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REQUEST FOR COUNCIL ACTION Date:February 14, 2022 Item No.: 7.d Department Approval City Manager Approval Item Description: Update and discussion on the American Rescue Plan Act (ARPA) and approval of the Standard Allowance for Revenue Loss and the proposed spending plan. Page 1 of 3 BACKGROUND 1 Congress adopted the American Rescue Plan Act in March 2021 (“ARPA”) which included $65 billion 2 in recovery funds for cities across the country. The US Treasury provided guidelines for each city to 3 follow while thinking about ways to use the funds. 4 5 The City Council approved application and acceptance of the ARPA funds on June 21, 2021. The City 6 received its first half distribution of ARPA funds on July 27, 2021 in the amount of $1,928,885.58. An 7 additional distribution of $63,165.69 was received on November 29, 2021. The City will receive the 8 balance of the ARPA funds ($1,992,051.27) in the second half of 2022 for a total award of $3,984,102.54. 9 10 Unlike the funds through the CARES Act which had a short time frame for spending the federal dollars, 11 the ARPA funds are available for appropriation through December 31, 2024. The Council approved some 12 uses of these funds in the 2022 budget and through certain union contract approvals. 13 14 The Final Rule has been issued by the U.S. Department of the Treasury, and the general categories of 15 eligible use of these ARPA funds are as follows: 16 1. Replacement of lost public sector revenues 17 2. Responding to the Public Health Emergency/Negative Economic Impacts 18 3. Infrastructure investments – water, sewer and broadband projects 19 4. Premium Pay for essential workers. 20 21 A key change in the Final Rule addresses the use of ARPA funds for revenue losses. This change allows 22 recipients the option to claim a “flat standard allowance” for revenue losses (up to $10 million). Funds 23 can then be used for “general government services”. This change is intended to provide more streamlined 24 reporting and tracking in the uses of funds. Recipients must choose either to calculate revenue losses 25 each year through 2024 or select the standard allowance. Once an option has been selected, it cannot be 26 changed over the life of the ARPA program. Staff recommends selecting the Flat Standard Allowance 27 option for ease in reporting through adoption of the attached resolution. 28 29 Staff has been discussing how to best implement these funds over the past few months and the City 30 Council has already approved some of these items. The following chart contains the City Manager and 31 Staff recommendations. 32