1

CORONAVIRUS LOCAL FISCAL RECOVERY FUND: 

NONENTITLEMENT UNIT OF LOCAL GOVERNMENT DEFINITIONAL AND DATA METHODOLOGY 

 

U.S. DEPARTMENT OF THE TREASURY 

The American Rescue Plan Act of 2021 (ARPA) allocates $19.53 billion to States for distribution to tens of 

thousands of nonentitlement units of local government (NEUs), which are local governments typically 

serving a population under 50,000. The Department of the Treasury (Treasury) has provided guidance to 

assist States with their distribution of these funds to NEUs. This document supplements that guidance in 

describing Treasury’s methodology in defining NEUs in accordance with ARPA and publishing the list of 

local governments on the Treasury website.

Definitional Methodology 

ARPA defines the term “nonentitlement unit of local government” to mean a “city” as that term is defined 

in section 102(a)(5) of the Housing and Community Development Act of 1974 (HCDA) that is not a 

metropolitan city. Under the HCDA: 

The term “city” means: (A) any unit of general local government which is classified as a 

municipality by the United States Bureau of the Census or (B) any other unit of general local 

government which is a town or township and which, in the determination of the Secretary [of

Housing and Urban Development], (i) possesses powers and performs functions comparable to 

these associated with municipalities, (ii) is closely settled, and (iii) contains within its boundaries 

no incorporated places as defined by the United States Bureau of the Census which have not 

entered into cooperation agreements with such town or township to undertake or to assist in the 

undertaking of essential community development and housing assistance activities.

The United States Census Bureau (Census Bureau) does not have a singular definition of municipality.

Instead, the Census Bureau generally classifies sub-county local governments as incorporated places or 

minor civil divisions (MCDs). Incorporated places include cities, towns (outside the six New England states, 

New York, and Wisconsin), boroughs (except the five boroughs of New York City and the boroughs in 

Alaska), and villages. MCDs are the primary subdivisions of a county in some states, and include towns (in 

New England, New York, and Wisconsin), townships, and districts. There are twenty states with active, 

governmentally functioning MCDs.

Since the government services provided by MCDs differ greatly by state, the Census Bureau refers to

twelve states with MCDs that generally provide a wide range of general government services as “strongMCD” states. In these states, MCDs are generally are treated as municipalities according to state statutes 

and codes. In eight other states, MCDs typically play less of a governmental role and provide more limited 

government services, even though they are still active governments (“weak-MCD” states). The twelve 

strong-MCD states are Connecticut, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New 

Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Wisconsin. The eight weak-MCD states are

Illinois, Indiana, Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota.

After consultation with the Census Bureau, Treasury is interpreting “municipality” under (A) in the HCDA 

definition for the purposes of ARPA to generally include both incorporated places and MCDs with active 

functioning governments, subject to the State determining, in the case of weak-MCD states, that a weak
2

MCD has the legal and operational capacity to accept ARPA funds and provides a broad range of services 

that would constitute eligible uses under ARPA. This process is detailed further in the guidance.

As detailed below, the list of local governments provided by Treasury includes all active, functioning 

incorporated places and MCDs, both in the twelve strong-MCD and the other eight weak-MCD states.

1

The guidance outlines a facts-and-circumstances test for the eight weak-MCD states to evaluate whether 

their MCDs are eligible for a distribution as a nonentitlement unit of local government. 

Data Methodology 

To compile the list of local governments, Treasury included local governments listed in the Census 

Bureau’s 2020 Place and 2020 County Subdivision Gazetteer files,

2

in consultation with the Census 

Bureau, and obtained their populations from the Census Bureau’s City and Town Population Subcounty 

Resident Population Estimates file from the 2019 Vintage.

3

The following modifications were made to the 

files to arrive at a list of local governments for use in conjunction with Treasury’s guidance:

• The data only includes incorporated places, MCDs, and consolidated cities. No census designated 

places (i.e., unincorporated places), non-functioning MCDs (i.e., election districts, county council 

districts, etc.), and census county divisions (entities defined for statistical purposes only) are 

included.

• The data only includes (1) active governments providing primary general-purpose functions, and 

(2) active governments that are partially consolidated with another government but with 

separate officials providing primary general-purpose functions.

• In states in which MCDs overlap with incorporated places and/or consolidated cities, the Census 

Bureau’s “MCD Place Part” was used as the population of the respective subcomponents of the 

MCD.

• Local governments that are eligible for payments as “metropolitan cities” under ARPA were 

excluded. The list of eligible metropolitan cities can be found here.

o Only the specific local government that was qualified as a metropolitan city is excluded 

from the list.

o In cases where a metropolitan city is geographically encompassed within an NEU, the 

metropolitan city population is excluded from that NEU’s population.

o In cases where a metropolitan city contains subsidiary NEUs, the metropolitan city is 

excluded from the NEU list, but the subsidiary NEUs remain. 

o In cases where a metropolitan city is consolidated with an NEU, the metropolitan city is 

excluded from the NEU list, but the NEU remains.

• Duplicate entries were generally eliminated. These duplicate entries can occur when local 

governments overlap, and the local governments are listed both as a standalone entry and as a 

subcomponent of a larger local government. This was done for ease of use.

• Additional formatting changes were made for ease of use.

1

For ease of use, Treasury also provides a list of local governments without MCDs for the eight weak-MCD states.

2 Dataset available at http://www.census.gov/geographies/reference-files/time-series/geo/gazetteer-files.html.

3 Dataset available at https://www2.census.gov/programs-surveys/popest/datasets/2010-2019/cities/totals/subest2019_all.csv.