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HomeMy WebLinkAbout100521-07.1 7.1 ADMINISTRATIVE STAFF REPORT TO:Mayor and Town CouncilOctober 5, 2021 SUBJECT:Resolution No. 64-2021, reserving and appropriating Coronavirus Local Fiscal Recovery Funds awarded to the Town of Danville under the American Rescue Plan Act of 2021 BACKGROUND On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (ARPA). The ARPA provides $1.9 trillion in relief funding intended to speed up the United States' recovery from the economic and health effects of the Coronavirus pandemic. Section 9901 of the ARPA amended Title VI of the Social Security Act to add Section 602, which establishes the Coronavirus State Fiscal Recovery Fund, and Section 603, which establishes the Coronavirus Local Fiscal Recovery Fund. The Fiscal Recovery Funds are intended to provide support to state local and tribal governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 on their communities, residents and businesses. The ARPA includes $360 billion in relief for state and local governments. This includes $219.8 billion to states, Washington, D.C., tribes, and territories; $10 billion for capital projects to support work, education, and health monitoring; with the remaining $130.2 billion to be evenly divided between counties based on population ($65.1 billion) and cities using a modified Community Development Block Grant formula ($65.1 billion). Danville has been awarded $10,647,738. Fiscal Recovery Funds provided by the ARPA are intended to assist cities in mitigating fiscal impacts resulting from the pandemic. Town use of funds will be focused on offsetting revenue reductions and costs and supporting programs, partnerships and projects that will promote economic recovery while providing the greatest possible community benefit. DISCUSSION The Town has reviewed information distributed by the United States Department of the Treasury (USDOT) and other sources that describe how ARPA funding may be utilized in order to ensure full compliance. Under the ARPA, Danville is classified as a non- entitlement city/town and is eligible to receive Coronavirus Local Fiscal Recovery Funds (Recovery Funds) under Section 603. Use of Recovery Funds is guided by the Interim Final Rule (IFR) issued by the USDOT. As a non-entitlement agency, DanvilleÔs Recovery Funds are disbursed by the USDOT to the State of California. On July 19, 2021, Danville received the first payment of $5,323,869, amounting to 50% of the total award. A second payment of $5,323,869 (the remaining 50%) is expected to be received in July 2022. The Town will obligate (reserve or appropriate) Recovery Funds once they have been received from the state. The deadline to obligate Recovery Funds is December 31, 2024 and the deadline to expend all funds is December 31, 2026. The Town has retained a consultant to assist with ARPA compliance and setting up all of the tracking and reporting that will be required by the USDOT. Permitted uses of ARPA funds Use of Recovery Funds is guided by Section 603(c)(1) of the ARPA. Funds may be used for the following purposes: a)To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality. Eligible uses in this category include assistance to households; small businesses and non-profits; and aid to impacted industries. The IFR goes into considerable detail describing the various forms of assistance that can be offered. Additional uses for Town government purposes include: public communication efforts; enforcement of public health orders; purchases of PPE; ventilation improvements in congregate settings, health care settings, or other key locations; capital investments in public facilities to meet pandemic operational needs; and payroll expenses for public safety employeeÔs time dedicated to responding to the COVID-19 public health emergency. b)To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers. c)For the provision of government services to the extent of the reduction in revenue due to the COVIDÏ19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency. The IFR establishes a methodology that allows recipients to compute the extent of their reduction in revenue by comparing their actual revenue to an alternative, representing what could have been expected to occur in the absence of the pandemic. While use of ARPA funds is Ñgenerally forward lookingÒ to cover costs incurred beginning on March 3, 2021, this section provides that reduction in revenue can be covered from the onset of the pandemic. Reserving and Appropriating Recovery Funds under the ARPA of 2021 2 October 5, 2021 d)To make necessary investments in water, sewer, or broadband infrastructure. Categories of eligible projects include: construction of publicly-owned treatment works; nonpoint source pollution management; national estuary projects; wastewater treatment systems; stormwater systems; water conservation; efficiency and reuse measures; watershed pilot projects; energy efficiency measures for publicly-owned treatment works; water reuse projects; security measures at publicly-owned treatment works; and, technical assistance to ensure compliance with the Clean Water Act. In