DATE: AUGUST 6, 2024
DEPARTMENT: FINANCE
FROM: RENE MENDEZ, CITY MANAGER
BY: JIM PIA, ASSISTANT CITY MANAGER
SELINA ANDREWS, ACTING FINANCE DIRECTOR
ABE PEDROZA, SENIOR FINANCE MANAGEMENT ANALYST
TITLE: AMERICAN RESCUE PLAN ACT (ARPA) PROJECTS UPDATE
RECOMMENDATION:
A motion to approve a resolution authorizing the reallocation of American Rescue Plan Act (ARPA) funding appropriations for certain projects within the same department.
EXECUTIVE SUMMARY:
City Council allocated appropriations to nineteen (19) eligible projects through the use of American Rescue Plan Act (ARPA) funding. The projects were consistent with the intent of the Act and in alignment with previous Council guidance. In addition, Council considered the multiple needs of the Salinas community in terms of equitable continuation of City services, infrastructure, investments in water and sewer, and homeless support services. On July 23, 2024, the Finance Committee reviewed staff’s recommendations to reallocate ARPA funding and provided feedback. At this time, staff would like to update City Council on the status of ARPA projects and recommend reallocation of $2.6 million between projects within the same department.
BACKGROUND:
On March 11, 2021, President Biden signed the American Rescue Plan Act, which provided the City with $51,567,313 in relief funds. These additional resources have provided critical community and economic recovery support.
ARPA requires that local governments obligate all ARPA funds (e.g., encumber funding through the issuance of contracts/purchase orders) by December 31, 2024, and to expend all ARPA funds by December 31, 2026. Due to this timeline, a number of the community and economic recovery workstreams were anticipated to be spent over a multi-year period. Of the $51.6 million initially received ARPA funding, a remaining amount of $27.5 million is included in the FY 2024-25 Budget. While the City has made considerable progress in this effort, a total of $14,597,374.12 remain unencumbered as of June 30, 2024 (based on expenditures at July 3, 2024).
Over the last few weeks, Staff has developed timelines for all projects and has determined that the reallocation of funding for certain projects is necessary to meet program needs while adhering to the December 31, 2024, encumbrance deadline. The status of all projects, including proposed reallocations, are reflected in the table below.
Dept
Project
Original Budget
Approved Amend
Amended Budget
Actuals to Date
FYTD 23-24 Enc
Remaining
% Used
Proposed Reallocation
CD
3220 SHARE
Center
1,000,000
-
1,000,000
999,792
208
-
100%
1,938,260
CD
8161 Chinatown Navigation Center
1,000,000
-
1,000,000
682,552
-
317,448
68%
(12,414)
CD
8162 Homeless Motel Program
3,000,000
-
3,000,000
2,119,226
52,896
827,878
72%
(993,275)
CD
9021 Housing Production Fund
7,000,000
-
7,000,000
5,748,859
318,569
932,571
87%
(932,571)
CD
9181 Downtown Streets Team
600,000
-
600,000
367,631
89,761
142,608
76%
Fire
9235 Fire Station Renovations
1,500,000
-
1,500,000
404,914
9,407
1,085,679
28%
Fire
9541 Fire Station Repairs
1,400,000
-
1,400,000
89,488
-
1,310,513
6%
PW
8170 City Hall / Facility HVAC
5,002,313
2,000,000
7,002,313
3,737,886
2,971,516
292,911
96%
PW
8180 Street Repair & Traffic Safety
6,000,000
-
6,000,000
2,015,676
3,331,420
652,904
89%
PW
8190 Sewer System Work
4,620,000
-
4,620,000
168,630
638,653
3,812,717
17%
354,539
PW
8192 Stormwater Green Infra
3,000,000
-
3,000,000
809,084
876,628
1,314,288
56%
(230,678)
PW
9086 Natividad Creek Silt
1,545,000
(1,000,000)
545,000
-
-
545,000
0%
(62,000)
PW
9293 Stormwater Master Plan
800,000
-
800,000
769,968
30,032
-
100%
PW
9720 Sidewalk & Drainage Impr
6,000,000
-
6,000,000
4,418,721
805,540
775,739
87%
PW
9727 Gabilan Creek Silt
500,000
-
500,000
211,841
66,298
221,861
56%
(61,861)
LCS
8171 Playground & Closter Park Impr
2,000,000
1,000,000
3,000,000
962,554
273,078
1,764,367
41%
277,875
LCS
8191 Park Irrigation Updates
5,000,000
(4,000,000)
1,000,000
213,429
242,744
543,827
46%
(220,812)
LCS
9165 Hebbron Family Center Impr
1,500,000
2,000,000
3,500,000
349,005
3,150,995
-
100%
LCS
9311 Firehouse Rec Center
100,000
-
100,000
34,867
8,071
57,063
43%
(57,063)
TOTAL
51,567,313
-
51,567,313
24,104,123
12,865,816
14,597,374
72%
-
Community Development
Housing Production funds have been used to acquire El Rey Motel (443 W. Market), 34 and 37 Soledad Street, and 403 E. Romie Lane, and to provide funding for pre-development costs ($500,000) for Eden Housing’s 855 E. Laurel affordable housing project. Other proposed housing projects, including pre-development assistance for Division Street properties and 467 E. Market, will not be ready to encumber funds by the November deadline. The three shelters include contracts for operations, security, and maintenance/facility expenses. Encampment Resolution Fund grants awarded to the City have been used to cover operational costs for the EMP resulting in an unencumbered balance of $993,275.44.
