CITY OF POMONA
COUNCIL REPORT
February 28, 2022
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: Approval of AN UPDATE TO the City of Pomona’s Expenditure Plan for the Coronavirus State and Local Fiscal Recovery American Rescue Plan (ARP) AND AMENDMENT TO THE FY 2021-22 OPERATING BUDGET RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2022-33– A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, APPROVING AN UDPATE TO THE CITY OF POMONA’S EXPENDITURE PLAN FOR THE CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY AMERICAN RESCUE PLAN (ARP) FUNDS ALLOCATED FROM THE UNITED STATES FEDERAL GOVERNMENT DEPARTMENT OF TREASURY AND Amending the Fiscal year (FY) 2021-2022 City Operating Budget to increase revenue estimates and appropriations in the amount of $544,901 FROM THE AMERICAN RESCUE PLAN (ARP) FUND AND THEN TRANSFER THIS AMOUNT to FY 2021-22 GENERAL FUND; Approve the award of a contract to OpenGov Inc. for the period of March 1, 2022 through February 28, 2025, for an aggregate total not to exceed $148,401.
Authorize the City Manager to execute the agreement and any possible extensions, upon City Attorney approval.
EXECUTIVE SUMMARY: In response to the 2019 Novel Coronavirus (COVID-19) public health crisis, the U.S. Congress passed the American Rescue Plan (ARP) Act on March 11, 2021. This assistance programs provided needed relief to state, local and Tribal governments to enable them to continue to support the public health response and lay the foundation for a strong and equitable economic recovery. The City was allocated $45.37M in ARP funds. As part of the FY 2021-22 adopted budget, $6.8M was budgeted in the General Fund for potential revenue loss. On August 9, 2021 a study session was held and discussion occurred regarding the possible uses that would be eligible. The Mayor and City Council provided direction and suggested a specific plan to allocate the $45.37M of the ARP funds. On September 20, 2021 the Mayor and City Council approved the City of Pomona Expenditure Plan for the Coronavirus state and local fiscal recovery American Rescue Plan (ARP). On November 15, 2021 as part of the FY 2021-22 1st Quarter an update to the Expenditure Plan was approved and $2.07M of the ARP funds were appropriated for one time payments included in the respective bargaining unit agreements. On December 6, 2021 the City On December 6, 2021, the City Council approved appropriation of $6.9M of ARP funds for capital improvement projects – Park Restroom Construction Replacement, Mission Blvd Rehabilitation – White Avenue to Towne Avenue, and Garey Avenue Rehabilitation – Aliso Street to Monterey Avenue. On December 20, an ARP Sub-Committee consisting of the Mayor, and two (2) council members to assist with the processes to appropriate the ARP funds for the specific programs and projects as set forth in the City Council approved ARP spending plan was formed. To date $15.77M has been appropriated of the $45.37M, the remaining $29.6M of funds will be presented to the City Council through various council actions over the next few years as it relates to the approved expenditure plan. With the recent surge most notably of the Omicron variant beginning in December 2021 of COVID-19 cases, the City faced challenges to the workforce that required additional funding for safety equipment, having to continue janitorial contracts for additional cleanings, and addressing staffing needs. In addition, two items, one being for ongoing City Attorney support for the ARP program and the purchase of a software dashboard program from OpenGov Inc. to track ARP expenditures and will assist in the reporting the spending of Pomona’s ARP dollars to the Treasury Department as well as document the spending plan for the life of the plan that has to be allocated by December 2024 and fully spent by December 2026.
FISCAL IMPACT: To date, $15.77M of ARP funds have been incorporated into the Fiscal Year 2021-22 Operating and Capital Improvement Program Budgets via transfers from the ARP fund. As part of this action the Fiscal year (FY) 2021-2022 City Operating Budget is requested to be amended by increasing revenue estimates and appropriations in the amount of $544,901 from the American Rescue Plan (ARP) fund (191-1101-40875/89938/89958-00000). This amount will be transferred to the FY 2021-22 General Fund (101-xxxx-xxxxx-51353) as outlined in this report.
PREVIOUS RELATED ACTIONS:
On June 7, 2021, the City Council adopted the FY 2021-22 Operating Budget which contained the use of $6.8M in ARP funds for potential revenue loss and accepted the $45.37M of the ARP funds allocated to the City of Pomona from the United States Federal Government Department of Treasury.