order to be eligible, broadband projects must reliably deliver at least 100 Mbps download speed, at least 20 Mbps upload speed, and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed. Projects must be designed to serve unserved or underserved households and businesses, defined as those that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed. The IFR also provides flexibility for recipients to use CLFR Funds for programs or services that are not specifically identified but which meet the objectives described under Section 603(c)(1)(a) Ï (d). Determination of Revenue Loss Section 603(c)(1)(c) permits recipients to use Recovery Funds to replace lost revenue. Revenues are required to be calculated on an entity-wide basis, excluding only intergovernmental transfers from the federal government. Determination of revenue loss begins by comparing future calendar years against 2018/19, which is the last full fiscal year prior to the COVID-19 public health emergency. The USDOT requires that all agencies present financial data on a January Ï December calendar year basis. Because Danville operates on a July 1 Ï June 30 fiscal year, this necessitates re-organizing all revenue and expense data to present the information in the required format. Revenue loss is arrived at by comparing actual revenues received with an alternative revenue scenario (i.e., the ÑARPA alterativeÒ) which illustrates what could have been expected to occur in the absence of the pandemic. The ARPA alternative scenario allows for revenues to be adjusted by an annual growth factor which is the greater of either: the actual average annual revenue growth for the three fiscal years prior to the pandemic; or 4.1% per year. In DanvilleÔs case, the actual average of 4.98% was used to determine the ARPA alternative scenarios. The actual revenue and ARPA alternative scenarios are then compared for years 2020 - 2023 and any diminution in revenue is presumed to have been due to the COVID-19 public health emergency. Table 1 presents the ARPA revenue loss analysis for the Town of Danville. Reserving and Appropriating Recovery Funds under the ARPA of 2021 3 October 5, 2021 Table 1 Actual & Estimated Revenue Loss: 2020-2023 General SpecialOther Revenue Fund Recreation RevenueFunds Total Loss 2018/19 Actual $25,555,749 $2,531,713 $11,000,540 $2,760,935 $41,848,937 2020 ARPA $26,828,425 $2,657,792 $11,548,367 $2,898,430 $43,933,014 2020 (Actual) $26,987,484 $742,658 $9,944,879 $1,476,078 $39,151,099 ($4,781,915) 2021 ARPA $28,164,481 $2,790,150 $12,123,476 $3,042,771 $46,120,878 2021 (est./actual) $28,252,641 $1,800,000 $10,490,513 $1,549,881 $42,093,035 ($4,027,843) 2022 ARPA $29,567,072$2,929,100$12,727,225$3,194,301$48,417,698 2022 (estimated) $29,947,799 $2,531,713 $11,119,944 $1,642,874 $45,242,330 ($3,175,368) 2023 ARPA $31,039,512 $3,074,969 $13,361,040 $3,353,378 $50,828,899 2023 (estimated $31,744,667 $2,683,616 $11,787,140 $1,741,447 $47,956,870 ($2,872,029) ($14,857,156) Based upon Table 1, there is a high likelihood that the total Town revenue loss will equal or exceed the full amount awarded under the ARPA. This determination is important because recipients have broader latitude to use funds that are received to offset lost revenue. An additional $675,153 in Coronavirus related expenses were made between March 3 Ï June 30, 2021, and may be recovered by the Town under the ARPA. Eligible Use of Funds to Replace Lost Revenue The ÑCoronavirus State and Local Fiscal Recovery Funds Frequently Asked QuestionsÒ issued by the USDOT provides the following guidance on how recipients may use funds that are recovered to offset revenue lost due to the pandemic: ÑOnce a recipient has identified a reduction in revenue, are there any restrictions on how recipients use funds up to the amount of the reduction?Ò The IFR gives recipients broad latitude to use funds for the provision of government services to the extent of reduction in revenue. Government services can include, but are not limited to, maintenance of infrastructure or pay-go spending for building new infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services. However, paying interest or principal on outstanding debt, replenishing rainy day or other reserve funds, or paying settlements or judgments would not be considered provision of a government service, since these uses of funds do not entail direct provision of services to citizens. Reserving and Appropriating Recovery Funds under the ARPA of 2021 4 October 5, 2021 The range of governmental uses for which these funds may be used is broader than those described in Section 603(c)(1). Funds received to offset reduction in revenues are to be used for direct provision of services to citizens Potential uses for Danville could include: . maintenance of infrastructure or pay-go spending for building new infrastructure (public works), including roads; modernizing/upgrading cybersecurity systems; and, provision of police, public safety, health or educational services. These potential uses would be combined with the other uses described in Section 603(c)(1) of the ARPA. Timing and Financial Reporting Requirements All Recovery Funds must