TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Director of Finance
PREPARED BY: Tanner Benson, Accountant
SUBJECT:
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American Rescue Plan Act Project Update
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RECOMMENDATION
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Approve the reallocation of $2,000,000 in American Rescue Plan Act (ARPA) funding originally allocated to the California Oaks Sports Park Pool Project (CIP 22025) to the Amphitheater Parking Lot Project (CIP 10041);
Amend the Fiscal Year 2023/24 Capital Improvement Budget to remove ARPA funding from the California Oaks Sports Park Pool Project (22025) and reallocate it to the Town Square Park Amphitheater Parking Project (10041);
Approve the reallocation of the remaining ARPA funding of $134,932 budgeted for the COVID-19 PPE Expenses program (50115) and allocate this funding to the construction of several Pickleball courts in existing public parks; and
Approve the transfer of ARPA interest earnings to the City’s local funds.
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PRIOR ACTION/VOTE
On February 22, 2022, the City Council held a workshop to receive public input related to the use of ARPA funds. The City Council reaffirmed its direction, and staff provided preliminary recommendations for the use of ARPA funding (Non-Action Item).
On April 19, 2022, the City Council adopted Resolution No. 22-4543 accepting ARPA grant funding, approved a Spending Plan for the City’s allocation of the ARPA funds, and amended the City’s Operating Budget and Capital Improvement Plan in accordance with the Spending Plan (Vote: 5-0).
On August 16, 2022, the City Council adopted Resolution No. 22-4604 to increase the appropriation to fund the City’s obligation under an Interagency Financial Contribution Agreement with Eastern Municipal Water District to utilize ARPA funding for water infrastructure in the Los Alamos region (Vote: 5-0).
On February 7, 2023, the City Council approved an Agreement with Western Municipal Water District to utilize ARPA funding for water and wastewater infrastructure in the Innovation Zone area (Vote: 4-0-0-1).
On May 16, 2023, the City Council approved the reallocation of the remaining budget of $88,210 from Employee Retention Project 50111 to the Los Alamos Hills Project 50116. (Vote: 4-0-0-1).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
In May 2021, the U.S. Department of the Treasury (Treasury) announced the launch of The Coronavirus State and Local Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021. To support the immediate pandemic response, bring back jobs, and lay the groundwork for a strong and equitable recovery, the American Rescue Plan Act of 2021 (ARPA) established the Coronavirus State and Local Fiscal Recovery Funds to deliver $350 billion to state, local, territorial, and Tribal governments to bolster their response to the COVD-19 emergency and its economic impacts. The allocation to the City of Murrieta (City) totals $16,463,101. Key objectives of the ARPA funds include:
• Fight the pandemic and support families and businesses struggling with its public health and economic impacts;
• Maintain vital public services, even amid declines in revenue resulting from the crisis; and
• Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity.
On July 20, 2021, City staff brought a report to the City Council to discuss and seek direction for the use of the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) allocated to the City. The City Council requested that staff bring the topic back in a workshop to seek community input. Subsequently, the City Council held public workshops on October 28, 2021, and February 22, 2022, to discuss possible uses of the City’s ARPA allocation with input from the public and recommendations from staff.
On April 19, 2022, the City Council formally accepted the ARPA grant funds, approved a spending plan as shown below, and amended the Operating Budget.
Since approving the spending plan, staff has brought forward reports, fund reallocation requests, and budget amendments for City Council approval to execute and deliver the spending plan as approved. As of the date of this report, the inception-to-date expenditures of the ARPA programs totaled $8,052,917, or approximately 49.0% of the total allocation. As part of this report, City staff seeks City Council approval to reallocate $134,932 of the remaining COVID-19 PPE program budget towards the construction of several Pickleball courts in existing public parks and $2 million from the Cal Oaks Pool Replacement project towards the Town Square Park Amphitheater Parking Lot Project. To ensure project funds are obligated and spent within the eligible costs timeframe stipulated in the Department of Treasury SLFRF final rule, staff recommends approval of project fund reallocation.