On August 9, 2021, the City Council discussed at a Study Session the possible uses of the ARP funds that would be eligible.
On September 20, 2021, the City Council approved the City’s expenditure plan to allocate the $45.37M of ARP funds.
On November 15, 2021, the City Council approved appropriation of $2.07M of ARP funds for MOU onetime payment.
On December 6, 2021, the City Council approved appropriation of $6.9M of ARP funds for capital improvement projects – Park Restroom Construction Replacement, Mission Blvd Rehabilitation – White Avenue to Towne Avenue, and Garey Avenue Rehabilitation – Aliso Street to Monterey Avenue.
On December 20, 2021, the City Council established an ARP Sub-Committee consisting of the Mayor, and two (2) council members to assist with the processes to appropriate the ARP funds for the specific programs and projects as set forth in the City Council approved ARP spending plan.
DISCUSSION: Since the inception of the ARP subcommittee in December 2021, the committee has met on three occasions to discuss topics including:
The ARP Final Rule Guidelines issued by the Treasury Department in January 2022 A process of how to accomplish the respective allocated City Council and Mayor funds Prioritizing the ARP expenditures plans
Staffing (both internally and via contract) to complete these ARP projects Addressing the safety challenges of City of Pomona employees, guests and customers – safety equipment and outbreaks current needs for the City of Pomona Purchasing of an ARP tracking software from OpenGov Inc. as the City is required to routinely document and report the City of Pomona’s ARP spending and budgeting of the plan from now until December 2026 Appropriating funds for City Attorney support to staff to ensure there is a clear Nexus to US Treasury Final Guidelines As mentioned and based on information shared with the ARP subcommittee it was discussed that $545k of ARP funds are requested to be appropriated and transferred to the FY 2021-22 General Fund in the areas listed below, followed by a short description of each.
OpenGov Software for ARP Expenditure Tracking – Staff is requesting the purchase of an ARP tracking software system from OpenGov Inc. The City is required to routinely document and report the City of Pomona’s ARP spending and budgeting of the plan from now until December 2026 to the US Treasury. The Dashboard that OpenGov offers provides a tracking system that is similar to the reporting requirements of the US Treasury when reporting the ARP expenditures. This three-year contract will cost $148k and will assist the City until March 2025. If additional contract terms or an extension are needed as the ARP funds must be spent no later than December 2026, staff will be able to amend at that time. The software will be purchased per City Code Section 2-993.2 (8) which provides an exception to the formal procurement procedure related to Fiscal and/or Personnel Services. This section of code allows the City to forgo the formal procurement process for fiscal services with approval by either the City Manager or City Council. Due to the complexities of the financial management system and the ability for the OpenGov software to communicate with our current system, it in the best interest of the City to utilize this section of code to obtain the software.
COVID-19 Cleaning Services at City Hall-Police Facilities/Greeters at City Hall/Staffing costs - Contract Services for Janitorial services for both City Hall and the Police facilities are necessary to continue additional cleanings in the amount of $65k. To maintain the greeter at the front of City Hall that assists with controlling the number of people who enter City Hall each day as well as assist with tracking the online waiting system will require additional funding at an estimated amount of $10k for the rest of FY 2021-22. Finally, with the most recent surge from the Omicron variant, several divisions within different Departments have minimal coverage for at least one work week. In one case a Los Angeles County engineer staff was contracted to assist with streetlights that went out of service. This $16.5k will assist if future needs such as this arise.
City Attorney Support – To continue the ongoing support necessary to ensure that a clear nexus is made between the Appropriations made with the ARP funds and the US Treasury Final Guidelines, City staff continues to work with Andre Monette of BBK who has also attended several City Council meetings when ARP items were discussed as well as been part of the discussions with the ARP subcommittees thus far. This budgeted amount of $60k is the anticipated amount for the entire ARP tenure which has an end date of December 2024.
Plexiglass/Masks & Respirators/Air Filtration Systems/COVID-19 Testing Programs and Kits – To provide employees and the respective workplaces with the safety measures and equipment needed, staff is recommending allocations from the ARP fund for Plexiglas ($10k), masks and respirators ($45k), air filtration systems ($115k), and COVID-19 Testing related items ($75k).
