DATE: December 6, 2023
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT: American Rescue Plan Act (ARPA) Funding: Analysis and Review of Current and Planned Expenditures
RECOMMENDATION
That the Committee receives an update on the status of American Rescue Plan Act (ARPA) funded projects and provides feedback on the potential projects to be funded by any unobligated ARPA funds.
SUMMARY
On March 11, 2021, the federal stimulus package, the American Rescue Plan Act (ARPA), was signed into law, providing $1.9 trillion in economic stimulus funding to address impacts on local agencies due to the COVID-19 crisis. Specifically, the federal relief provided over $65 billion in direct funding to cities to address the economic and fiscal impacts of the COVID-19 crisis and to assist in the recovery of local communities. The City of Hayward was awarded an allocation of $38.4 million in ARPA dollars.
This report provides an update on the status of ARPA funded projects that were approved by Council on July 13, 2021, as part of the Federal Stimulus Expenditure Plan. To meet funding requirements, all ARPA funding must be obligated by December 31, 2024, and fully expended by December 31, 2026. For the Committee’s consideration and feedback, this report provides a list of potential projects that could be funded using unobligated and/or reallocated ARPA dollars.
BACKGROUND
The City of Hayward was awarded an allocation of approximately $38.4 million in ARPA relief funds from the federal government to address the internal and external needs of the organization and Hayward community associated with the COVID-19 crisis.
On July 13, 2021, the City Council adopted the City of Hayward Federal Stimulus Expenditure Plan for $38.4 million in federal stimulus funding. Annual budget appropriation of ARPA funded projects has been included in the annual budget process beginning in FY 2022 through FY 2024.
DISCUSSION
To prioritize the needs of the organization and community, the City created two major expenditure categories with respect to the ARPA allocation: (1) Community Safety and Economic Recovery, and (2) Fiscal Recovery and Stabilizing City Operations. The Community Safety and Economic Recovery category prioritizes the external needs of the community in the areas of: economic development; housing and homelessness prevention; community and nonprofit programs and efforts; and enhanced clean-up and maintenance. The Fiscal Recovery and Stabilizing City Operations category focuses on: the internal fiscal needs of the City to stabilize City operations and services through replenishing and offsetting the loss of past and projected City revenues; investments in technology needed to return-to-work safely and to enhance remote participation moving forward; and other building and infrastructure investments needed to help maintain and expand City operations and services in a post-COVID environment.
On July 13, 2021, the City Council adopted the City of Hayward Federal Stimulus Expenditure Plan for $38.4 million in federal stimulus funding. The projects and programs funded by ARPA include: (1) Support Public Health Expenditures, including Capitalizing Investments in Public Facilities to Meeting Pandemic Operational Needs; (2) Address Negative Impacts Caused by the Public Health Emergency; (3) Replacement of Lost Public Sector Revenue; and (4) Investment in Water, Sewer, and Broadband Infrastructure. Table 1, below, provides a summary of federal relief funding efforts by project/program categories:
Table 1: Summary of Hayward Federal Stimulus Expenditure Plan
PROJECT/PROGRAM CATEGORY
BUDGET AMOUNT
YEAR 1 BUDGET APPROPRIATION (FY 2022)
YEAR 2 BUDGET APPROPRIATION (FY 2023)
YEAR 3 BUDGET APPROPRIATION (FY2024)
Public Health
$ 6,940,000
$ 3,240,000
$ 2,981,000
$ 719,000
Negative Economic Impacts
$15,700,000
$ 7,845,000
$ 5,755,000
$ 2,100,000
Replacement of Lost Revenue
$14,500,000
$ 7,250,000
$ 7,250,000
$ -
Water/Sewer/Broadband Infrastructure
$ 1,238,000
$ 588,000
$ 450,000
$ 200,000
TOTAL
$38,378,000
$ 18,923,000
$ 16,436,000
$ 3,019,000
ARPA Project and Program Updates:
The City provides updates on the status of each project in the adopted Federal Stimulus Expenditure Plan in the annual budget document to allow for continued transparency with the Council and the community. Attachment II, delivers an update on each project through November 2023, providing actual expenditure details and status of project completeness.
