City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Ken Irwn, City Manager
BY: Jennifer Riedeman, Finance Director
MEETING DATE: August 20, 2024
ITEM NO: 7.1
SUBJECT: Discussion and Direction for reallocations of American Rescue Plan Act (ARPA) Fund 103 - American Rescue Relief Fund, including interest earnings not previously allocated, in order to meet obligation deadline of December 31, 2024.
RECOMMENDATION
Staff seeks direction from Council on the allocations of ARPA funds in Fund 103 - American Rescue Relief Fund, including interest earnings not previously allocated, in order to meet obligation deadline of December 31, 2024.
BACKGROUND
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), established by the American Rescue Plan, delivers $350 billion to state, local, territorial, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency.
On May 10, 2021, Treasury issued an interim final rule implementing the SLFRF program. On January 6, 2022, Treasury subsequently issued a final rule that responded to public comments.
On April 1, 2022, the final rule became effective. On December 29, 2022, the Consolidated Appropriations Act, 2023 was enacted, amending the SLFRF program to provide additional flexibility for recipients to use SLFRF funds to respond to natural disasters, build critical infrastructure, and support community development. The existing eligible uses, as discussed in the 2022 final rule, remain unchanged. Recipients may continue to use SLFRF funds in alignment with the 2022 final rule.
The Interim Final Rule (IFR) was submitted for publication in August 2023 and will become effective when published. Recipients may use SLFRF funds for the new eligible uses for costs incurred beginning December 29, 2022. Consistent with the existing eligible uses, recipients must obligate SLFRF funds for the new eligible uses by December 31, 2024. Recipients must expend SLFRF funds obligated to provide emergency relief from natural disasters by December 31, 2026. Recipients must expend SLFRF funds obligated for Surface Transportation projects and Title I projects by September 30, 2026.
State, territorial, local, and Tribal governments (together, recipients) must comply with the final rule beginning on April 1, 2022, when the final rule takes effect. Prior to April 1, 2022, recipients may take actions and use funds in a manner consistent with the final rule, and Treasury will not take action to enforce the interim final rule if a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. This means that Treasury will not take action to enforce uses of the interim final rule to the extent that the recipient wishes to change its planned uses of SLFRF funds in a manner consistent with the final rule.
This includes, but is not limited to, the following uses of SLFRF funds:
(1) Responding to the public health and negative economic impacts of the pandemic (which includes several subcategories)
(2) Providing premium pay to essential workers
(3) Providing government services to the extent of revenue loss due to the pandemic, and (4) Making necessary investments in water, sewer, and broadband infrastructure.
ANALYSIS
The City of Patterson was allocated $5,388,220 in ARPA funds and has already spent or allocated funds as follows, including $121,513 in interest earned to date:
Original Allocation Spent or Encumbered to Date Balance as of June 30, 2024 Aid to Nonprofit Organizations $ 190,000 $ (60,000) $ 130,000 Centennial Park 1,085,172 (285,172) 800,000
COVID-19 Expenditures 105,588 (105,588) -
Cybersecurity Services 105,000 (64,363) 40,637
Downtown String Lights 393,385 (39,785) 353,600
Economic Recovery Programs 600,000 (589,260) 10,740
Employee Premium Pay 386,500 (386,500) -
Façade Improvements ($10,000-$20,000 /Applicant) 100,000 - 100,000 Garza Park - Ball Field 590,000 (88,463) 501,537
General Contract Services 143,000 (34,380) 108,620
Homeless Shelter Programs 236,000 (20,490) 215,510
IT Equipment – Council Chamber Upgrades 381,000 (327,811) 53,189 Loss of General Fund Revenue 56,017 - 56,017
Mural Project 10,000 - 10,000
Public Safety PPE 100,000 (79,596) 20,404
Recreation Program Modification 20,215 (20,215) -
South Park Improvements 304,234 (304,234) -
Strategic Plan 50,000 (48,776) 1,224
Transfer to General Fund - Prior COVID Expenses 93,017 (93,017) - Way Finding Signs 547,391 (39,100) 508,291
Total Allocations $ 5,496,519 $ (2,586,750) $ 2,909,769 Staff is requesting Council provide direction in reallocating any previous allocations in consideration of the deadline to obligate funds by December 31, 2024.
In addition, because the ARPA funds must be obligated no later than December 31,2024, staff recommends that any remaining unobligated funds as of December 15, 2024, be authorized to be transferred to the General Fund to reimburse for Contracted Police Services, an eligible expense.
Any amounts transferred to the General Fund to reimburse contract expenses would make available the Budget originally intended for the contracted service in FY 2024/25.
FISCAL IMPACT
There is no fiscal impact as the funds are already budgeted in Fund 103.