HomeMy WebLinkAboutAgenda Report - October 20, 2021 C-03AGENDA ITEM CI -3
CITY OF LODI
COUNCIL COMMUNICATION
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AGENDA TITLE: Receive Quarterly Report on the Use of Federal American Rescue Plan Act of
2021 Block Grant Funding
MEETING DATE: October 20, 2021
PREPARED BY: Deputy City Manager
RECOMMENDED ACTION: Receive quarterly report on the use of federal American Rescue
Plan Act of 2021 block grant funding
BACKGROUND INFORMATION: The American Rescue Plan Act of 2021 (ARPA) was signed into law
on March 11, 2021. ARPA provides $65.1 billion to the
approximately 19,000 units of state, local and tribal governments
nationwide using a block grant formula. Initial estimates indicated
the City of Lodi would be receiving $16,135,210 and initial recommendations and program allocations
approved by Council were based on this amount. Final allocation for the City is $15,764,793 which is
$370,417 less than the estimated allocation.
Per the legislation, the City may use the funds from this Act toy
• Respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-
19 or its negative economic impacts, including assistance to households, small businesses, and
nonprofits, or aid impacted industries such as tourism, travel, and hospitality;
• Respond to workers performing essential work during the COVID-19 public health emergency by
providing premium pay to eligible workers of the City that are performing such essential work, or
by providing grants to eligible employers that have eligible workers who perform essential work;
• For the provision of government services to the extent of the reduction in revenue of the City due
to the COVID-19 public health emergency relative to revenues collected in the most recent full
fiscal year for the City prior to the emergency;
• To make necessary investment in water, sewer, or broadband infrastructure.
To date, the federal Treasury Department has yet to issue its Final Rule guidance on full program
eligibility, however Interim Final Rules have been issued subsequent to the adoption of local ARPA
funding programs. City staff has reviewed the Interim Final Rules and frequently asked questions
produced by the Treasury and determined that some adjustments to City allocations will be necessary
once the Final Rule is issued. Staff is confident the City can still accomplish the same goals and program
objectives outlined but will need to do so under different provisions of the Act than initially planned. The
City has until December 31, 2024 to spend funds. In addition to permissible activities, funding of
unfunded pension liabilities and funding of rainy day reserve funds is expressly prohibited.
The following table summarizes ARPA program spending to date based on Resolution 2021-129 adopted
on May 5, 2021. No funding has been spent on any project staff now deems ineligible under the Interim
APPROVED: 51 (.111,1021 H35 PDT)
Stephen Schwabauer, City Manager
Final Rules subsequently issued. To date the City has received half of its expected allocation, or
$7,882,396.50. The remaining half is expected next July.
ARPA Program per Resolution
2021-139
COVID-19 Leave for Employees
Total Amount Allocated
$1,365,000
Spending to Date (March 9,
2021 through September 30,
2021)
$429,415
Chamber of Commerce Grant
$60,000
$60,000
Small Business Grants
$440,000
$132,481
Utility Debt Relief Program *
$1,500,000
$93,972
Vaccine Incentive Program
$230,000
$9,450
TOTAL
725,318
*The Utility Debt Relief Program was suspended by the City Manager due to low participation and its
overlap with the subsequently adopted California Arrearage Payment Program (for electric utilities) and
the California Water and Wastewater Arrearage Payment Program. City Council ratified this decision on
September 15, 2021, when it adopted Resolution 2021-263.
Four uses of ARPA funds staff is now aware will be ineligible. First is revenue loss. Based on the
guidelines released by Treasury, the City will not be able to claim a revenue loss under ARPA. The
pandemic did not negatively impact the City's total overall revenues. In addition, the base year used to
determine revenue loss is prior to Measure L's effective date. The City actually shows revenue gain as
an organization when including all categories required under the now published revenue loss
calculations.
Second, funds cannot be directly used to fund reserve accounts. In the initial recommendation by staff,
various reserve accounts were funded by a general fund transfer of assumed revenue loss dollars into
the various reserve accounts. Staff is now recommending the City accomplish the same goals by
claiming the staff time our police and fire (General Fund departments) spend on COVID-19 related
activities. The full list of these activities is not yet published and we anticipate further clarity with the
issuance of the Final Rule by Treasury. Based on current estimates, the City will be able to fully recover
dollars for its general fund equal to the assumed revenue loss amounts previously approved by City
Council. Additionally, funding of our reserve accounts will not violate ARPA as all the reserve accounts
funded through Resolution 2021-129 are programmed to spend more than the amount replenished by
ARPA through 2024, so ARPA dollars ultimately get spent on current resources.
The third ineligible program is the refunding to the electric utility for pandemic related bill credits issued in
July of 2020. Based on the Interim Final Rule, the City will not be able to reimburse for bill credits
granted prior to the adoption of ARPA so this use is expressly ineligible.
The fourth ineligible program is reimbursement to the City for COVID-19 related expenditures that were
deemed ineligible by FEMA. Most of these cost will not be eligible under ARPA because the costs were
incurred prior to ARPA's adoption on March 9, 2021. The Interim Final Rule clarified that expenses prior
to this date are ineligible for reimbursement. Due to revenues greater and expenses less than
anticipated for Fiscal Year 2020-21, the City has been able to fund these costs from the General Fund
without an impact to any other program, reserve balance or operating budget.
In addition to the four ineligible programs, the transfer to Parks Capital must be modified based on the
Interim Final Rule. The City will need to wait for reimbursements for police and fire time spent on COVID
activities to accrue to the General Fund prior to executing the full transfer to Parks Capital. Because the
ultimately funded projects are longer term, this should not impact ultimate delivery of the projects.
One program approved by Council has since been made obsolete. The City adopted a Utility Debt Relief
program as part of its ARPA allocations. The City's program would provide debt relief for accountholders
who could show a reduction in income from 2019 to 2020 by paying up to 75% of the delinquent account
balance accrued during the pandemic through program adoption. Subsequent to program launch, the
State of California has approved use of its ARPA dollars for two programs that will provide relief for
electric, water and wastewater bills accrued during the pandemic with no application, income or income
loss requirements. The money in those programs is transferred directly to the City and the City applies
the money directly to accounts on the accountholders behalf. The final details of the State program are
being finalized, but in the interim Council has approved the suspension of the City's Utility Debt Relief
program as it is redundant and it is likely residents who would otherwise be eligible for this program will
receive an even greater benefit without an application through the state program.
The update provided in this report is information only. Staff will bring an action item to Council as soon
as possible after issuance by the Treasury of a Final Rule on ARPA program eligibility. Should there be
remaining funding to allocate after the Final Rule is issued, staff will use the priorities in Resolution 2021-
129 to make recommendations to Council for approval.
FISCAL IMPACT: There is no negative fiscal impact from this presentation
FUNDING AVAILABLE: N/A
Andrew Keys (Oct 4, 202116:12 PDT)
Andrew Keys, Deputy City Manager