  • Equipment Only – involves the acquisition of loose, moveable equipment not affixed to the building structure.

(Updated: 12/2/2021)

How much time will be allowed to complete the proposed project(s)?

Each awardee will have three years from the award date to complete their project(s).

(Added: 4/30/2021)

What should health centers do if they were not able to define all the details of the proposed project(s) requested in their ARP-Capital application?

HRSA reviewed and conditioned ARP-Capital awards as needed for any items that require additional details. HRSA did not require health centers to hire an architect or design professional to develop and submit the information required for the ARP-Capital application.

(Updated: 12/2/2021)

Were Health Center Program look-alikes eligible for ARP-Capital funding?

No, look-alikes were not eligible to apply for ARP-Capital funding.

The American Rescue Plan Act (PDF)  authorized funding for major capital activities (e.g., expanding and modernizing existing buildings or constructing new buildings) only for health centers funded under section 330 of the Public Health Service Act. ARP-Capital applicants were limited to existing health centers receiving Health Center Program operational support (under sections 330(e), (g), (h), and/or (i)) at the time of application and at the time of award.

Note that look-alikes may propose to use up to $500,000 of American Rescue Plan – Funding for Look-Alikes (ARP-LAL) (L2C) funds for minor alteration and renovation activities, consistent with the ARP-LAL NOFO.

(Updated: 12/2/2021)

Do the Davis-Bacon Act requirements apply to capital improvement activities using C8E funds?

No. The Davis-Bacon Act does not apply to this funding. However, you must follow state and local requirements for prevailing wages and fair labor policies.

(Added: 6/24/2021)

Allowed Uses of Funds

Do activities using ARP-Capital funding need to relate directly to COVID-19?

ARP-Capital funding can be used to support a health center’s COVID-19 related infrastructure needs, as well as to address additional health care infrastructure needs related to the health center’s in-scope services.

(Updated: 12/2/2021)

Can ARP-Capital funding be used to support in-progress activity at a site that previously received HRSA capital funding?

ARP-Capital funding may not supplant other resources (federal, state, local, or private funds), and projects must be separate and distinct from any other existing construction-related projects.

(Updated: 12/2/2021)

Can ARP-Capital funding be used to cover costs incurred prior to the award date of September 1, 2021?

Physical construction activities (e.g., installation of utilities, demolition) that occurred prior to September 1, 2021, are unallowable. Other pre-construction activities, such as design development, budgeting, the hiring of an architect, surveys, and testing, may be allowable expenses if they occurred on or after January 31, 2020. You must submit a separate prior approval request for such pre-award costs.

(Updated: 12/2/2021)

Although American Rescue Plan Funding for Health Centers (H8F) and ARP-Capital (C8E) funds cannot be used for the same project at a single site address, are there scenarios in which a health center may use funds from both awards at the same site?

Health centers are allowed to use H8F and C8E funds at the same site, as long as the construction-related activities or projects supported under each award are separate and distinct. Each project must have its own construction contract, deliverables, and milestones. H8F and C8E funds cannot be combined to support the same construction-related activities or project, nor can C8E funds be combined with any other HRSA construction grant funding to support the same project.

(Updated: 12/2/2021)

Can ARP-Capital funding be used to support a project at an administrative-only site?

Equipment Only projects may be supported at an administrative-only site. However, no construction-related project types (Construction of a New Facility, Construction/Expansion (C/E) of an Existing Facility or Alteration/Renovation (A/R) of an Existing Facility) are supported at administrative-only sites.

(Updated: 12/2/2021)

Can ARP-Capital funds be used to purchase a modular unit?

Yes. The purchase and permanent installation of a modular unit is an allowable construction cost.

(Added: 4/30/2021)

Can ARP-Capital funding be used for operational costs?

No. You may not use ARP-Capital funding to support the provision of services and other operating costs (e.g., funding direct services, clinical full-time equivalents, costs for staff not directly related to the implementation of the proposed project within the project scope of work, rent, mortgage payments, refinanced credit facilities).

(Added: 4/30/2021)

Can a health center add services to its Health Center Program scope of project through this funding opportunity?

No. ARP-Capital award recipients cannot add services to their Health Center Program scope of project through this funding opportunity. Any change to services must be submitted through a separate change in scope request. See Policy Information Notice 2008-01: Defining Scope of Project and Policy for Requesting Changes (PDF - 224 KB).

(Added: 4/30/2021)

If a health center plans to use New Market Tax Credits (NMTC) with their ARP-Capital project, what information will HRSA need to assess the NMTC financing?