The following section provides expenditure details by ARPA funded project category as outlined in the Federal Stimulus Expenditure Plan: (1) Support Public Health Expenditures, including Capitalizing Investments in Public Facilities to Meeting Pandemic Operational Needs; (2) Address Negative Impacts Caused by the Public Health Emergency; (3) Replacement of Lost Public Sector Revenue; and (4) Investment in Water, Sewer, and Broadband Infrastructure.
Supporting Public Health Projects, Including Investments in Public Facilities:
Several projects were identified to support public health expenditures, including capitalizing investments in public facilities to meet pandemic operational needs. Projects related to technology investment in City operations as well as building upgrades and improvements are included in the Hayward Federal Stimulus Expenditure Plan.
Graph 1 provides an overall summary of the total allocation and year-to-date actual expenditures spent on projects and programs that are included under the category of Support Public Health, Including Investments in Public Facilities. Attachment II provide more detail on project status and financial obligations anticipated through FY 2024.
Graph 1:
Supporting Public Health Projects, Including Investments in Public Facilities – Allocation vs. Actuals
$ in thousands
Address Negative Economic Impacts Caused by the Public Health Emergency:
Several projects were identified to address the negative economic impacts caused by the public health emergency. Projects and Programs included under this category were intended to assist local businesses in efforts to recover from the implications of the pandemic, as well as the development of programs to support those experiencing homelessness and to prevent more members of the community from falling into homelessness.
Graph 2 provides an overall summary of the total allocation and year-to-date actual expenditures spent on projects and programs that are included under the category of Address Negative Economic Impacts Caused by the Public Health Emergency. Attachment II provides more detail on project status and financial obligations anticipated through FY 2024.
Graph 2:
Address Negative Economic Impacts Caused by the Public Health Emergency – Allocation vs. Actuals
$ in thousands
Replace Lost Public Sector Revenue:
Replacement of Lost Public Sector Revenue: Consistent with the methodology provided by the Treasury Guidelines, Council authorized the appropriation of ARPA funding to replace lost public sector revenue due to the COVID crisis. Funding to replace lost revenue was allocated in Year 1 (FY 2022) and Year 2 (FY 2023), which reflects a transfer of $ 14.5 million, split equally between the two fiscal years.
Graph 3 provides an overall summary of the total allocation and year to date actual expenditures. As outlined in Hayward Federal Stimulus Expenditure Plan, a total of $14.5 million of ARPA dollars were allocated to the General Fund to replace lost public sector revenue during the height of the pandemic.
Graph 3:
Replace Lost Public Sector Revenue – Allocation vs. Actuals $ in thousands
Invest in Water, Sewer, and Broadband Infrastructure:
Graph 4 provides an overall summary of the total allocation and year to date actual expenditures spent on projects and programs that are included under the category of Invest in Water, Sewer, and Broadband Infrastructure.
Graph 4:
Invest in Water, Sewer, and Broadband Infrastructure – Allocation vs. Actuals $ in thousands
Potential Uses of Unspent ARPA Funds
ARPA recipients must obligate funds by December 31, 2024, and fully expend all ARPA dollars by December 31, 2026. The obligation of funds may include entering into contracts and/or securing a purchase order or requisition for supplies, services, and/or equipment that are considered eligible expenses. The City has the option to reallocate any unspent and/or unobligated ARPA dollars to fund potential projects that meet the eligibility requirements of ARPA dollars. Currently, the majority of projects are expected to fully obligate or expend all ARPA dollars by the funding deadlines.
As of November 2024, it is estimated that there may be approximately $1.2 million in funding from the Regional Fire Training Center project that may be considered for reallocation. However, staff will continue to monitor and provide regular updates on the status of projects and potential available ARPA dollars that may be reallocated.
