FROM:
Finance
SUBJECT:
Title
American Rescue Plan Act Update
End
RECOMMENDATION:
Recommendation
Receive update and approve revisions to the American Rescue Plan Act (ARPA) Expenditure Plan, including the leveraged projects.
End
COUNCIL GOALS:
• Operate in a businesslike manner by improving services through the effective use of technology.
• Practice sound fiscal management by producing timely and accurate financial information.
• Practice sound fiscal management by living within our means while investing in the future.
• Practice sound fiscal management by emphasizing capital formation.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by maintaining and improving the city's existing infrastructure.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by providing for the development of new infrastructure.
• Invest in the City’s infrastructure (streets, sewers, parks, etc.) by creating and promoting community through people, parks, and programs.
DISCUSSION:
Background
The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021, providing additional relief to address the continued impact of COVID-19 on the economy, public health, state and local governments, individuals, and businesses. ARPA funding of $1.9 trillion provided for $362 billion in flexible fiscal aid to state and local governments in America under the State & Local Fiscal Recovery Funds (SLFRF). The City of Fontana was allocated $50.3 million in ARPA SLFRF funds. The U.S. Department of the Treasury issued an Interim Final Rule in May 2021, and the Final Rule in January 2022, to implement the Coronavirus State and Local Fiscal Recovery Funds established under ARPA.
On March 8, 2022, the City Council approved the original ARPA Expenditure Plan (Plan). On September 13, 2022, the City Council subsequently approved a revised Plan which properly categorized existing projects per the Final Rule and eliminated projects that were determined to be ineligible. As all projects were determined eligible in concept for ARPA funding, staff has worked diligently with the City Attorney’s office and HdL ECONSolutions ensuring that all project details met ARPA Final Rule requirements. All projects have received a final legal determination as to their eligibility. An Updated ARPA plan is presented to Council as needed to ensure proper allocation of funds.
Current Plan
The current Plan reflects expenditures in four primary Federal Eligible Use Categories. As the U.S. Department of Treasury (Treasury) continues to refine reporting requirements, the table below reflects the current budget in the updated categories per the Treasury reporting requirements.
Recommended Plan - Revisions
The revisions proposed for the current Plan budget reflect no change in total appropriation.
Plan revisions being proposed with this item include adjustments to the following projects:
• Leveraged Project: Support Government Employment (hiring above the pre-pandemic baseline): Current allocation is $9.1 million and an increase of $735,325 million is recommended as a result of leveraging projects.
• Leveraged Project: Fontana 311: Project has been reevaluated and determined to use $54,090 less than anticipated. The project is recommended to be reduced by this amount.
• Leveraged: The Homelessness Prevention Resources and Care Center is recommended to be increased by $581,430 due to additional expenditures being identified.
• Leveraged: The Park Improvements project is being recommended to be reduced by $1,064,007 and will be leveraged by the General Fund. Required adjustments were included in the Mid-Year Budget Report
• Leveraged: The Administration budget is recommended to be reduced by $198,568 and will be leveraged by the General Fund. Required adjustments were included in the Mid-Year Budget Report.
• The Fiber to City Facilities had a correction of a $90 decrease in the budget.
Recommended Plan - Leveraged Projects
The original Plan as recommended by Council included $18.0 million of projects in the Revenue Loss category of which only had $10.0 million of available funding per the standard allowance in the Final Rule. As a result, the Revenue Loss category was over appropriated by $8.0 million and the projects in this category were not eligible under any other category. As such, $8.0 million of ARPA eligible projects needed to be identified in the General Fund and the funding for these projects switched to ARPA thus making available General Fund for the projects. These projects included the Police Department helicopter ($3.0 million) and various pavement rehabilitation projects ($5.0 million) which will be funded through the General Fund as a result of the leveraged projects below which were previously funded by the General Fund and will now be funded through ARPA.
Additionally, two projects have been reduced in ARPA and will be funded by General Fund or a different source. As a result, there was an increase in the budget for the Support Government Employment project.
Leveraged Projects below:
• Support Government Employment - Hiring Above the Pre-Pandemic Baseline ($9,107,438): Per the Treasury Final Rule, the City may hire above the pre-pandemic baseline and use SLFRF funds to pay for payroll and covered benefits associated with the recipient increasing its number of budgeted FTEs up to 7.5 percent above its pre-pandemic baseline. All costs associated with new positions approved by Council can be considered for this leveraged project, including by not limited to the new Police Department positions added in 2021-22 and 2022-23. This amount is being increased by $735,325 million to accommodate additional leveraged projects.
• Accela and Fontana 311 projects have been identified as eligible projects. These two projects have been reduced and have been reallocated to the Support Government Employment - Hiring Above the Pre-Pandemic Baseline leveraged project.
• Homelessness Prevention Center and Park Improvements are recommenced to be reduced and leveraged for the amounts of $1.5 million, and $1.06 million respectively. Any required expenditures will be funded from a different source.
Recommended Plan Summary
The recommended Plan below reflects all changes discussed above:
Plan Update
As of the last report, all Plan projects had been reviewed and based upon the scope of each project, deemed eligible by HdL and the City Attorney. Since the last report, all projects have been reviewed by City Attorney’s office in detail with the projects having been fully approved. As of December 31, 2024, $39.4 million has been expended. Staff is recommending the reallocation of any unused project balances to other approved projects in the interim reporting period. Attachment B provides a brief update on each project.
FISCAL IMPACT:
There is no net fiscal impact associated with the approval of this item. Approval of this item reallocates ARPA funding within the expenditure plan as detailed in Attachment A.
MOTION:
Adopt staff recommendation.