The table below summarizes the total financial activities.
As a metropolitan city, the City received its allocation of the ARPA funds in two equal allotments. The City placed the funds in an interest-bearing account. As a result of the high yield returns on short-term investments, the ARPA fund has generated interest income. Per the SLFRF Compliance and Reporting Guidance, under the Cash Management section of the “Uniform Administrative Requirements,” “SLFRF payments made to recipients are not subject to the requirements of the Cash Management Improvement Act and Treasury’s implementing regulations at 31 CFR Part 205 or 2 CFR 200.305(b)(8)-(9). As such, recipients can place funds in interest-bearing accounts, do not need to remit interest to Treasury, and are not limited to using that interest for eligible uses under the SLFRF award.” Therefore, staff recommends transferring all interest income generated in the ARPA funds to the City’s local fund. This will allow the City to use the interest funds as it sees fit. Staff recommends that these funds be partially contributed toward the construction of Pickleball Courts.
ARPA Projects and Programs Update
Dine and Shop Local Incentive Program
• The City of Murrieta Economic Development Department started the Murrieta Money Match Shop Local Program on May 8, 2022, with an initial deposit of $100,000 from the $1,000,000 in ARPA funds that were allocated to the program at the March 15, 2022, City Council Meeting. Yiftee Inc. of Menlo Park, California, responded to a Request for Proposals and was selected to administer the Murrieta Money Match Shop local program.
• As of February 8, 2024, the program has matched $835,190 in shop local cards for a total value of $1,670,380 paid to local businesses. The program has a remaining balance of $164,810 in matching funds. There are 97 Murrieta businesses currently participating in the program. The motivation behind the program was to support local businesses recovering from the COVID-19 pandemic. Economic studies show that for each dollar spent in a local business, 48 cents remain in the community vs 15 cents spent in a national chain. The program has been highly efficient, and there have been virtually no adverse impacts on staff, participants, or merchants.
Affordable Housing
• On June 7, 2022, the Council approved the appropriation of a $1.5 million loan from ARPA funds through the Murrieta Housing Authority (HA) to National CORE to construct a Multi-Family and Senior housing complex. The funds were obligated to the Adams Avenue Affordable Project and are currently being held with the HA until Phase 2 of the project is ready to begin construction.
Homeless JPA
• In 2016, all five cities in Southwest Riverside County approved a joint resolution committing to solving homelessness through regional efforts rather than working in silos within each agency. Through multiple grant awards over the years, the cities have implemented various programs and are currently working on a regional homeless action plan. As the plan moves forward, cities will enter into Memorandums of Understanding (MOU) to share resources and outreach, possibly including forming a Joint Powers Authority that will manage homeless services, share resources, and share data regionally. The ARPA allocation will be used in conjunction with federal funding (SAMSHA/Calvert) activities.
• The first MOU between Murrieta and Wildomar was presented to the respective City Councils in February 2024. Four cities have approved a proposal to move forward with the development and implementation of a regional “by-name” client list. This will allow cities to share information on the most highly contacted homeless individuals and collaborate on strategies to remove barriers and overcome their homeless status.
Homeless Outreach
• To reach and maintain functional zero homelessness in Murrieta, ARPA funding was allocated for full-time homeless street outreach and case management services. Services were provided by the City’s contractor, City Net. Services are coordinated through the Homeless Outreach Team in partnership with the Murrieta Police Department. Funding has been exhausted. Data on street outreach contacts, how many new homeless individuals have arrived, street exits, and overall outcomes has been collected.
• Murrieta remains one of the few cities in California that have reached and maintained functional zero homeless, defined as a bed available for any individual or family that desires to move to housing sustainability.
