HomeMy WebLinkAbout7.1 Adoption of Revised American Rescue Plan Act Budget for Fiscal Year 2021-22 (2)STAFF REPORT
CITY COUNCIL
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Agenda Item 7.1
DATE:September 7, 2021
TO:Honorable Mayor and City Councilmembers
FROM:Linda Smith, City Manager
SUBJECT:Adoption of Revised American Rescue Plan Act Budget for Fiscal Year 2021-22Prepared by:John Stefanski, Assistant to the City Manager
EXECUTIVE SUMMARY:The City Council will consider adopting a Resolution Approving the Revised American Rescue Plan Act (ARPA) Budget for Fiscal Year 2021-22. The City Council previously adopted an ARPA budget on April 20, 2021, however due to a significant change in the overall amount of funding the City will receive and changes in program guidance from the U.S. Department of the Treasury, a revised budget is needed to ensure compliance with the program’s requirements.
STAFF RECOMMENDATION:Deliberate, make a determination on the optional budget item, and adopt the ResolutionApproving the Revised American Rescue Plan Act Budget for Fiscal Year 2021-22.
FINANCIAL IMPACT:ARPA will provide the City with $7,088,512, which will be distributed in two equal tranches. This figure represents the final funding amount as determined by the U.S. Department of the Treasury. The City received the first tranche of $3,544,256 on June 14, 2021 and will receive the second tranche in June 2022. This allocation is significantly less than the $12,202,075 estimate provided by the House Oversight and Government Committee on March 8, 2021. This change in allocation is due to the City being reclassified as a “Metropolitan City” rather than a “non-entitlement unit.” This change in classification has implications on the formula by which the City’s ARPA allocation is determined. Whereas allocations to Metropolitan Cities are determined by a “modified CDBG formula,” non-entitlement units are allocated funds on a per capita basis from a set amount of funds. This change also means that the distribution of funds directly come from the Treasury Department, not from the State who has responsibility for distributing funds to non-entitlement units.
DESCRIPTION:
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Review of ARPA Eligible ExpensesAs stipulated in the law, the City shall only use the funds to cover costs incurred by the City by December 31, 2024. Eligible uses of funds include:1)COVID-19 Response:Responding to the public health emergency with respect to COVID-19 or its negative economic impacts, which include assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.2)PremiumPay for Essential Workers: Responding to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the city or by providing grants to eligible employers that have eligible workers who perform essential work.3)Local Government Revenue Replacement: Providing 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 of the City prior to the emergency (FY 2018-19).4)Infrastructure Investments: Making necessary investments in water, sewer, or broadband infrastructure.The City can elect to transfer funds to private nonprofit groups, public benefit corporations or multistate entities involved in passenger or cargo transportation, and special-purpose units of state or local government. Funds cannot be deposited into a pension fund.Further regulations on eligible uses are included in an Interim Final Rule (Rule), issued on May 10, 2021, as well as through rolling Treasury Department guidance, the most recent version of which was issued on July 19, 2021. The public comment period on the Rule ended on July 16, 2021. Following this period, the Treasury Department may make modifications to the Rule. The timing of the issuance of the “Final Rule” is unknown currently, nor is the extent of any further changes in the guidance.Updated Guidance ImplicationsAt the April 20, 2021 City Council meeting, the City Council adopted the Fiscal Year 2021-22 budget for the initial tranche of ARPA funding. This budget utilized expenditure assumptions based off the text of the ARPA legislation and analyses by the National League of Cities & California League of Cities. However, the Rule has since placed restrictions on the use of the ARPA fundsbeyond what was initially presented and assumed.The Rule explicitly states funds may only be used to cover costs incurred beginning on March 3, 2021. Any expense incurred prior to that date is ineligible to be funded by the Fiscal Recovery Funds. Furthermore, the Rule states that contributions to financial reserves or similar funds is notan eligible use of the Fiscal Recovery Funds. The original ARPA budget planned for $1,955,093 in identified reimbursements back to the City for COVID-19-related expenses, which are now ineligible. Given this and the reduction in the overall amount of ARPA funds the City will receive, Staff has prepared a Revised ARPA budget to account for these changes. Adjusted ARPA Budget
