Report Prepared by: Scott McBride, City Manager
Title
SUBJECT: Seeking Direction on Other Reinvestment Options on the City Council Adopted American Rescue Plan Act (ARPA) Strategic Investment Plan
REPORT IN BRIEF
Seeking direction on other reinvestment options on the City Council adopted American Rescue Plan Act (ARPA) Strategic Investment Plan.
RECOMMENDATION
Provide staff direction on reinvestment options related to the ARPA Strategic Investment Plan.
Body
AUTHORITY
Charter of the City of Merced, Section 200.
BACKGROUND
In 2021, the City of Merced was allocated $27,427,882 in ARPA funding from the Federal Government. The funds were intended to provide support to State, local, and Tribal governments in responding to the impact of COVID-19 and their efforts to contain COVID-19 on their communities, residents, and businesses. Eligible uses are public health and economic impacts, premium pay, reduction in revenue, and investments in infrastructure. The Final Rule, which is a guiding document issued by the Federal Government requires the City obligate the funding by December 2024 and expend all funds by December 2026.
During the October 18, 2021, Study Session, Staff and Council reviewed the survey results and public input regarding the ARPA funding allocation. During the Study Session Council received input from the public and provided staff areas of interest for ARPA funding allocation.
During the November 1, 2021, Public Hearing, the Council received input from the community and provided a refined list of projects for staff to evaluate. Those projects included: Affordable Housing, Water - conservation & SB 244, Broadband, Applegate Zoo, Downtown - Public Spaces & Street Scape, CP-42/Sports Fields, Utility Bill Relief, Job Training, Tourism, Stimulus Payments, Expanded Youth Services, On-going Operational Needs, Kiddie Land/Non-Profit Support, and City Beautification.
In addition to the areas above, the City Council also considered a program for Universal Basic Income (UBI). After discussion, the Council voted 4-3 to not move forward with the program. For this reason, UBI was not evaluated for future direction.
During December 6, 2021, Public Hearing, the City Council adopted the ARPA Strategic Investment Plan.
As part of the Mid-Year Budget update in February of 2023, the City Council directed staff to evaluate potential options for re-investment and to return prior to the presentation of FY 2023-24 Budget to receive additional direction.
On May 1, 2023, Staff brought the ARPA Strategic Investment Plan to the City Council for evaluation of potential options for re-investments. The Council adopted changes to the plan that were incorporated in the FY 23-24 budget.
On November 6, 2023, per City Council request, staff provided a Utility Bill Relief Program update. The City Council chose to continue the program until March 31, 2024. At that time any funding left from this program would automatically be re-invested in the construction of Community Park #42. On March 31, 2024, $557,948 was remaining in the program and was re-invested per Council Direction.
On May 6, 2024, Staff brought the ARPA Strategic Investment Plan to the City Council for re-evaluation of potential options for re-investments. Street Parklet ($200,000) and Broadband ($1,051,020) projects were determined to not be able to meet ARPA’s timeline for obligation and Stimulus Program had a balance of $9.500. Therefore, funding was reallocated to Applegate Zoo renovation, Community Park 42, and Stephen Leonard Park.
DISCUSSION
Staff is requesting direction on updates and reallocations of remaining ARPA funds. The City Council has previously provided direction to commit funds and then encumber funds when necessary for the following projects and activities.
Current ARPA Funding Allocation
|
Category |
Amount |
|
Affordable Housing |
$7,500,000 |
|
Water |
$0 |
|
Broadband |
$98,980 |
|
Applegate Zoo Renovation/Expansion |
$2,050,000 |
|
Applegate Restroom |
$425,000 |
|
Bob Hart Square Expansion |
$800,000 |
|
Mainstreet Directional Enhancements |
$750,000 |
|
Parklets/Beautification |
$0 |
|
Community Park #42 |
$9,976,304 |
|
Stephen Leonard Rehabilitation |
$150,000 |
|
Utility Bill Relief |
$442,052 |
|
Job Training Program |
$2,200,000 |
|
Stimulus Payments |
$762,500 |
|
Expanded Youth Programs |
$250,000 |
|
Non-Profit Support |
$1,500,000 |
|
COVID-19 City Expense |
$523,046 |
|
Est. Total |
$27,427,882 |
|
ARPA Allocation |
$27,427,882 |
|
Remaining Funds |
$0 |
Remaining Projects - Commitments
Broadband - There is $10,000 under this activity that can be reprogrammed to another project.
Affordable Housing - the city has committed all funds pledged towards affordable housing except for $1,000,000. This is the amount that was pledged for the Gateway Terrace II project. The property transfer from the Merced County Housing Authority to the Central Valley Coalition for Affordable Housing (CVCAH) has been delayed by HUD. Because of these delays the city cannot process the agreements in time to meet the ARPA obligation schedule. The project is still viable and city staff will continue to work with the developer on other funding options.
Bob Hart Square Expansion - Bids were opened on October 22nd. The lowest responsive bidder had a total project cost of $3,098,041 - does not include contingency or inspection costs. In the original budget there were two separate funding sources, water funds which are necessary to replace an aging line and the project remainder to be funded using ARPA funds.
Of the $800,000 in ARPA committed to the project approximately $120,000 was used for design and engineering. The available amount of ARPA Funds to this project are approximately $680,000. Based on the bid the water enterprise funds to be committed are approximately $1,200,000. Therefore, there is a funding shortage of approximately $1,218,041. If the $10,000 from the Broadband Project is committed this would reduce the shortage to $1,208,041.
Downtown One-Way Project - this project was bid at the same time as the Bob Hart Square Project but received no bids. Staff has contacted contractors that have done similar work in the city and received some feedback. Edits are being made in the specifications and bid package to extend the construction working days, lower liquidated damages, and expand the prime contractor license type. The project will be rebid and should be on a schedule for consideration and award by council on December 2, 2024. If necessary, a special meeting may also be considered.
Of the $750,000 in ARPA committed to the project approximately $80,000 was used for design and engineering. The available amount of ARPA Funds to this project are approximately $670,000.
It should be noted that the Downtown One-Way project is a mitigation measure for the environmental document for the Hwy 59 safety improvement project. In the event the costs for the project will exceed the ARPA allocation the council may need to consider adding funding to the project from other capital improvement projects to ensure this required mitigation measure is completed.
Options for Consideration
1. Reallocate the $10,000 remainder from the Broadband Activity to the Bob Hart Square Expansion.
2. Reallocate the $1,000,000 ARPA commitment for affordable housing - Gateway Terrace II, to the Bob Hart Square Project. This would reduce the funding shortfall from $1,218,041 to $218,041, the Broadband funds would reduce it to $208,041 - does not include contingency or inspections - testing.
3. Reduce the remaining ARPA commitment to the Downtown One Way to address the remaining shortfall for Bob Hart Square, approximately $208,041. This would provide the remainder of $461,959 in ARPA funds towards the project. Based on bids, staff may need to identify additional funding options or provide potential modifications to reduce the overall project budget. For example, eliminating a block until funding is available at a later time.
4. Direct Staff to identify other project modifications or consider other programs or activities to redirect funds.
Future adjustments
Since the Downtown One-Way project is on schedule to be rebid new project costs will be known at the end of November. Staff will provide an ARPA update with any final recommendations to the council on December 2nd.
IMPACT ON CITY RESOURCES
No impact on City resources at this time.
ATTACHMENTS
1. Presentation