CITY OF POMONA
COUNCIL REPORT
April 17, 2023
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Andrew Mowbray, Finance Director / City Treasurer SUBJECT: RESOLUTION TO AMEND THE FISCAL YEAR (FY) 2022-23 OPERATING BUDGET FOR THE AMERICAN RESCUE PLAN FUND AND POMONA JOBS PROGRAM (PJP) RECOMMENDATION:
It is recommended that the City Council take the following actions:
Adopt the following resolution (Attachment No. 1):
RESOLUTION NO. 2023-66 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA AMENDING THE FY 2022-23 OPERATING BUDGET BY INCREASING REVENUE ESTIMATES AND APPROPRIATIONS IN THE AMERICAN RESCUE PLAN (ARP) FUND IN THE AMOUNT OF $350,000 Award a sub-recipient contract to Latino-Latina Roundtable of the San Gabriel and Pomona Valley (LRT), in partnership with the Institute for Ecological Civilization (EcoCiv) and the Wellbeing Economy Alliance California Hub (WEAll), which is seeking funding from the City of Pomona’s American Rescue Plan Act (ARP) funds to help launch the Pomona Jobs Program (the “PJP”) in the amount of $630,750 Authorize the City Manager to execute the contract and all necessary documents, amendments, and extensions, subject to approval by the City Attorney.
EXECUTIVE SUMMARY:
The Latino-Latina Roundtable of the San Gabriel and Pomona Valley (LRT), in partnership with the Institute for Ecological Civilization (EcoCiv) and the Wellbeing Economy Alliance California Hub (WEAll), seek funding from the City of Pomona’s American Rescue Plan Act funds to help launch the Pomona Jobs Program (the “PJP”), a public jobs program that will establish an Anchor Institution Collaborative and industry-led High Road Training Partnerships to create at least 30 to 50 new, high-quality jobs for which program beneficiaries will be prepared and into which they will be hired by the end of the American Rescue Plan (ARP) Act grant funding deadline in December 2026.
City Staff and Best Best and Krieger (BBK) legal counsel noted a number of concerns whether the initial PJP proposal that was brought on the December 5, 2022 City Council meeting was an eligible use of ARP funds. During the meeting, Council directed staff to work with PJP to revise its proposal to address staff’s concerns. PJP has since provided additional information to staff about the PJP, including an updated scope of work for key positions within the PJP and a revised proposed budget. The rewritten proposal and budget can be found in Attachment No. 1.
FISCAL IMPACT:
The estimated cost per the budget proposed by the Latino-Latina Roundtable of the San Gabriel and Pomona Valley (LRT) is $630k which includes $542k for salaries and $88k for operating expenses that are defined as services and supplies as detailed in Table 1 (Page 17 in Attachment No. 2). These salaries (positions costs) are estimated based on a 30-month cycle for the PJP. All costs for these expenses would be on a reimbursement basis, per the system set up via the ARPA Policies and Procedures approved by the Mayor and City Council on June 6, 2022.
Funding of $280,750 is available in the ARP Fund within District 1’s ARP allocation (191-0201-52285-10007). The remaining balance will require amendment to the FY 2022-23 Operating Budget in the ARP Fund by increasing revenue estimates (191-xxxx-40875-00000) and appropriations (191-xxxx-52285-10040) in the ‘Economic Support Related to the Pandemic’ ARP bucket in the amount of $350,000.
Table 1 – Pomona Jobs Program Estimated Annual Budget
PREVIOUS RELATED ACTION:
On June 7, 2021 as part of the FY 2021-22 adopted budget, $6.8M was budgeted in the General Fund for potential revenue loss and accepted the $45.37M of the ARP funds allocated to the City of Pomona by the US Treasury.
On August 9, 2021 an ARP study session was held, and discussion occurred regarding uses that will 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 $45.37M City of Pomona ARP Expenditure Plan.
On November 15, 2021 as part of the FY 2021-22 1st Quarter, update to the Expenditure Plan was approved and $2.07M of ARP funds were appropriated for one-time payments included in the respective bargaining unit agreements.
On December 6, 2021the City Council approved appropriation of $6.9M of ARP funds for capital improvement projects – Park Restroom Construction Replacement, Mission Blvd Rehabilitation (White Ave to Towne Ave), and Garey Ave Rehabilitation (Aliso Street to Monterey Ave).