For the Committee’s considerations, staff prepared a list of potential projects that could be funded by the reallocation of unobligated and/or unspent ARPA dollars. The list below does not reflect any form of prioritization, but provides the Committee with potential uses for its consideration and feedback.
Potential Projects
Description
Estimated Cost
St. Regis Capital Allocation
Allocate funding to St. Regis capital costs to account for funds that were supposed to be from FEMA reimbursement and allocated on behalf of Eden Health District. $ 250,000
Homelessness Public Education Campaign
Develop a public education campaign to educate the Hayward community about ongoing homelessness efforts and how the homeless system of care operates. (LHH 1.3a). $ 75,000
FY25 Funding for South Hayward Parish Year-Round Operations Continued funding for extended operations of emergency shelter at South Hayward Parish, which was expanded beyond a Winter Warming Shelter through the City's first ARPA allocation (2.1e). $ 1,000,000
Calendar Year 2025 Safe Parking Pilot
Leverage County land use committee convening to identify land for safe parking pilot to serve mid-county residents (2.2b). $ 1,000,000
Additional Navigation Center Funding for On-Site Meals and Operational Expenses Increase operational funding to Hayward Navigation Center to add more on-site meals and cover existing operating gaps due to increased costs (2.1a). $ 500,000
Potential Projects
Description
Estimated Cost
FY 2025 Motel Voucher Program
Allocate funding to enable continued operations of motel voucher program, which provides brief motel stays for individuals who are unsheltered and on the waitlist for the Navigation Center or who need temporary shelter during dangerous weather events when alternative shelter is not available. $ 50,000
Affordable Housing Development
Apply available ARPA funding to the next Affordable Housing Notice of Funding Availability (NOFA) to fund affordable housing development loans. To ensure funds are expended prior to the deadline, funds could be used for shovel-ready projects, pre-development costs, or acquisition costs. Applicable projects would include new construction, preservation of affordable housing or adaptive re-use. The additional $5 million in funding may possibly fund another one or two projects. $ 5,000,000
Exterior Video Surveillance Cameras-City Hall and Weekes Branch Library This project will provide staff a 360-degree view of the exterior perimeter of both facilities (both have interior surveillance but little to no exterior surveillance). Both sites are considered the most problematic as it relates to crime and the unhoused community. Each site is estimated to require eight exterior cameras, installation, and integration into our Citywide surveillance platform. $ 175,000
Expansion of Together for Hayward eGift Card Program
The Together for Hayward eGift Card Program is one of the most successful and impactful economic recovery programs the City offers. The program injects dollars into small businesses using ARPA funds which are then matched by consumers. Staff are well versed administering this program and would be able to expend the funds prior to the deadline.
Any available
amount
ECONOMIC IMPACT
Receiving the Federal Stimulus funding (ARPA), the City has been able to respond and provide relief to both the City programs and local community members who experienced adverse economic impacts related to the COVID crisis. Beginning in July 2021, the adopted Federal Stimulus Expenditure Plan identified several projects and programs that provided funding that has made a substantial difference in helping the local economy recover from the pandemic.
FISCAL IMPACT
There is no fiscal impact related to this specific agenda item.
However, this agenda item provides a fiscal update on the use of the $38.4 million in stimulus funding. Staff will continue to monitor project status and funding usage to ensure compliance with funding requirements. As the December 31, 2024 funding requirement deadline approaches, staff will continue to provide regular updates and recommendations for consideration to the Committee and Council on potential opportunities to reallocate unspent and/or unobligated ARPA dollars to fund proposed projects outlined in this report.
STRATEGIC ROADMAP
This agenda item supports several of the Strategic Priorities in the City’s approved Strategic Roadmap.
PUBLIC CONTACT
This agenda item was published in accordance with all Brown Act requirements.
Prepared by: Nicholas Mullins, Management Analyst II
Nicole Gonzales, Director of Finance
Recommended by: Nicole Gonzales, Director of Finance Approved by:
______________________________________
Kelly McAdoo, City Manager
Hayward City Council Meeting – July 13, 2021 (www.legistar.com)