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In developing the Adjusted ARPA Budget and in recognition of the constraints put in place by the Rule, Staff assumed that the planned programs or services funded by ARPA would fall within the first category of eligible expenses:COVID-19 Response: Responding to the public health emergency with respect to COVID-19 or itsnegative economic impacts, which include assistance to households, small businesses, andnonprofits, or aid to impacted industries such as tourism, travel, and hospitality.The Rule provides a framework for determining whether a program or service is an eligible use. Generally, there must be an identified need or negative impact from the COVID-19 public health emergency for which the proposed expenditure directly addresses. Expenses must be in “response to” the disease itself or the consequences of the economic disruptions resulting from or exacerbated by the pandemic. Furthermore, the Rule also includes a non-exhaustive list of eligible expenditures, which is further supplemented by the rolling guidance issued by the Treasury Department. The Adjusted ARPA Budget plans for the use of the first tranche of funding and presents expenditures within the programmatic areas discussed below. Community Recovery & Support Services—$403,251
$163,251 for supplemental funding for Human Services Grants Program, which was included in the initial ARPA budget. This amount was allocated by the City Council on June 15, 2021 (Resolution 86-21).
$240,000 for Rental Assistance. These funds could be used to either restart the Dublin COVID-19 Rent Assistance Program or provided to a community-based organization to administer rent assistance to Dublin residents. Staff estimates that this funding could serve 33 households with an average award of $6,000. This amount also includes funding for staff time processing complete applications. Small Business Support and Regulatory Alignment—$1,332,340
$1,000,000 for a new Commercial Rent Relief Program. Funding for this program was included in the initial ARPA budget and was allocated by the City Council on July 20, 2021 (Resolution 97-21)
$235,340 for a new Outdoor Operations Grant Program. Funding for this program was included in the initial ARPA budget and was allocated by the City Council on July 20, 2021 (Resolution 97-21).
$97,000 for Regulation Realignment under the Downtown Dublin Specific Plan. This funding would cover the cost of Staff time to update the Downtown Dublin Specific Plan to address changed market conditions related to a post-COVID-19 world, and changes in the retail environment as more and more transactions move online with customer pick-up or quick delivery options.
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City Capacity and Performance—$475,000
$425,000 for limited-term staffing increases. This funding would provide a Management Analyst II and a Special Project Manager position to assist in the implementation of the various ARPA-funded programs as well as be responsible for the quarterly reporting requirements. The limited term positions would expire on December 31, 2024, concurrently with the ARPA period of performance. These positions would be located within the City Manager’s Office in a newly created COVID-19 Response and Recovery Unit. Additional out-year funding will be included in the budget for the second tranche of funding.
$50,000 for Technology Upgrades for the Parks and Community Services Department and City Information Technology. This will fund the purchase of system to manage contactless check-ins, pick-ups, and attendance for pre-school, after school, and camp programs. This also includes the purchase of laptops for City Staff to improve remote work capabilities.Revenue Replacement—$1,333,665
The Rule provides a specific formula that the City must use to claim ARPA funds for Revenue Replacement. Under this formula, the City can claim revenue replacement up to approximately $21 million. However, the use of such funds must go towards current City expenditures and may not be deposited into a reserve fund. As such, these funds must be used to offset current General Fund expenses. The City could then shift the General Fund savings into an Assigned Reserve for future unexpected pandemic expenditures.Optional Budget Item—$667,787
The Treasury Department recognizes that the pandemic exacerbated mental health and substance abuse issues and therefor considers mental health and other behavioral health services to be eligible public health expenditures under ARPA. At this meeting, the City Council will receive a presentation from the Alameda County Sheriff’s Office Youth and Family Services Bureau on establishing a Dublin Police Services Behavioral Health Unit. This newly created unit would be staffed by licensed therapists dedicated to working with youth, children, adults, couples, and families on immediate mental health related issues.The first-year costs of this new unit are estimated at $667,787 which could be funded through the City’s ARPA allocation or potentially through other funding available through Alameda County. Staff is requesting direction from the City Council on whether to include this optional item in the City’s ARPA budget. If the City Council elects to fund this item, such funding would be deducted from the Revenue Replacement line item.Other ConsiderationsExpenditures funded by ARPA must be obligated (i.e., encumbered) by December 31, 2024, and expended by December 31, 2026.The City was required to submit an Interim Report on August 31, 2021 for the period beginning June 14, 2021, through July 31, 2021. The City is then required to submit Quarterly Project and
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Expenditure Reports, with the final report due on March 31, 2027.Next StepsFollowing City Council direction on the options presented in this Staff Report and approval of the proposed adjusted budget, Staff will execute this budget to ensure all funds are spent in accordance with the various ARPA regulations. Programming of the second tranche of funds will take place as a part of the Fiscal Years 2022-23 and 2023-24 budget process.
