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HomeMy WebLinkAboutLake Elsinore ARPA Plan - SR CITY OF i�� L A DE LSII'iO E L � DREAM EXTREME REPORT TO CITY COUNCIL To: Honorable Mayor and Members of the City Council From: Jason Simpson, City Manager Prepared by Shannon Buckley, Director of Administrative Services Date: December 14, 2021 Subject: City of Lake Elsinore ARPA Recovery Plan Recovery Plan Recommendation 1. Accept and file a status Performance Report on the City of Lake Elsinore ARPA Recovery Plan; 2. Approve the City's ARPA Recovery Plan as outlined in Exhibits A and B; and 3. Authorize the Director of Administrative Services to submit related documents on the City of Lake Elsinore ARPA Plan to the U.S. Treasury. Executive Summary This item is a status report on the City of Lake Elsinore ARPA Recovery Plan allocations and expenditure plan. The ARPA provides that CLFR funds can be used for COVID-19 related expenses incurred through December 31, 2024, as well as to recover prior revenue losses. Accordingly, the City of Lake Elsinore ARPA Recovery plan includes $14.97 million in recommended COVID-19 related expenditures across City departments and in support of our community should the Treasury question the recovery of prior revenue losses. The City of Lake Elsinore ARPA Recovery plan is summarized in Attachment B. Summary Conclusions and Recommendations With the City Council's approval of the City of Lake Elsinore ARPA Recovery plan, the City will be positioned to help the community recovery and sustain essential City programs and operations. Following are highlights of programs that will allow the City to continue to support our community through COVID-19 response and mitigation: • Provide for crisis intervention and homelessness issues • Support compliance with California's SB95 and Families First Coronavirus Response Act for expanded emergency paid sick leave ARPA Recovery Plan December 14, 2021 Page 2 • Maintain programs intended to be covered by FEMA but that FEMA may determine are not eligible for cost recovery • Investment in public infrastructures, such as water, sewer, and broadband • Investment in public infrastructures, such as storm drainage (comply with Clean Water Act) • Provide for City Council directed COVID response • Provide for Community partners outreach efforts • Support continued Parks programs and operations • Support public safety costs such as homeless outreach Staff will closely evaluate the ARPA and CLFR guidance ultimately issued by the US Treasury and provide recommended modifications during the monthly updates to the City Council. Background As the COVID-19 public health and economic crisis continue throughout the nation, the federal government enacted the American Rescue Plan Act of 2021 on March 11, 2021. This plan is intended to combat the COVID-19 pandemic, including the public health and economic impacts. Included in the $1.9 trillion economic relief package, was $130.2 billion for CLFR funding split equally between counties and cities, with $65.1 billion allocated directly to cities. The ARPA also allocates hundreds of billions of dollars for public health and vaccines, assistance for vulnerable populations, education and housing stabilization, transit and transportation funding, economic recovery assistance, and direct assistance for families and individuals. On May 10, 2021, the U.S. Treasury Department released final allocation amounts and interim guidance on the use of ARPA funding. The final allocated amount to the City of Lake Elsinore, California is $14,967,198. The first allocation of$7,483,599 was received on July 15, 2021, with the final allocation expected on July 15, 2022. The ARPA stipulates that CLFR funds must be obligated/spent by December 31, 2024. Additionally, the ARPA requires the City to provide `periodic reports on the use of the funding, though the City is currently awaiting guidance from the US Treasury as to the specific duration and required information needed for the compliance and reporting requirements. Use of Funds The Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal governments with a substantial infusion of resources to meet pandemic response needs and rebuild a stronger, and more equitable economy as the country recovers. Recipients may use these funds to: • Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic ARPA Recovery Plan December 14, 2021 Page 3 • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband internet Within these overall categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities. Analysis Unlike the 2020 Coronavirus Relief Funds the County received through the State of California as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020, the City will receive CLFR funds directly from the federal government, and they are more flexible in both uses and duration. This welcome news allows the City to address multiple fiscal strains brought on by the COVID-19 pandemic. However, as will be noted in more detail below, the allocation of ARPA funds is one cornerstone of a larger budgetary strategy to maximize community benefits while minimizing budgetary risks. Update on Revenue Loss Recovery Final U.S. Treasury Rules The interim final rules, particularly on the calculation of City revenue losses