be obligated by December 31, 2024, and expended by December 31, 2026. Financial records and supporting documentation must be retained for a period of five years after all funds have been expended or returned to Treasury, whichever is later. This includes those which demonstrate the award funds were used for eligible purposes in accordance with the ARPA, TreasuryÔs regulations implementing those sections, and TreasuryÔs guidance on eligible uses of funds. The Town will be required to submit project and expenditure reports annually by October 31 of each year. Recommendations for use of Coronavirus Local Fiscal Recovery Funds It is recommended that the Town utilize Recovery Funds to support programs, partnerships and projects that will address high priority needs and help spur economic recovery. This includes support for business and non-profit organizations that serve the community; support for mental health, seniors and homeless services that serve the community; fiber-optic and cybersecurity upgrades; and, infrastructure improvements that support economic recovery and revitalization, and benefit the broader community. Adoption of Resolution No. 64-2021 will ÑreserveÒ or ÑappropriateÒ Recovery Funds received with the first ARPA payment in July 2021. On September 21, 2021, the Town Council adopted Resolution No. 58-2021 which appropriated $599,726 in Recovery Funds to undertake cybersecurity measures related to CIP Project B-626 Town Office Relocation. This leaves $4,724,143 of the $5,323,869 received with the first payment available to be reserved or appropriated. Reserved funds will be designated for a specific purpose, with additional Town Council action required to appropriate these funds once the actual service providers and scope of services are finalized. Appropriated funds will be available for expenditure with no further Town Council action. Exhibit 1 to Resolution No. 64-2021 identifies all recommended uses of funds to be committed with the first tranche of funding received. Reserving and Appropriating Recovery Funds under the ARPA of 2021 5 October 5, 2021 Attachment B includes funding recommendations for the entire $10,647,738 awarded to the Town. PUBLIC CONTACT Posting of the meeting agenda serves as notice to the general public. FISCAL IMPACT The Town has been awarded $10,647,738 in Coronavirus Local Fiscal Recovery Funds. Recovery funds will allow the Town to partially offset actual and estimated revenue losses of $14,857,156 due to the economic impacts resulting from the Coronavirus pandemic and support programs, partnerships and projects that will address high priority needs and help spur economic recovery. Receipt of the funds will occur via two equal installments of $5,323,869. The Town received the initial payment in July 2021, with the second payment expected in July 2022. RECOMMENDATION Adopt Resolution No. 64-2021, reserving and appropriating Coronavirus Local Fiscal Recovery Funds awarded to the Town of Danville under the American Rescue Plan Act of 2021. Preparedby: Joseph A. Calabrigo Town Manager Lani Ha Finance Attachments: A - Resolution No. 64-2021 Exhibit 1 - Recommended Uses of Funds to be Committed with the First Tranche of Funding Received B Ï ARPA Recommended Use of Recovery Funds for Tranches 1 and 2 Reserving and Appropriating Recovery Funds under the ARPA of 2021 6 October 5, 2021 RESOLUTION NO. 64-2021 RESERVING AND APPROPRIATING CORONAVIRUS LOCAL FISCAL RECOVERY FUNDS AWARDED TO THE TOWN OF DANVILLE UNDER THE AMERICAN RESCUE PLAN ACT OF 2021 , on March 11, 2021, the President of the United States signed the American WHEREAS Rescue Plan Act of 2021 (ARPA); and , the ARPA provides $1.9 trillion in relief funding intended to speed up the WHEREAS United States' recovery from the economic and health effects of the Coronavirus pandemic; and , Section 9901 of the ARPA amended Title VI of the Social Security Act to WHEREAS add Section 603, which establishes the Coronavirus Local Fiscal Recovery Fund; and , Danville is classified as a non-entitlement city/town and is eligible to WHEREAS receive Coronavirus Local Fiscal Recovery (Recovery) Funds under Section 603; and , Recovery Funds are intended to provide support to state local and tribal WHEREAS governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 on their communities, residents and businesses; and , under the ARPA, Danville has been awarded $10,647,738 in Recovery WHEREAS Funds; and , Recovery Funds are being disbursed in two tranches, 12 months apart; and WHEREAS , funds for non-entitlement cities/towns are disbursed by the United States WHEREAS Department of the Treasury to each state, and states have 30 days to disburse the first tranche to each city/town, provided that the city/town has submitted the requisite paperwork to the state; and , the Town of Danville submitted the necessary paperwork to the State of WHEREAS California by the June 23, 2021, deadline; and , with state disbursement of the first tranche on July 19, 2021, Danville WHEREAS received its first payment of $5,323,869, amounting to 50% of the award that the Town will receive; and , state disbursement of the second tranche of