On December 20, 2021 an ARP Sub-committee consisting of the Mayor, and two (2) council members to assist with the process to appropriate the ARP funds for the specific programs and projects as set forth in the City Council approved ARP spending plan was formed.
On February 28, 2022 an update to the ARP Spending Plan was approved to transfer $544,901 for City support related to the pandemic.
On April 18, 2022 the City Council approved ARP appropriations of $370k for Buena Vista Avenue Rehabilitation – Mission Blvd to 9th Street and $500k Philadelphia Street Rehabilitation – San Antonio Avenue to East City Limit.
On May 16, 2002 an update to the ARP Spending Plan was approved to transfer $106k District 2 Microgrants and a status update of ARP FY 2021-22 Appropriations and FY 2022-23 Proposed Budget Appropriations was provided.
On June 6, 2022, the City Council approved the Proposed ARPA Policies and Procedures, and the Adopted FY 2022-23 budget that included appropriations increase of $500k to be used from ARP funds for Library youth services. An update to the ARP Spending Plan was approved to allow a reduction of $250k from the Health and Wellness Activities category, as well as a reduction of $250k from the Participatory Budget category to fund this increase to the Library.
On August 15, 2022, an update to the ARP Spending Plan was approved to allocate $1M for Citywide Rental Stabilization startup costs for consultant services, legal aid, and future work by City staff, $1.15M for Health and Wellness for possible uses including but not limited to concerts and community events as coordinated by the Mayor and councilmembers with City staff, mainly Neighborhood Services Department, $1.06M for Small Business Grants to fully appropriate funds allocated for this program, $600k for Real Time Crime Center (RTCC) which includes live-feed cameras on Holt Avenue ($300k) and build out of RTCC ($300k, and $200k for ARP Administration – Best, Best & Krieger support services, consultant services for subrecipient monitoring and ARP staffing services in Finance and Neighborhood Services.
On November 21, 2022, an update to the ARP Spending Plan was approved to allocate $211k for the Police Departments COPS Technology and Equipment Grant. This amount was offset from the General Fund Budget Shortfall category.
On December 5, 2022, Staff provided a summary of the PJP proposal and noted a number of concerns with the project as proposed at that point. During the meeting, Council directed staff to work with PJP to revise its proposal to address staff’s concerns.
DISCUSSION:
In the staff report for the December 5, 2022 Council meeting, Staff provided a summary of the PJP proposal and noted a number of concerns with the project as proposed at that point. During the meeting, Council directed staff to work with PJP to revise its proposal to address staff’s concerns. PJP has since provided additional information to staff about the PJP, including an updated scope of work for key positions within the PJP and a revised proposed budget. The additional information addresses the concerns raised in the December 5, 2022 staff report as follows:
Concern raised in December 5, 2022 Staff Report: The project application does not provide all of the information necessary for the City to move forward with the proposed project.
How the concern was addressed: City staff met with the Latino-Latina Roundtable in January, 2023, to seek clarification and additional details regarding the PJP. During the meeting, Latino-Latina Roundtable provided additional information about the project, and following the meeting submitted additional materials including an updated description of employment positions within the PJP. Latino-Latina Roundtable also clarified that it will be the subrecipient for purposes of grant implementation and will enter into a subrecipient agreement with the City to administer the grant funds for the PJP.
Concern raised in December 5, 2022 Staff Report: The proposed project appears to be very administrative cost heavy in a way that has not been clarified and that Treasury could view as violating federal cost principles.
How the concern was addressed: The Latino-Latina Roundtable submitted a revised budget in March, 2023 that appears to be consistent with federal regulations governing ARPA grant funding.
