CITY OF SIMI VALLEY
MEMORANDUM
February 13, 2023
TO: City Council
FROM: Office of the City Manager
SUBJECT: CONSIDERATION OF CLAIMING $ 1,576,318 OF AMERICAN RESCUE
PLAN ACT FUNDS AS REVENUE LOSS
STAFF RECOMMENDATION
It is recommended the City Council approve the City claiming an additional $1,576,318 in American Rescue Plan Act funds as revenue loss and transfer these funds to the General Fund for distribution through the COVID Community Recovery Grant Program.
BACKGROUND AND OVERVIEW
The American Rescue Plan Act (ARPA) allocated $15,325,2 94 to the City of Simi Valley. The ARPA has specific categories and uses for utilization of the funds, i n addition to offsetting revenue losses that may have been encountered by the City as a result of the COVID-19 pandemic. On May 9, 2022, the City Council approved the distribution of the ARPA funds to various projects in compliance with the ARPA Final Rule.
The ARPA Final Rule allows cities to claim ARPA funds to offset revenue losses; which funds are then transferred to the C ity’s General Fund and used for various purposes. As allowed through the Final Rule for the ARPA funds, the City claimed $10 million as a standard deduction. Based on revenue loss calculations for calendar year 2021 , the City claim ed an addition al $3.7 million in August 2022 .
Recent calculations for the calendar year 2022 determined that the City can claim the remaining $1.5 million in ARPA funds as revenue loss. Staff recommends the City Council approve claiming $1.5 million in ARPA funds for distribution through the COVID Community Recovery Grant Program to previously identified projects.
FINDINGS AND ALTERNATIVES
The Final Rule for use of ARPA funds established by the T reasury Department provides for cities to claim $10 million as a “standard deduction” of revenue loss due to the COVID- 19 pandemic. In claiming the $10 million, the City Council allocated these funds to the City’s General Fund for use on Streets and Roads projects. ARPA funds claimed for AGENDA ITEM NO.
Consent (3)
2 revenue loss, and subsequently transferred to the General Fund, are not required to follow the extensive reporting requirements similar to those mandated by the use of Federal Funds. This allows non-profits receiving revenue loss ARPA funds from the City to be relieved of burdensome and extensive Federal audit and reporting requirements.
As noted above, the City received $15,325,294 in ARPA funding. Revenue losses related to the pandemic, as calculated by the Treasury guidance for calendar years ended 2020 through 2023, can be claimed as such and transferred to the General Fund for further distribution per City Council direction. City auditors provided approval of staff’s revenue loss calculation for calendar year 2020 and 2021, and determined that the City could claim $13,748,976 in ARPA funds . Based on calculations for the 2022 calendar year, the remaining $1,576,318 of ARPA funds can now be claimed as revenue loss and transferred to the General Fund for distribution through the City’s COVID Community Recovery Grant program.
Staff is not recommending any changes to the City Council approved May 9, 2022 distribution of ARPA funds. By previously claiming the $3 .7 million, together with the $1.5 million addressed in this report, staff will continue to distribute these revenue loss funds to the non-profits identified to receive ARPA funds (i.e. Samaritan Center, Free Clinic, Interface, etc.), relieving the recipients of the burdensome Federal reporting requirements.
The following alternatives are available to the City Council:
1. Approve the City claiming $ 1.5 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic.
2. Not approve the City clai ming $1.5 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic
3. Provide staff with further direction.
Staff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to approve the City claiming an additional $ 1,576,318 in American Rescue Plan Act funds as revenue loss and transfer these funds to the General Fund.
SUMMARY
The City received $15,325,294 in ARPA funding. The Final Rule for use of ARPA funds established by the Treasury Department provides for cit ies to claim $10 million as a “standard deduction” of revenue loss due to the COVID -19 pandemic. Staff has previously provided calculations for calendar year 2020 and 2021 and the City’s auditors 3 approved the City’s total revenue loss due to the COVID -19 pandemic and determined that the City could claim $13,748,976 in ARPA funds. Based on calculations for the 2022 calendar year, the remaining $1,576,318 in ARPA funds can now be claimed and transferred to the General Fund for distribution through the City’ s COVID Community Recovery Grant program. Staff recommends the City Council a pprove the City claiming $1.5 million in ARPA funds as additional revenue loss due to the COVID-19 pandemic.
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Brian P. Gabler
City Manager