If a health center plans to use NMTC with their ARP-Capital project, they must submit a prior approval request. Health centers should contact their assigned Grants Management Specialist for instructions. The request will likely consist of the following documentation:

  • Detailed description of the financing for the ARP-Capital project, including the proposed NMTC arrangement and other associated financing resources, such as bridge financing.
  • Description of the benefits of the proposed NMTC financing for the project (e.g., comparison of NMTC loan rates and associated cost savings compared to other loans or bond rates available to the health center).
  • Description of the financial risks associated with the proposed NMTC financing and corresponding mitigation strategies to protect the health center’s and HRSA’s interest in the associated property.
  • Assurance that the project approved by HRSA will be completed as proposed, in accordance with federal interest requirements and the approved timeline.
  • Letter of commitment from the Community Development Entity.
  • Proposed schedule of cash draws (dates and amounts) from the appropriate Payment Management System subaccount.

Please note: If there is a requirement for HRSA to subordinate federal interest and/or grant permission to transfer property to a Limited Liability Company, this information should also be submitted along with the request for prior approval.

(Added: 6/7/2021)

Are there any project activities that can begin if there are outstanding conditions relating to that project?

ARP-Capital funds are restricted and may not be drawn down until all program- and grant-specific conditions of the award associated with the project(s) have been met and lifted from the Notice of Award. The only exceptions to this restriction are for limited pre-construction activities related to meeting an award condition, such as expenses for completing architectural and engineering plans, meeting licensing and permitting requirements, historic preservation consultation with the State Historic Preservation Office/Tribal Historic Preservation Office, and/or preparing the Environmental Assessment.

(Added: 1/18/2023)

Can we use funds to test for Asbestos, lead based paint, and other hazardous materials at our site? Also, is it allowable to use funds for a consultant to prepare technical specifications and onsite monitoring related to hazardous materials?

Yes, funds can be used for testing. However, ARP-Capital funds cannot be used for removal and disposal of asbestos containing materials or lead paint abatement.

(Added: 1/18/2023)

How do we handle costs related to testing for hazardous materials and hazardous materials abatement in our project budget?  

HRSA awards can be used for testing for hazardous materials, so these costs should be included in your project budget as an allowable cost. However, HRSA awards cannot support the removal and disposal of hazardous materials (also known as ‘abatement’), so abatement costs should be categorized as unallowable costs in your total project budget. Examples of abatement costs include the removal and disposal of asbestos-containing materials or lead paint abatement. Unallowable costs must be paid by sources other than the ARP-Capital award.

(Added: 1/18/2023)


Are mobile vans and other vehicles an allowable cost?

You may use ARP-Capital funds to purchase new or replacement mobile medical vans. Other vehicle purchases (e.g., passenger vehicles) are unallowable.

(Added: 4/30/2021)

Are supplies an allowable cost?

No. Expendable supplies (e.g., office supplies, medical supplies, educational supplies) are unallowable. Supplies with a useful life of more than one year may be included as moveable equipment for this funding opportunity.

(Added: 4/30/2021)

What is considered moveable equipment?

Moveable equipment consists of non-expendable equipment items, with a useful life of more than one year, that can be readily shifted from place to place without requiring a change in the utilities or structural characteristics of the facility.

(Added: 4/30/2021)

Can ARP-Capital funds be used to lease moveable equipment?

No. ARP-Capital funds may not be used to lease moveable equipment.

(Added: 4/30/2021)

Can ARP-Capital funding be used to purchase a new electronic health record (EHR) system?

No. You may not use ARP-Capital funding for costs related to a new EHR system, to purchase an EHR, or to support ongoing EHR operations or maintenance. However, you may use the funding to purchase equipment associated with using an existing EHR, such as software, site licenses, laptops, and/or servers.

(Added: 4/30/2021)

For ARP-Capital Awards, how is ‘Equipment’ defined for our SF424C budget page? 

For all Capital Awards, we request that all loose, movable items with a useful life of one year or more (regardless of cost) be shown on line 10 Equipment on your SF424C budget and the related budget justification. 

(Added: 1/18/2023)

For an equipment-only project, is a prior approval request required if you want to change the quantity of some items or remove equipment items or add new equipment?

Please contact your IOA and/or your grants management specialist concerning any shifts in your proposed purchases. Some smaller changes can be simply recorded in the final budget submission, but others may require prior approval.

(Added: 1/18/2023)

We have included in our project some large items of ‘equipment’ (a water heater, a roof top HVAC unit, parking lot lighting) that will be installed into the building. Should these items be shown on line 10 Equipment in the budget and the labor to install on line 9 Construction?

Because these items are installed, they should not be shown on the equipment list (where only loose, movable items are shown). The cost to purchase and install these types of items should be shown on line 9 Construction on your SF-424C. Please note that if you classified your project as an equipment-only project type, but you want to use ARP-Capital funds to both purchase and install the equipment, you must change your project type to Alteration/Renovation (A/R) of an Existing Facility.

(Added: 1/18/2023)

Leasehold Improvements and Federal Interest

Can ARP-Capital funding be used at a leased site?

