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Home My WebLink AboutD-3 Staff Report - FY 2021-22 Excess FundsSCHEDULED ITEM D-3 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER DATE: FEBRUARY 22, 2022 SUBJECT: DISCUSS AND APPROVE ALLOCATION OF AMERICAN RESCUE PLAN ACT FUNDS AND PROJECTED EXCESS RESERVES BACKGROUND: In recent months, City Council had two discussions on how to allocate the City’s projected General Fund Excess Reserves. As part of those discussions, staff also updated Council on developments of the American Rescue Plan Act (ARPA). With the recent issuance of the Final Rules for ARPA staff is seeking authorization from Council on how to allocate and best utilize both categories of available funds. RECOMMENDATIONS: Staff recommends that the City Council take the following actions: 1)Adopt the attached Resolution No. 2022-C16 approving the use of $10 million of the estimated $12 million from the American Rescue Plan Act to cover costs related to Government Services; and 2) Approve using $1,954,843 of the remaining American Rescue Plan Act funds to address impacts related to local unsheltered individuals. ANALYSIS: On March 11, 2021, the United States Congress passed the American Rescue Plan Act of 2021 (APRA), which provides fiscal relief funds to State and Local Governments, and other program areas aimed at mitigating the continuing effects of the COVID-19 Pandemic. The City of Azusa is slated to receive $11,954,843 in two disbursements. The first disbursement, $5,977,422 was received July 2021. The monies must be obligated for use by December 31, 2024, and fully expended by December 31, 2026. APPROVED CITY COUNCIL 2/22/2022 American Rescue Plan Act and Excess Reserves Allocation February 22, 2022 Page 2 After a thorough review of the Final Rules issued by the U.S. Department of the Treasury in January 2022, and in an effort to allow for maximum flexibility of use and streamlined audit and reporting requirements, staff is recommending to accept the $10 million standard allowance from the revenue loss provision and utilize this amount for Government Services related to general administration, police, fire and other public safety services. The standard allowance of $10 million can be used for anything other than to offset a reduction in net tax revenues, pensions, debt service and reserves. Using the revenue loss provision gives the City the maximum flexibility in utilizing the funds, allowing the City to prioritize and address a variety of projects and objectives citywide without being subject to the more restrictive requirements of categorical spending, and consequently results in a further increase to the General Fund Excess Reserves Funds, which will now grow to approximately $17 million. Funds may then be made available for approved projects established and tracked through our 5-Year Capital Improvement Program. City facilities identified in need will be assessed, a scope of work will be developed, and projects will be brought forward individually to City Council for budget approval and appropriation. Areas of Focus: Investing in Current Facilities/Infrastructure and Adding New Amenities: • Senior Center • Memorial Park • Library • Dog Park • Azusa Woman’s Club • Scout House • Sidewalks/Parkways • Downtown Streetscape • City Hall Parking Lot Addressing Pandemic Impacts: • Impacts Related to Unsheltered Individuals • Business and resident support measures with the aim of mitigating Covid-19 impacts The balance of ARPA funds, approximately $2 million, can be earmarked to address the impacts and needs of the local unsheltered community. Attached is a resolution authorizing staff to accept $11,954,843 in ARPA funds; to grant staff authority to amend the City budget to increase revenues in the Local Fiscal Recovery Fund account by $5,977,422 to accept the first tranche of the City’s allocation; to approve the use of the standard allowance in the revenue loss category of the Final Rule for the provision of Government Services; to approve the use of the remainder of state and local fiscal recovery funds for matters related to addressing impacts experienced by the local unsheltered community; and authorize staff to prepare, submit, and publish the required reports regarding the use of the funds and other documents in connection with acceptance of these funds and to take any other actions