Park Improvements
• At the City Council goal-setting workshop held on January 11, 2024, the City Council confirmed the Library Expansion Project is a high-priority project with a $6 - $6.5 million budget. The Library Project needs additional funds to be fully funded. The initial thought was to move funding for the Cal Oaks Pool Replacement Project to the Library Expansion Project. However, after reviewing the timeline, the likelihood of getting the Project obligated by the December 31, 2024 cutoff was not feasible. Being “obligated” would entail completing the construction bid process and awarding a construction contract, which requires a finalized design. Alternatively, the $2 million that was budgeted for Park Improvements is proposed to be reallocated to the Town Square Park Amphitheater Parking Lot Project. Per the Final Ruling’s FAQs as of February 6, 2024, the aforementioned project appears to be an allowable use of the funds. This project provides infrastructure, improves accessibility to and from the current parking area, and revitalizes a public space. Reallocating ARPA funds from the Library Expansion Project will necessitate identifying alternative funding for that project, which staff will recommend as part of a future Council discussion item related to that project.
Incurred COVID-19 Personal Protective Equipment (PPE) Expenses
• To date, the City has spent $131,669 of the $266,601 appropriated for COVID-19 protection-related expenditures. There has been one expense in the last year. A balance of $134,932 remains budgeted for this project. Since funding is no longer needed to purchase PPE, staff proposes allocating the remaining balance to the pickleball courts project.
Employee Retention Expenses
• This was approved by the City Council on April 19, 2022, as part of the ARPA Spending Plan discussion; at the time, all current employees were given a one-time stipend as an incentive to remain employed with the City during the Pandemic. A total of $289,916 of the appropriated $372,500 was paid to employees. Of that amount, $5,626 was returned to the City by employees who found other employment within one year. The City Council reappropriated the remaining budgeted appropriation of $88,210 to a project with the Eastern Municipal Water District for the Los Alamos Project during the May 16, 2023, City Council Meeting.
Water/Sewer Infrastructure
• On February 23, 2023, the City entered into an agreement with Western Municipal Water District (WMWD) to use $7.4 million of ARPA funds to annex properties within the Innovation Zone into the Metropolitan Water District as well as install water and sewer infrastructure within the Innovation Zone. The Innovation Zone is along Jefferson Avenue, between Guava Street and Elm Street. The City has provided $1.4 million for WMWD’s annexation costs. The remaining balance is obligated, per the City’s agreement, and is awaiting progression with the project. The original focus of the project was going to be on Madison Ave, but the feasibility of getting the necessary permits and construction documents before December 31, 2024, is now uncertain. WMWD is required to adhere to the ARPA guidelines and cutoff, which includes the Obligation of Funds, by December 31, 2024. WMWD is working with the City’s Public Works Department and the City Manager’s Office to find a solution and meet the required deadlines. The City receives quarterly reports covering this project’s progression from WMWD.
• On August 16, 2022, the City Council approved the interagency agreement with Eastern Municipal Water District (EMWD) to provide approximately $3.2 million in ARPA funds for the Los Alamos Hills Project. This project aims to install a waterline loop for the Los Alamos Hills area, making safe drinking water available to 50 adjacent parcels that currently rely on wells. On May 16, 2023, the Council took action to reallocate $88,210 from the remaining allocation for Employee Retention to the EMWD Project. This reallocation of funding was consistent with the agreement with EMWD to provide additional funding if available. To date, the full $3,280,210 has been billed for and paid to EMWD for this project, and the City receives quarterly reports covering the progression of the Los Alamos Hills Project.
FISCAL IMPACT
Staff proposes that the City Council authorize the $2 million budget reallocation from the Cal Oaks Pool Replacement Project (CIP 22025) to the Amphitheater Parking Lot Project (CIP 10041). This reallocation will adjust the grant budgets and the Fiscal Year 2023/24 Capital Improvement Project Budget.
Additionally, staff proposes that the City Council reallocate the remaining funds from the COVID-19 PPE Expenses program, in the amount of $134,932, for the construction of the Pickleball Court project. Once approved, Finance will create the CIP Project code and apply the reallocated budget of $134,932 to the new project.
Lastly, staff requests that the City Council approve the transfer of ARPA interest earnings to the City’s local fund.
ATTACHMENTS
None.