Any of these funds not spent in its entirety by June 30, 2022, will be a carryover to the FY 2022-23 budget or returned to the ARP fund balance if necessary. Staff will keep the City Council updated on the status of these funds at the fiscal year ending period.
ARP SPENDING PLAN
As it relates to the $545k appropriation requested herein, this will impact the City’s original ARP Expenditure Spending Plan of the $45.37M allocated to the City by the US Treasury. Half of the allocation in the amount of $22.7M million was received on May 19, 2021, and the balance is anticipated to be provided in May 2022. The U.S. Treasury issued the Final Rule with guidance on the funding allocation methodology, distribution process, and reporting requirements in January 2022. ARP funds must be obligated by December 31, 2024 and expended no later than December 31, 2026. The City has discretion to use the funds in ways to meet the needs of the community if the use fits into one of the following categories:
Public Health and Economic Impacts
Provide premium pay for essential workers
Replace public sector lost revenue
Invest in water, sewer, or broadband infrastructure
The expenditure plan was last discussed at the November 15, 2021, City Council meeting at the 1st Quarter Mid-Year review. With the requested appropriation of $545k of ARP funds, staff would like to provide an updated Expenditure spending plan with some brief updates on each line. The table below captures the programs, projects, and commitments that the Mayor and City Council have approved to date, with included updates to approve with this action based on discussion from the ARP subcommittee.
Each item noted in the above listed ARP Proposed Spending plan update table is discussed in detail below:
Universal Basic Income Program ($5M)
A Universal Basic Income Program is designated as an eligible use of ARP funds. Many other agencies in the State of California have implemented their own programs or are in the planning stages of creating such a program. These programs require ARP recipients to identify the amount of the total funds that are allocated to evidence-based interventions and if the programs are primarily serving disadvantaged communities. Since last time the plan was presented, the plan has have changed slightly. It now is to impact 400 families receiving a monthly allocation of $500 for 2 years. As mentioned before, an experimental study is required by the US Treasury when ARP funds are used under this cash assistance expenditure category.
Small Business Grants ($2M)
This category is defined as an eligible use because it relates to the negative economic impact of the COVID-19 pandemic. Assistance to small business and non-profits includes but is not limited to loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, rent, or utilities costs, and other operating costs. Assistance can also come in the form of loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs. Technical assistance, counseling, or other services to assist with business planning needs is another eligible use of the ARP funds. Contracting out this service of the program is being explored. Operational costs for this program would come from the proposed allocation.
Economic Development ($1M)
This $1M allocation has not been dedicated towards a specific program or process yet, however discussion has included dedicated assistance to small businesses. The subcommittee will continue to discuss options for use of this dedicated amount toward economic development that meet the ARP final rule guidelines.
Allocation for Mayor Identified Eligible Projects ($1.5M)/ Allocation of $750k to each of the 6 Council Districts ($4.5M) These allocations are for the Mayor and each Councilmember to create a list of eligible programs and projects to be funded via ARP Funds. The ARP guidelines must be referred to before an appropriation can be budgeted and the allocations needs to tie back to the parameters of the language described in the US Treasury’s most recent released Final Rule. These funds could be combined with other councilmembers allocations listed in their respective expenditure plans. Staff is collecting the Mayor and City Council respective plans with assistance from BBK to ensure the proposed programs have a defined nexus to use ARP funds. The ARP subcommittee has suggested that each councilmember prioritize their list of items to assist staff to compile a working plan to address all needs in an efficient manner. Any of the proposed items that are Public Works CIP staff will need to be involved in creating all new CIP projects that could potentially use ARP funds.
General Fund Budget Shortall ($9.2M)
The current amount in the revised expenditure plan is $9.2M. The FY 2021-22 General Fund Budget included $6.8M of the City‘s allocated $45.37M ARP funds to assist with balancing the budget. The use of ARP funds for assisting the General Fund losses cannot be put into a “rainy day” fund or to build up reserves. If the General Fund doesn’t have a shortfall or only needs a portion of the ARP funds, the funds can be allocated back to the ARP fund and be considered for other uses. Finance staff will continue to keep the Mayor and City Council apprised of the General Fund revenue shortfalls each fiscal year to determine the amount of ARP funding that may be considered to maintain services at an adequate level. With this update $545k is proposed to be move to a new line (Bucket) in the spending plan for City support related to the pandemic.