Federal regulations at 2 C.F.R. 200.401 and 200.404 require the City to ensure that subrecipient project costs are reasonable, and have the appropriate allocations for administrative and direct costs. Specifically, 2 C.F.R. 200.404 requires the City to ensure that the subaward costs are “of a type generally recognized as ordinary and necessary” for the proposed project; whether the proposed project would “employ sound business practices; arm's-length bargaining; . . . and other terms and conditions” of ARPA; and whether the project would be paying “market prices for comparable goods or services for the geographic area.” Additionally, federal regulations at 2 C.F.R. 200.332 require the City to limit indirect costs in subrecipient awards. Generally, indirect costs are limited to 10% of the total award. (2 C.F.R. 200.332(a)(4)(ii); 200.414(f).) Indirect costs in excess of that amount are prohibited. (2 C.F.R. 408.) In contrast, 90% or more of a project must be allocated to direct costs. Under 2 C.F.R. 200.413 direct costs include:
Typical costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs that otherwise would be treated as indirect costs may also be considered direct costs. Examples include extraordinary utility consumption, the cost of materials supplied from stock or services rendered by specialized facilities, program evaluation costs, or other institutional service operations.
The revised PJP budget appears consistent with these requirements. The proposed indirect costs are less than 10% of budget, the individual direct costs look reasonable for tasks described, and the cost per job created is $21,025 if the PJP creates and places 30 applicants in jobs. This last figure is significantly lower than current Housing and Urban Development (“HUD”) metrics for cost per job. HUD guidelines are not directly applicable to ARPA grants, but they do provide an analogous program for comparison.
Concern raised in December 5, 2022 Staff Report: The proposed project includes limited information about how it will create jobs for beneficiaries, and lacks measurable benchmarks that the City could use to ensure the ARPA funds are being directed to the intended beneficiaries.
How the concern was addressed: Latino-Latina Roundtable revised the scope of work for key employees in the PJP to clarify their role in job creation. Additionally, Latino-Latina Roundtable will enter into a subrecipient agreement with the City that will include the following benchmarks:
Latino-Latina Roundtable will enter into agreements with proposed employers who will participate in the PJP describing their commitment to hire employees from the PJP. Documentation of the agreements will be submitted to City within three months of Latino-Latina Roundtable’s first request for reimbursement.
Latino-Latina Roundtable will provide documentation of all successful job placements. Documentation will be reported to the City in quarterly reports.
All jobs placements will be qualified beneficiaries – as defined in applicable ARPA regulations and guidance.
Job placement programs are an allowed, enumerated use under Treasury’s ARPA guidelines. (87 Fed Reg 4369) Requiring Latino-Latina Roundtable to enter into a subrecipient agreement that includes the above listed benchmarks will ensure that grant funds are delivered to the intended class of beneficiaries.
Concern raised in December 5, 2022 Staff Report: The City’s involvement in the project has created an appearance of favorable treatment that the Treasury Department could view as violating federal regulations.
How the concern was addressed: The City Council directed staff to help Latino-Latina Roundtable revise its proposal in open session. Members of the public had advanced notice of the issue via the City Council agenda, and had an opportunity to provide comment on the decision during the meeting. Moreover, no party to the decision had any interest in the outcome, a real or apparent conflict of interest, or personal or organizational conflicts of interest.
ARPA does not require grants to be awarded via a competitive bidding process. The baseline requirement is that award decisions must be free of undisclosed personal or organizational conflicts of interest, both in fact and in appearance. (87 Fed Reg 4383, fn 240) According to Treasury regulations, recipients may avoid conflicts of interest in awarding aid to impacted industries by “making aid available to businesses in the industry on generally applicable terms or utilizing a competitive grant process.” But this suggestion is not mandatory. The Treasury regulations prohibit use of or control over ARPA for a decision maker’s private gain, and state “no employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a federal award if he or she has a real or apparent conflict of interest.” (87 Fed Reg 4383, fn 240; see also 2 C.F.R. 200.318(c)(1).) Those conditions were met through the Council’s open session direction to staff at the December 5, 2022 Council meeting. As noted above, the Council’s decision was made in open session with prior notice to the public, and with an opportunity for the public to provide input on and support or oppose the decision. None of the Council members had a real or apparent conflict of interest, and although one member of the Council is a former board member for the Latino-Latina Roundtable, that Council member took no part in the decision.
ALTERNATIVE(S):
The City Council has the following alternatives:
Do not pursue proposal
Instruct staff to attempt to pursue other non-federal funding alternatives if available.
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2023-66
Attachment No. 2 – Proposal and Budget Pomona Jobs Program Pomona Jobs Program (PJP) – Award of American Rescue Plan (ARP) Funds