STRATEGIC PLAN INITIATIVE:Strategy 2: Explore New City Revenue Streams for Long Term Financial StabilityObjective D: Continue to maintain strong fiscal policies.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:The City Council Agenda was posted.
ATTACHMENTS:1) Resolution Approving the Revised American Rescue Plan Act (ARPA) Budget for Fiscal Year 2021-22
2)Exhibit A to the Resolution – American Rescue Plan Act Revised FY 2021-22 Budget
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Attachment 1
Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 2
RESOLUTION NO. XX – 21
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING THE REVISED AMERICAN RESCUE PLAN ACT BUDGET
FOR FISCAL YEAR 2021-22
WHEREAS,in March 2021, President Biden signed into law the American Rescue Plan
Act, a $1.9 trillion COVID-19 aid package; and
WHEREAS,on April 20, 2021, the City Council approved Resolution 37-21 Approving the
American Rescue Plan Act Budget for Fiscal Year 2021-22 and Establishing a Fund to Track
Related Expenses; and
WHEREAS,due to a significant change in the overall amount of funding the City will
receive and changes in program guidance from the U.S. Department of the Treasury, an
Revised Budget is needed to ensure compliance with the program’s requirements; and
WHEREAS,the American Rescue Plan Act included the Coronavirus State and Local
Fiscal Recovery Funds, which will provide the City approximately $7,088,512 in funding,
distributed in two equal tranches; and
WHEREAS,the City received its first tranche of $3,544,256 on June 14, 2021; and
WHEREAS,all funds shall be expended by December 31, 2024 in accordance with the
American Rescue Plan Act, guidance developed by the U.S. Department of the Treasury, and
information included in the accompanying Staff Report.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin hereby
approves the Revised American Rescue Plan Act Budget for Fiscal Year 2021-22, attached
hereto as Exhibit A.
BE IT FURTHER RESOLVED that the City Council establishes a new Assigned Reserve
Fund for unexpected future pandemic expenditures and allocates the $665,878 in General Fund
savings created by the revenue replacement funding included in the Revised American Rescue
Plan Act Budget.
BE IT FURTHER RESOLVED that the City Manager is authorized to make any
necessary, non-substantive changes to carry out the intent of this Resolution, including making
nominal adjustments to the budgeted amounts, based on the total final funding amount.
PASSED, APPROVED AND ADOPTED this 7th day of September 2021, by the following
vote:
AYES:
NOES:
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Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 2 of 2
ABSENT:
ABSTAIN:
______________________________
Mayor
ATTEST:
_________________________________
City Clerk
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Attachment 2
EXHIBIT A TO THE RESOLUTION
American Rescue Plan Act
Coronavirus Local Fiscal Recovery Funds
Revised FY 2021‐22 Budget
FY 2021‐22
1 Revenue Revised Budget
2 ARPA Allocation 3,544,256$
3
4 Expenditures
5 Community Recovery and Support Services
6 HSG Supplemental Funding 163,251$
7 Rental Assistance Program 240,000$
8 Subtotal 403,251$
9 Small Business Support and Regulatory Alignment
10 Commercial Rent Relief Program 1,000,000$
11 Outdoor Operations Grant Program 235,340$
12 Land Use Regulation Realignment 97,000$
13 Subtotal 1,332,340$
14 City Capacity and Performance
15 Salaries and Benefits 425,000$
16 Technology Upgrades 50,000$
17 Subtotal 475,000$
18 Revenue Replacement
19 Revenue Replacement 1,333,665$
20 Subtotal 1,333,665$
21
22 Total Expenses 3,544,256$
23 Surplus (Deficit)‐$
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Item 7.1
Adoption of Revised American
Rescue Plan Act Budget for FY
2021-22
September 7, 2021
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ARPA Background
Eligible Use of Funds
1.COVID -19 Response
2.Premium Pay for Essential
Workers
3.Local Government Revenue
Replacement
4.Infrastructure investments
in water,sewer,and
broadband
Ineligible Use of Funds
•Deposits to Pension Funds
•Reimbursements for
expenses incurred prior to
March 3, 2021.