Yes. You may use ARP-Capital funding at a leased site. However, you may not use ARP-Capital funds to address facility needs that are part of the terms of the lease (i.e., the obligation of the lessor).

(Updated: 12/2/2021)

Is a Notice of Federal Interest (NFI) required?

Depending on the scope of work, the owner of the property may be required to consent and file an NFI. Your Notice of Award will indicate if an NFI is applicable.

If an NFI is required, the award recipient must submit the NFI after the award of the grant, but prior to initiating physical work on the project.

For more information regarding the filing of an NFI, see the Federal Interest in Real Property FAQs (PDF - 500 KB) . You can also view a sample NFI (PDF - 297 KB).

(Added: 4/30/2021)

What if there is already a HRSA NFI on the property?

NFIs must specify the grant under which the capital funding was provided. NFIs that cite other grant programs cannot be substituted. Existing NFIs may be amended to add in the new grant and project description along with the existing grant information upon issuance of a Notice of Award.

(Added: 4/30/2021)

Are leasehold improvements allowable?

Yes. For more information about leasehold improvements, see the Leasehold Improvements section in the NOFO.

(Added: 4/30/2021)

Project Conditions

Why are conditions placed on my project?

During HRSA’s review of your application documents, certain project-specific conditions were placed on the award to gather additional information required to approve the project(s). In the post-award period, the award recipient must resolve the appropriate conditions specific to an individual project before proceeding with implementing the individual project. If changes are made to the proposed project, HRSA may place additional conditions so that the revised project is properly reviewed, documented, and approved.

(Added: 1/18/2023)

We have more than one project and have noticed that the conditions are different on each project. Are some of these conditions missing or are some conditions not applicable to our award?

HRSA reviews each project independently and only places condition(s) for project(s) that require additional information or clarification. For example, if Project -01 has a condition requesting revised drawings but Project -02 does not, HRSA is only requiring additional information on the drawings for Project -01. The drawings you submitted for Project -02 are acceptable and require no additional information. Your IOA and/or GMS will be able to assist you if you have specific questions on your conditions.

(Added: 1/18/2023)

How will we know that we have satisfied a condition of award?

After HRSA reviews your submission response and determines that the information is complete and acceptable, you should receive an NOA that lifts the condition. Note that HRSA may use a single NOA to lift more than one condition.

(Added: 1/18/2023)

Can we move forward with projects if all conditions have been lifted?

Yes. Before starting construction activities at any site/project, review the grant folder or consult with your IOA to make sure all the conditions relating to the site/project have been lifted. Please note that although most projects that propose construction, alterations, renovations, or permanently installed equipment will have conditions, some projects, such as equipment-only projects, might not have any conditions that require resolution before starting.

(Added: 1/18/2023)

My C8E award covers multiple projects. Do I need to satisfy all conditions for all awards before starting my project?

No. All conditions are project-specific. If you meet the all the conditions for one project, work can begin on that project, no matter how many conditions remain on other projects. If all conditions are approved for a project, project activity can begin. Funds must be drawn down based on the Federal Percentage Share for that specific project.

(Added: 1/18/2023)

Project Changes

We would like to change our project to other work at the same site.  The work appears to be allowable in the Notice of Funding Opportunity.  Do we need to inform HRSA of these changes?

Yes. Changes to the project may require prior approval from HRSA.  The activities and equipment purchases proposed in your ARP-Capital application were the basis for awarding these funds. HRSA is required to review all work supported by the funding, so please contact your IOA to discuss these changes.  Do not begin any new or updated construction-related activities until all the work has been accepted by HRSA and all conditions have been met for the specific project.

(Added: 1/18/2023)

After further study by our governance board, we would like to delete the work at our originally proposed site and use ARP-Capital funds for work at a different site that is in our scope of active service sites.  What steps do we need to take?

The change in your project site will require a prior approval by HRSA. Please contact your IOA to discuss the changes you are considering. You should not begin work on any construction-related activities until after all the work has been accepted and all conditions have been met.

(Added: 1/18/2023)

The site we proposed in our original application is not working out. We have identified another property that meets the needs of our service area. Can we use ARP-Capital funds for this new project?  The site is not in scope. What steps do we need to take?

In this case, a two-part approval process is needed to add the site to scope and obtain approval for the new project scope: 1) A Capital Update Prior Approval request is required within the C8E grant folder to provide the details on the project at that site; and 2) a Change in Scope (CIS) is required to add the site to scope within the H80 grant folder. These two approval processes can occur simultaneously, but HRSA will only approve the Capital Update if the CIS is approved to add the site to scope. 

Please note that due to how the standard CIS module operates, the scope verification will initially provide only 120 days to verify that the site is open and operational. Once the Capital Update is completed, the due date for the scope verification will be extended to align with the end date of the ARP-Capital award.

(Added: 1/18/2023)

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