To meet the internal encumbrance deadline, staff recommends reallocating all unencumbered balances totaling $1,938,260.63 to SHARE Center Operations because it is not anticipated that these funds will be spent and/or encumbered by the deadline. The City entered a Memorandum of Understanding with the County to establish equal (50/50) financial support of SHARE operations and maintenance. County staff recently brought forward that the City has not paid its full 50% share over the past three years. City and County staff are working together to document the exact amount the City is in arrears. It is anticipated that the City will need to pay more than 50% of SHARE Center costs in FY 24-25, which is more than the $1.125 million that was approved in the FY 24-25 budget. The $1.9 million dollars will be encumbered to cover the total amount of the SHARE Center operation agreement for professional services with Community Human Services. If this reallocation of ARPA funding is approved by City Council, a contract amendment would be brought to City Council for consideration. Below is the proposed reallocation.
Project
Original Budget
Approved Amendments
Amended Budget
Proposed Reallocation
Proposed Amended
3220 SHARE
Center
1,000,000
-
1,000,000
1,938,260
2,938,260
8161 Chinatown Navigation Center
1,000,000
-
1,000,000
(12,414)
987,586
8162 Homeless Motel Program
3,000,000
-
3,000,000
(993,275)
2,006,725
9021 Housing Production Fund
7,000,000
-
7,000,000
(932,571)
6,067,429
Public Works
The Lake Street Pump Station is the City's largest pump station collecting sewer from over 4,100 acres of residential, commercial, industrial, and school facilities. The pump station was constructed in 1967 and has 3 - 2,800 gpm pumps. After almost 60 years, the controller was replaced in March 2024 following a spill in the spring of 2022, which resulted a discharge into the Natividad Creek and a compliance order served from the Regional Board (R3-2023-0041). This aging facility requires extensive service and currently requires 24-7 attention from maintenance staff to keep it operational.
The Santa Rita Pump Station is the second largest pump station collecting sewer from approximately 348 acres of residential, commercial and school facilities, including a portion of Bolsa Knolls. The facility also dates back approximately 60 years and needs repair.
Staff received a proposal for the most urgent repairs at the pump stations including new pumps, pipe supports and a monitoring system at Lake Street pump station and a new bypass at Santa Rita pump station, totaling $835,125 and $234,652, respectively. Repair of these pump stations is crucial to allow the Future Growth Area to move forward successfully as additional sewer flows would be served by these facilities. Below is the proposed reallocation.
Project
Original Budget
Approved Amendments
Amended Budget
Proposed Reallocation
Proposed Amended
8190 Sewer System Work
4,620,000
-
4,620,000
354,539
4,974,539
8192 Stormwater Green Infra
3,000,000
-
3,000,000
(230,678)
2,769,322
9086 Natividad Creek Silt
1,545,000
(1,000,000)
545,000
(62,000)
483,000
9727 Gabilan Creek Silt
500,000
-
500,000
(61,861)
438,139
Library and Community Services
As of June 2024, the Closter Park Renovation Project had an anticipated construction gap of just under $1.7 million. On June 18, 2024, the City Council authorized the transfer of $1 million from Park Irrigation Upgrades to Playground & Closter Park Improvements, which reduced the gap to approximately $700,000. In order the reduce that gap even further, staff is recommending transferring additional funding from Park Irrigation Upgrades and Firehouse Recreation Center to Playground & Closter Park Improvements. Given staff’s increased capacity and working knowledge of irrigation systems, no additional funding is needed in the Park Irrigation Updates project. The design phase of the Firehouse Recreation Center ADA Restroom project is complete, and we have sufficient funding for construction therefore no additional funding is needed. Below is the proposed reallocation.
Project
Original Budget
Approved Amendments
Amended Budget
Proposed Reallocation
Proposed Amended
8171 Playground & Closter Park Impr
2,000,000
1,000,000
3,000,000
277,875
3,277,875
8191 Park Irrigation Updates
5,000,000
(4,000,000)
1,000,000
(220,812)
779,188
9311 Firehouse Rec Center
100,000
-
100,000
(57,063)
42,937
CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
STRATEGIC PLAN INITIATIVE:
The projects and programs funded by the Salinas Recovery Plan under the American Rescue Plan Act (ARPA) of 2021 achieves the Council 2022-2025 Strategic Goals of Housing/Affordable Housing, Infrastructure and Environmental Sustainability, Public Safety, Youth and Seniors, and Effective and Culturally Responsive Government.
DEPARTMENTAL COORDINATION:
This staff report has been coordinated with the City Manager’s Office, Finance Department, Community Development, Fire, Public Works, and Library & Community Services.
FISCAL AND SUSTAINABILITY IMPACT:
American Rescue Plan Act (ARPA) funding allows the City to move forward with several important projects and programs with no impact on the City’s General Funds.
ATTACHMENTS:
Resolution
Page | 4
Page | 1
Proposed Reallocation column reflects “Up to” amount of transfer, meaning the amount could be a lower due to ongoing transactions.
Pending expense transfer will increase remaining amount to $1.1M.
Staff is working with the County on this and expects to have more information at the meeting.
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