and uses of revenue loss recovery, are a significant departure from the anticipated calculations and uses of revenue loss recovery in the City's ARPA Recovery Plan. The replenishments of reserves and fund balances will need to be revised since the U.S. Treasury interim final rules now forbid the use of ARPA funds to be directly used to replenish reserves or recover specific revenue sources. The U.S. Treasury interim final rules also outline a set of robust reporting requirements on the use of ARPA funds.To simplify the reporting requirements, staff has proposed an ARPA Recovery Plan to maximize the allowed level of revenue losses (which do not require related performance measures reporting to the U.S. Treasury) calculated to be at over $19.99 million in FY 2019-20, the first year of eligibility, and projected to be over$22.2 million in FY 2020-21. Combined revenue losses in these two fiscal years exceed the City's ARPA allocation, therefore staff intends, with the Council's approval, to claim the entire ARPA allotment under revenue loss recovery. This means that costs related to the Covid19 pandemic will now be considered `uses of recovered funds' to be consistent with U.S. Treasury guidance. By simplifying the reporting and reducing the bureaucratic federal government requirements, staff can focus on executing the adopted recovery plan in accordance with the City's priorities and continued emergency response. More detailed information on the reorganization of the City's ARPA Recovery Plan can be reviewed in Attachment A. Staff in coordination with professional associations, fellow cities, and consultant groups submitted detailed comments on the U.S. Treasury rules on July 16, 2021. It is unclear when the final rules will be released following the public comment period, and it is a real possibility that the rules may further deviate from the City's understanding and require additional adjustments to the City's ARPA Recovery Plan. Additional Guidance and reporting requirements were released the first week of August, and staff is preparing for the first interim report. That first interim ARPA report from the City to the U.S. Treasury is due on August 31, 2021, with the first actual report due ARPA Recovery Plan December 14, 2021 Page 4 October 31, 2021, then additional quarterly reports due after that. Staff is recommending that the City Council authorize the City staff to file the necessary documents to comply with these reporting requirements. Delta Variant and Omicron Concerns With the recent surge in local COVID-19 cases primarily driven by the Delta Variant and the emergence of a variant Omicron, the City staff now anticipates that the local health emergency to last at least through March 2022. Over the next several weeks, staff will be evaluating the financial needs of these programs and assess the potential to use the Other Unanticipated COVID Costs program category to fund any shortfalls that could occur should there be a needs to extend certain programs into late fall or early winter. Fiscal Impact The final allocated amount to the City of Lake Elsinore, California is $14,967,198. The first allocation of$7,483,599 was received on July 15, 2021, with the final allocation expected on July 15, 2022. The ARPA stipulates that CLFR funds must be obligated/spent by December 31, 2024. Category Amount Description Community Support $ 1,239,481 Homelessness and COVID19 Response -.......--.......--........................----------------------...................... -- -..._ ....................................................................... Infrastructure Camino Del Norte-Water/Sewer/Storm Drain 4,305,000 Unlock development of 140 acres-put in Clean Water Act improvements .--. .-..------ Road ........................458,364 Emergency repairs ........................................................ Downtown 1,000,000 Business Support coming out of Pandemic .... .... ... . ....................................................................... .......................................................................................................................................... Storm Drainage Projects-Clean Water Act 1,750,000 Clean Water Act Improvements ......... - -------- -------- -------- -------------------.......................................................--------- ---------.- - -------- -------- ----------- Broadband 750,000 Deploy broadband to support residential and commercial ............................................................................................................................................................................... -------- -----.......-.............-........................----..----------------------- Tourism Impacts 2,500,000 Artificial Turf at Diamond Stadium-opens facility up to year-round events for tourism Park improvements 500,000 Promote Tourism Subtotal-Infrastructure 11,263,364 Human Resources&Risk Management 184,353 COVID19 Employment related Parks 615,000 COVID19 Safety Measures Public Works 165,000 COVID19 Safety Measures Affordable Housing 1,500,000 Affordable Housing Project-ARPA Total $ 14,967,198 Exhibits A - City of Lake Elsinore ARPA Recovery Plan Recovery Plan Performance Report B - City of Lake Elsinore ARPA Recovery Plan (Tabular Table)