required by the Department of the Treasury. American Rescue Plan Act and Excess Reserves Allocation February 22, 2022 Page 3 FISCAL IMPACT: Allocating $10 million of the $11,954,843 ARPA funds for critical costs associated with Government Services/Public Safety is fiscally prudent. This would result in and free existing general funds for other urgent priorities as previously established by the City Council. Prepared by: Sergio Gonzalez City Manager Attachments: 1) Resolution No. 2022-C16 Attachment 1 RESOLUTION NO. 2022-C16 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, TO: 1. ACCEPT $11,954,843 FOR THE AMERICAN RESCUE PLAN ACT (ARPA) CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS; 2. GRANT STAFF AUTHORITY TO MODIFY THE BUDGET(S) AS NECESSARY WHEN THE CITY RECEIVES STATE AND LOCAL FISCAL RECOVERY FUNDS; 3. TO APPROVE THE USE OF THE STANDARD ALLOWANCE IN THE REVENUE LOSS CATEGORY IN THE DEPARTMENT OF TREASURY’S FINAL RULE ($10,000,000) FOR THE PROVISION OF GOVERNMENT SERVICES; AND, 4. TO APPROVE THE USE OF THE REMAINDER OF STATE AND LOCAL FISCAL RECOVERY FUNDS ($1,954,843) FOR MATTERS RELATED TO ADDRESSING IMPACTS EXPERIENCED BY THE LOCAL UNSHELTERED COMMUNITY WHEREAS, on March 11, 2021, the United States Congress passed the American Rescue Plan Act of 2021 (ARPA), which provides fiscal relief funds to State and Local Governments, and other program areas aimed at mitigating the continuing effects of the COVID-19 Pandemic; and, WHEREAS, ARPA is intended to provide support to local governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 in their communities; and, WHEREAS, on January 6, 2022, the United States Treasury announced the adoption of the Final Rule as guidance regarding the use of ARPA funds; and, WHEREAS, in July 2021, the United States Treasury disbursed the City of Azusa’s first tranche of funds, totaling $5,977,422, and is scheduled to disburse the second tranche, totaling $5,977,421 in or after July 2022; and, WHEREAS, that as recipient, the City of Azusa accepts the award of Coronavirus Local Fiscal Recovery Fund allocations up to the maximum allocation pursuant to the terms and conditions of ARPA; and, WHEREAS, it is in the best interest of the City to accept such funding and authorize the use of the standard allowance of $10,000,000 for the eligible use category of providing government services (Revenue Loss category), and the use of the remaining $1,954,843 of State and Local Fiscal Recovery funds for matters related to addressing impacts experienced by the local unsheltered community, which the City will prioritize and allocate through the city budget process, as set forth in the Final Rule issued by the Department of the Treasury; NOW THEREFORE BE IT RESOLVED that the City Council of the City of Azusa does hereby find, determine and declare as follows: SECTION 1. It is necessary to make amendments to the FY2021-22 Budget to increase revenues to accept the City’s allocations of ARPA State and Local Fiscal Recovery Funds. Attachment 1 SECTION 2. The City Council hereby authorizes the use of the standard allowance in the revenue loss category in the Department of the Treasury’s Final Rule for the provision of government services, and to authorize the use of the remainder of state and local fiscal recovery funds for matters related to addressing impacts experienced by the local unsheltered community, which the City will prioritize and allocate through the city budget process. SECTION 3. The City Council hereby (i) authorizes the City Manager or his designee to prepare, submit, and publish the required reports regarding the use of the funds and other documents in connection with acceptance of these funds and to take such other actions as may be necessary to carry out the intent of this resolution and for the acceptance and administration of the funds, and (ii) ratifies the submittal of any reports previously submitted to the Department of the Treasury. PASSED, APPROVED and ADOPTED this 22nd day of February, 2022. Robert Gonzales Mayor ATTEST: Jeffrey Lawrence Cornejo, Jr. City Clerk Attachment 1 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2022-C16 was duly adopted by the City Council of the City of Azusa, at a meeting thereof held on the 22nd day of February 2022, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: Marco Martinez City Attorney Best Best & Krieger LLP