funding amounting to the WHEREAS second payment of $5,323,869 is expected in July 2022; and , Section 603(c)(1) of the ARPA provides that Recovery Funds may be used: WHEREAS a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality. b) To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers. c) For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency. d) To make necessary investments in water, sewer, or broadband infrastructure; and , pursuant to Section 603(c)(1) c), recipients may use funds for the direct WHEREAS provision of government services to citizens, to the extent of reduction in revenue; including, but not limited to, maintenance of infrastructure or pay-go spending for building new infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services; and , the Danville Town Council has determined that Recovery Funds awarded WHEREAS to Danville should be expended to support programs, partnerships and projects that will speed up the Town’s recovery from the economic and health effects of the Coronavirus pandemic while providing the broadest possible community benefit, including: Support for business and non-profit organizations that serve the community Support for senior services, mental health and homeless services Fiber-optic and cybersecurity upgrades Infrastructure improvements that support economic recovery and revitalization Infrastructure improvements that benefit the broader community; and on September 21, 2021, the Town Council adopted Resolution No. 58-2021, WHEREAS, appropriating $599,726 to undertake cybersecurity measures related to CIP Project B- 626 Town Office Relocation; now, therefore, be it , that the Danville Town Council hereby reserves or appropriates RESOLVED $4,724,143in Coronavirus Local Fiscal Recovery Funds as shown in Exhibit 1 to this resolution; and, be it further , that the Danville Town Council finds that such use of Coronavirus Local RESOLVED Fiscal Recovery Funds is consistent with and meets all requirements described in Section 603(c)(1) of the American Rescue Plan Act of 2021. PAGE 2 OF RESOLUTION NO. 64-2021 by the Danville Town Council at a regular meeting held on October 5, APPROVED 2021, by the following vote: AYES: NOES: ABSTAINED: ABSENT: MAYOR APPROVED AS TO FORM:ATTEST: CITY ATTORNEY CITY CLERK PAGE 3 OF RESOLUTION NO. 64-2021 EXHIBIT 1 TO RESOLUTION NO. 64-2021 Reserving and appropriating Coronavirus Local Fiscal Recovery Funds received with Tranche #1 of the American Rescue Plan Act of 2021 PROGRAM FUNDING PurposeDescription Implement measures and recommendations identified to support Senior Services seniors through the “Age Friendly Roadmap” currently being developed by the Town Senior Advisory Commission. Action: Reserve $500,000 Identify and support local and/or regional service providers with Mental Health initiatives to address pandemic induced social isolation, provide mental health services/assistance or improve response to behavioral health crises. Action: Reserve $250,000 Identify and support local, regional and/or county programs and Homeless Services services that shelter, feed and care for our homeless population. Action: Reserve $100,000 FUNDING FOR PARTNERSHIPS PartnerPurpose Support Danville businesses to facilitate economic recovery Danville Area Chamber and growth, and broaden the local economic base. of Commerce Action: Appropriate $150,000 (forgive existing $80,000 loan plus $70,000) Support community mental health and wellness services. Discovery Counseling Center Action: Appropriate $100,000 Support services that promote independence and health for seniors. Meals on Wheels Diablo Region Action: Appropriate $100,000 Support broadened, and enhanced services offered through the Danville Library Danville Library Foundation Action: Appropriate $100,000 Provide materials, programs and services for the Danville Library Friends of the Danville Library Action: Appropriate $100,000 Support efforts to preserve the heritage and history of the San Museum of the Ramon Valley San Ramon Valley Action: Appropriate $100,000 Exhibit 1 Partner Purpose Support public education with programs that assist children San Ramon Valley Education Foundation Action: Appropriate $100,000 Provide resources and support for people with Down Syndrome Down Syndrome Connection Action: Appropriate $100,000 Support literature, theater and the arts Eugene O’Neill Foundation Action: Appropriate $50,000 PROJECT FUNDING Project Description Construct improvements identified in the Town-wide Storm Town-wide Storm Drain Drain Master Plan and/or watershed pilot projects Management (CIP A-330) Action: Appropriate $500,000 Install a fiber-optic interconnect network to connect Town Fiber-optic Cable facilities and upgrade traffic signal communications Interconnect (CIP A-620) Action: Appropriate $500,000 Install solar/photovoltaic system to improve energy Town Office efficiency and reduce GHG emissions Relocation (CIP B-626) Action: Appropriate $500,000 Replace HVAC units to improve particulate filtration and Town Office improve energy efficiency Relocation (CIP B-626) Action: Appropriate $500,000 Construct Front Street corridor improvements described in