CC - Item 5A - Recieve an Overview of American Rescue Plan Act (ARPA) Funding and Provide Direction on Use of the FundsROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: GLORIA MOLLEDA, CITY MANAGER.
DATE: JANUARY 25, 2022
SUBJECT: RECEIVE AN OVERVIEW OF AMERICAN RESCUE PLAN ACT (ARPA)
FUNDING AND PROVIDE DIRECTION ON USE OF THE FUNDS
SUMMARY
On January 6, 2022, the U.S. Department of the Treasury issued the Final Rule on the use of
Coronavirus State and Local Fiscal Recovery Funds, which were established under the American
Rescue Plan Act. This presentation will provide an overview of allowable uses of the ARPA funds
and committed uses of the funds this far. Upon completion of the presentation, staff requests City
Council direction on use of the remaining funds.
BACKGROUND
On March 11, 2021, the $1.9 trillion American Rescue Plant Act (ARPA) was signed into law and
established the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery
Fund, which together make up the Coronavirus State and Local Recovery Funds (SLFRF)
program. The SLFRF program provides $350,000 billion in emergency funding and is intended
to provide support to State, territorial, local, and Tribal governments in responding to the economic
and public health impact of COVID-19 and their efforts to alleviate impacts on their communities,
residents, and businesses.
Under the ARPA's SLFRF program, the City of Rosemead was allocated $17,878,653 in one-time
funding. These funds are to be disbursed in two tranches: 50% after certification and the remaining
50% one year after the first disbursement. The City completed the certification process through
the U.S. Treasury Portal and received the first tranche in the amount of $8,939,327 in May 2021.
The second tranche is expected to be received in May 2022. The funds may be used to cover
eligible costs incurred between March 3, 2021, and December 31; 2024, and must be fully
expended by December 31, 2026.
As reflected in the Interim Rule issued on May 17, 2021, the SLFRF program provides four
categories of eligible uses of SLFRF funds including (1) to replace lost revenue; (2) to respond to
AGENDA ITEM 5.A
City Council Meeting — American Rescue Plan Act Funds
January 25, 2022
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the public health and economic impacts of COVID-19; (3) to provide premium pay to eligible
workers, and (4) to invest in water, sewer, and broadband infrastructure.
The Final Rules, published January 6, 2022, provided several key changes from the Interim Final
Rule. The Final Rule broadens the eligible uses and provides recipients with additional clarity and
flexibility for the use of the recovery funds. The following are key changes to the Rule:
• It offers a standard allowance for revenue loss of $10 million, allowing recipients to select
between a standard amount of revenue loss or complete a full revenue loss calculation.
Recipients that select the standard allowance may use that amount for government services,
with streamlined reporting requirements.
• It allows for a broader set of uses to restore and support government employment, including
hiring above a recipient's pre -pandemic baseline, providing funds to employees that
experiences pay cuts or furloughs, avoiding layoffs, and providing retention incentives. It
also expands the types of households and communities presumed to be "impacted" and
"disproportionately impacted" by the pandemic and provides a broader set of uses available
for these communities.
• It provides more streamlined options to provide premium pay by broadening the share of
eligible workers who can receive premium pay without a written justification while
maintaining a focus on lower-income and frontline workers performing essential work.
• The Final Rule significantly broadens eligible broadband infrastructure investments to
address challenges with broadband access, affordability, and reliability, and adds
additional eligible water and sewer infrastructure investments, including a broader range
of led remediation and stormwater management projects.
DISCUSSION
A key component of the ARPA's SLFRF program is the ability for recipients to use ARPA funds
to replace Lost Revenue. During the 2021-22 Budget Study Session, it was discussed and
subsequently approved that $1.5 million of the ARPA funding would be used to replace lost
revenue within the General Fund due to the pandemic and balance the FY 2021-22 budget. A
subsequent analysis of Lost Revenue based on the League of California Cities calculation program
indicated that the City's lost revenue is much greater than the $1.5 million. Under the Final Rule,
the City is allowed to claim the standard allowance of $10 million for loss of revenue to be used
for any government services purpose.
In addition to the $1.5 million allocated to balance the FY 2021-22 budget, the City has expended
over $175,000 in unreimbursed pandemic -related expenses and $265,000 in COVID premium pay
and sick/administrative leave paid hours for COVID illness/exposure/closings.
City Council Meeting — American Rescue Plan Act Funds
January 25, 2022
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In light of the newly defined regulations and expenses incurred to date, staff recommends
accepting the standard allowance of $10 million to cover lost revenue and government services
and committing a minimum of $1 million for COVID related expenses, including reimbursement
of premium pay for employees and current unreimbursed expenditures.
STAFF RECOMMENDATION
It is recommended City Council review the presentation and provide direction on the use of
available ARPA funds.
FISCAL IMPACT
None with this action.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Prepared by:
Paula Chamberlain, Interim Finance Director