City Support related to the Pandemic ($545k)
This new allocation will fund City needs including safety equipment, contacts for daily cleanings of city facilities, extend funding for the City Hall greeters who provide customer service to the public, funding for the City Attorney to provide the legal opinions to ensure ARP funds allocated have a clear nexus to the guidelines set forth by the Treasury. In addition, a software will be purchased for City staff to rely on to track ARP funds for the life of the ARP program as well as to assist with reporting to the US Treasury.
Capital Improvement Program (CIP) Projects ($15M)
The ARP guidelines clearly state that funds can be used to make “necessary investments to improve access to clean drinking water, support vital wastewater and storm water infrastructure, and to expand access to broadband internet.” In addition, the FAQs section does address many questions about investing in other forms of CIP projects (streets, roads, facilities, etc.) and specifically to addresses revenue loss from funding sources that would normally fund these type of CIP projects. With the final rule, general revenue loss can also be justified to fund these projects. On December 6, 2021, the City Council approved appropriation of $6.9M of ARP funds for capital improvement projects – Park Restroom Construction Replacement, Mission Blvd Rehabilitation – White Avenue to Towne Avenue, and Garey Avenue Rehabilitation – Aliso Street to Monterey Avenue.
Health and Wellness Activities ($1.6M)
To address the negative economic impacts caused by the public health emergency, including economic harms to households, which would include youth, adults, and seniors, the funds can be used for this effort. This may be in the form of services provided to the youth by the City at community centers or by third party organizations as well as those services or activities offered for senior and family programming. These types of services are eligible as responses to the negative economic or public health impacts to the community. This can be in the form of programs such as concerts, community gathering, and wellness events offered at City Parks and other outdoor venues in the City.
Technology upgrades, Leadership Development, Operational efficiencies ($1M) Efforts made to improve COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs is an eligible expense. This also includes efforts made to implement new technology to provide less physical contact, which in turn may be more efficient in providing a City service. This suggested program may come in the form of a software suite that the City could implement to improve efficiencies and could have positive impacts on all Departments.
Participatory Budgeting ($2M)
Participatory budgeting is a process of deliberation and decision-making, in which citizens are included in the process for deciding how to allocate part of a municipal budget. As it relates to incorporating this proposed plan into the ARP expenditure plan, it should be noted that the funds allocated for this budget process could only be used on eligible uses a defined by the ARP guidelines. The funds would only be available to be used in the defined time frame, and must be obligated by December 31, 2024 and expended by December 31, 2026. The Finance Department has begun researching the process via an organization (particpatorybudgeting.org) that assists communities through the entire process.
Onetime Payments - MOUs ($2.07M)
On November 15, 2021, the City Council approved appropriation of $2.07M of ARP funds for MOU onetime payments related to each of the bargaining unit approved agreements. These ARP funds will be used to fund portions of the ARP onetime payments to employees, as included in the respective bargaining units MOUs.
CONCLUSION
The City was allocated $45.37M in ARP funds in March 2021. Half of the allocation in the amount of $22.7M million was received on May 19, 2021, and the balance will be provided in May 2022. The U.S. Treasury issued the Final Rule with guidance of the funding allocation methodology, distribution process, and reporting requirements in January 2022. The revised ARP expenditure plan presented in this report details out a specific plan based on the original product discussed at the August 9, 2021 ARP Study Session, and with the various updates that have occurred since then. Staff has begun formulating the specific programs and has brought forward actions to appropriate the funds along with the components of the respective programs/projects. In total $15.77M has been appropriated to date. This report provides an update to the ARP expenditures spending plan that includes a $545k appropriation to support City operations as it relates to the pandemic. The ARP subcommittee will continue to meet, advise to staff recommendations to keep moving towards appropriating the entire $45.37M of ARP funds. A key factor to keep in mind with all the items in the approved Expenditure Spending plan is to ensure that they meet the criteria for the City of Pomona in responding to the economic and public health impacts of COVID-19 and to assist in efforts to mitigate impacts on communities, residents, and businesses as stated in the US Treasury’s Final Rule.
ALTERNATIVE(S): None.
Prepared by:
____________________________
Andrew Mowbray
Finance Director/City Treasurer
ATTACHMENT(S):
Attachment No. 1– Resolution No. 2022-33
American Rescue Plan Expenditure Spending Plan Update