•Contributions to financial
reserves/ “rainy day funds”
Costs must be incurred by the City by December 31, 2024
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Why a Revised Budget?
•Initial ARPA Budget adopted on April 20, 2021
•Since that time,new information/circumstances
necessitate the need for a revised budget
–Allocation decrease from $12.2M to $7M
–Certain expenditures have been deemed ineligible
•$1.9M in reimbursements back to City for COVID-19
expenses incurred prior to March 3, 2021.
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Revised ARPA Budget
Community Recovery and Support Services
•$163,251—Human Services Grants
Supplemental Funding (previously approved
program)
•$240,000—Rental Assistance Program
–Could serve 33 households with an average award of
$6,000.
–Includes administrative costs.
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Revised ARPA Budget
Small Business Support and Regulatory Alignment
•$1,000,000—Commercial Rent Relief Program
(previously approved program)
•$235,340—Outdoor Operations Grant Program
(previously approved program)
•$97,000—Land Use Regulation Realignment
–Staff time to update DDSP to address changed
market conditions anticipated in a post COVID
world.
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Revised ARPA Budget
City Capacity and Performance
•$425,000—Salaries and Benefits
–Limited Term staffing increases including a
Management Analyst II and Special Project Manager
for ARPA Programs Management.
•$50,000—Technology Upgrades
–Contactless check-in, pick-up, attendance system for
various Parks programs.
–Remote work capability improvements
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Revised ARPA Budget
Revenue Replacement
•$1,333,665—Revenue Replacement
–Funds must go towards current City expenses and
not into reserve funds.
–Offset current General Fund expenses, then shift the
General Fund savings into an assigned reserve for
future unexpected pandemic expenses.
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Budget Comparison Original Budget Revised Budget
Revenue
ARPA Allocation $ 6,101,038 $ 3,544,256
Expenditures
COVID Related Expenses $ 533,632 $ -
Small Business Microloan Fund Reimbursement $ 519,461 $ -
ED GF Subsidy Reimbursement $ 902,000 $ -
Ongoing City COVID Expenses $ 300,000 $ -
HSG Supplemental Funding (Reso. 86-21)$ 163,251 $ 163,251
Rental Assistance Program $ -$ 240,000
Assistance to Small Businesses $ 1,213,947 $ -
Commercial Rent Relief Program (Reso. 97-21)$ -$ 1,000,000
Outdoor Operations Grant Program (Reso. 97-21)$ -$ 235,340
Land Use Regulation Realignment $ -$ 97,000
Salaries and Benefits $ -$ 425,000
Technology Upgrades $ -$ 50,000
Revenue Replacement $ 2,468,746 $ 1,333,665
Total Expenses $ 6,101,038 $ 3,544,256
Budget Comparison
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Optional Budget Item
•$667,787—DPS Behavioral Health Unit
–Mental Health and other behavioral health services
are eligible expenditures under ARPA.
–Funding would be deducted from the Revenue
Replacement Line Item.
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Staff Recommendation
1.Deliberate.
2.Make a determination on the Optional Budget
Item (DPS Behavioral Health Unit).
3.Adopt the Resolution Approving the Revised
American Rescue Plan Act Budget for Fiscal
Year 2021-22.
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