the Town Green and Arts Town Green Master Pan to support downtown revitalization District (CIP B-628) Action: Appropriate $1,059,143 Install measures to safeguard against security intrusions into Cybersecurity Upgrades Town government operations Action: $599,726 previously appropriated through Resolution No. 58-2021 P ROGRAM ADMINISTRATION Purpose Description Tanner LLC ARPA Consultant to assist with implementation and Compliance Action: Appropriate $40,000 Total Recovery Act Funding Commitment - Tranche #1: $5,323,869 Page 2 of Exhibit 1 07/202207/202212/202112/202112/202112/202112/202112/202112/202112/202112/202112/2021 Start StartStart 850,000900,000 TotalTotalTotal $$ * 500,000250,000100,000150,000100,000100,000100,000100,000100,000100,000100,000 50,000 AmountAmountAmount $$$$$$$$$$$$ CategoryCategoryCategory 2111 11111111 Sub-totalSub-total - Expenditures using funds received to replace: a) lost revenue, or b) funds expended after Support local, regional and/or county programs and services that Provide materials, services and programs for the Danville Library Provide resources and support for people with Down Syndrome Support local, regional and/or county-wide initiatives to improve Broaden and enhance services offered by the Danville Library Support Danville businesses to facilitate economic recovery recommended through the Age Friendly Roadmap processPreserve the history and heritage of the San Ramon ValleySupport public education with programs that assist children mental health or response to behavioral heath crises shelter, feed and care for our homeless population and growth, and broaden the local economic base Implement measures to support senior citizens as Support literature, theatre, education and the arts arch 3, 2021 for purposes described in Section 603(c)(1) of the ARPA Support independence and health for seniors Support mental health and wellness services Description PurposePurpose - Expenditures described in Section 603(c)(1) of the ARPA - second payment of $5,323,869 to be received July 2022 PROGRAMS, PARTNERSHIPS& PROJECTS for Danville Recommended Use of Coronavirus Local Fiscal Recovery Funds - first payment of $5,323,869 received July 2021 American Rescue Plan Act of 2021 - Funding Recommendations San Ramon Valley Education Foundation Senior Services - Age Friendly Roadmap Danville Area Chamber of Commerce Museum of the San Ramon Valley Meals on Wheels - Diablo Region PurposePartnerPartner Friends of the Danville Library Discovery Counseling Center Down Syndrome Connection Danville Library Foundation Eugene O'Neill Foundation by Category by Tranche Funding for Partnerships M Homeless Services Tranche #1Tranche #2 Category 1Category 2 Program Funding Use of Funds - Use of Funds - Mental Health TRANCHE #1 07/202307/202203/202201/202207/202301/202210/202107/202307/202207/202207/202307/202307/2023 StartStart 3,533,86940,0005,323,869 TotalTotal $$$ 500,000500,000500,000375,000599,726500,000350,000973,869 1,059,14340,0001,500,0001,000,0001,000,000 AmountAmount $$$$$$$$$$$$$ CategoryCategory 122122121222 1 Sub-totalSub-total Install a fiber optic interconnect network to connect Town facilities Expand the UGMO computerized irrigation management system Construct improvements identified by the new Downtown Master Install solar/photovoltaic sytem to improve energy efficiency and Construct improvements identified in the Townwide Storm DrainConstruct Front Street corridor improvements described in the Construct improvements identified in the Townwide Storm DrainConstruct Front Street corridor improvements described in the Fund infrastructure improvements to support youth, teens and Install measures to safeguard against security intrusions into Town Green Master Plan to support downtown revitalizationTown Green Master Plan to support downtown revitalization Fund public street improvements identified in the Townwide Replace HVAC units to improve particulate filtration andPlan to promote economic viability and business growth to reduce water usage in public parks and roadsides Bicycle Master Plan to improve residents mobility Master Plan and/or watershed pilot projectsMaster Plan and/or watershed pilot projects and upgrade traffic signal communications DescriptionDescription Town government operations adults at Diablo Vista Park improve energy efficiency reduce GHG emissions Tanner LLC TRANCHE #1 - Total Recommended Expenditures - Funding Recommendations Central Irrigation Capital Maintenance Townwide Storm Drain ManagementTownwide Storm Drain Management Downtown Improvement Project Townwide Bicycle Master Plan Fiberoptic Cable Interconnect Town Green and Arts DistrictTown Green and Arts District Cybersecurity Upgrades Town Office RelocationTown Office Relocation ProjectProject Multi-Sport Skate Park Program Administration ARPA Consultant Project FundingProject Funding TRANCHE #2 C-609 A-330A-620B-626B-626B-628A-330A-362A-492B-616B-628 CIPCIP 10,647,73810,647,738 5,323,869 $$$ 5,323,8695,323,8693,015,0007,632,738 $$$$ TRANCHE #2 - Total Recommended Expenditures Summary of Recommended Expenditures Tranche #1Tranche #2 Category 1Category 2 October 5, 2021 by Category by Tranche