FROM:
Finance
SUBJECT:
Title
American Rescue Plan Update
End
RECOMMENDATION:
Recommendation
1. Receive update and approve revisions to the American Rescue Plan Act (ARPA) Expenditure Plan, including the leveraged projects.
2. Authorize the reallocation of any future unused project balances to other approved projects within the 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. Currently, all projects have received a final legal determination as to their eligibility. An Updated ARPA plan is presented to Council a few times each Fiscal Year 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 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) - increase of $3.03 million is recommended as a result of eligible expenses being fully expensed and completion of projects.
• Leveraged Project: Accela - decrease of $193,364 as a result of project completed
• Leveraged Project: Fontana 311 - decrease of $697,555 due to project costs being lower than anticipated
• Septic to Sewer - decrease of $1.5 million due to Council action, Item 21-3005 (5/28/2024)
• Cypress Storm Drain - increase of $1.5 million due to Council action, Item 21-3005 (5/28/2024)
• Fiber to City Facilities - decrease of $225,942 due to Council action Item 21-3144 (7/23/2024)
• Park Improvements - increase of $225,942 due to Council action Item 21-3144 (7/23/2024) for Veterans Park and Jack Bulik Park.
• Homelessness Prevention Resources and Care Center - decrease of $2.1 million. Project will be funded by General Fund savings as a result of leveraging funds through the Support Government Employment (hiring above the pre-pandemic baseline) project.
Recommended Plan - Leveraged Projects
Leveraged projects include ARPA eligible projects that were programmed in the General Fund and the funding for these projects was revised to use ARPA funds thus making available General Fund for the projects. Additional revisions are requested for Leveraged Projects and are detailed 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 $3.03 million to accommodate defunded and completed projects.
• Accela and Fontana 311 projects were also 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.
Recommended Plan Summary
The 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. Staff will continue to work with the City Attorney to ensure all projects meet all eligibility requirements. To date, $32.37 million have been expended. Staff is recommending the reallocation of any unused project balances to other approved projects in the interim reporting period. Any changes will be reported to City Council at the end of the next quarter. 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.