Title
American Rescue Plan Act Second Tranche Strategic Plan
Description
This report provides City Council a draft strategic plan for the second tranche of American Rescue Plan Act (ARPA) funds and requests City Council feedback and direction. Included in this report is a summary detailing how COVID-19 relief dollars have been spent to date and potential programs for City Council discussion and consideration. The strategic plan currently needs to be reduced by approximately $14 million and as such, staff is seeking City Council feedback and direction regarding which programs should receive second tranche allocations. This report also requests early approval of additional funds to support summer heat and homelessness related services.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
The federal government allocated $396 million to the City of Phoenix in the American Rescue Plan Act. On June 8, 2021, City Council approved the ARPA Strategic Plan that allocated $198 million, the first tranche of funds, to various City programs with nearly 75 percent of allocations targeted in community investment. The City anticipates receiving the remaining $198 million from the US Treasury this May. It is important to again allocate ARPA funds in transformational one-time investments to improve the prospects of impacted residents and address economic and social disparities that have continued and worsened during the COVID-19 pandemic.
According to federal guidance issued to date, ARPA funds may only be used to cover costs that are necessary expenditures caused by COVID-19 incurred between March 3, 2021 and Dec. 31, 2024. Per the Final Rule, funds can only be used:
- to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
- to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the state, territory, or tribal government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
- for the provision of government services to the extent of the reduction in revenue of such state, territory, or tribal government due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the state, territory, or tribal government prior to the emergency; or
- to make necessary investments in water, sewer, or broadband infrastructure.
As of March 31, 2021, $75 million of the first tranche has been spent on various programs such as COVID-19 testing and vaccinations, resident meal deliveries, nonprofit and artists grants, bus cards, rental assistance, landlord incentives, business assistance, and premium pay. Staff expects spending to continue for the rest of the fiscal year as most programs have awarded contracts and program services are moving forward. The summary below outlines the City's community investment to date with relief dollars since the inception of the pandemic. The file then includes an attachment outlining the second tranche strategic plan for City Council discussion, feedback, and early action.
CRF Review
Established through the 2020 CARES Act, the $150 billion Coronavirus Relief Fund (CRF) provided payments to local, state, and tribal governments navigating the impact of the COVID-19 pandemic. The City of Phoenix received $293 million CRF dollars. Programs included small business assistance, rent/mortgage and utility assistance, distance learning and Wi-Fi access, food delivery services, personal protective equipment, and COVID-19 testing. In June 2020, City Council strategically approved using $143 million to offset public safety salaries to preserve City services. The transfer of the one-time resources into the General Fund and public safety funds preserved services that would have been reduced due to the projected negative impact of COVID-19 on City revenues. This fund was closed with the US Treasury on July 9, 2021.
ERA Review
The City received $51.1 million in Emergency Rental Assistance (ERA) 1.0 funds and launched its ERA Program on March 8, 2021. Under ARPA, the US Treasury allocated $55.3 million in ERA 2.0 funding to the City. The City began disbursement of ERA 2.0 dollars in October 2021 and in total has distributed nearly $80 million in ERA 1.0 and ERA 2.0 dollars. Approximately 11,000 households, totaling over 28,600 residents, have received ERA services since the inception of the program. At the end of November 2021, the City requested $35 million in additional ERA 1.0 funding and received all funding on March 22, 2022.
ARPA Second Tranche Strategic Plan
Previously Approved Allocations
City Council has approved various programs utilizing anticipated second tranche funding at previous council meetings. The US Treasury guidance provides that ARPA funds can be used to provide premium pay to essential workers for work performed during the pandemic. On Dec. 15, City Council approved up to $29 million of premium pay for employees from the second tranche. Additionally, it was previously discussed that funds are needed to cover the increased cost of workers' compensation claims and health care claims related to COVID-19. As of Sept. 30, 2021, the Health Care Benefits Trust has paid over $14 million of COVID-19 related expenses. The City has also had nearly 800 workers' compensation claims filed and accepted for COVID-19, resulting in approximately $6 million of incurred costs. Consistent with US Treasury guidance, staff recommended allocating $28 million to the City's health care trust and workers' compensation program to cover current and projected COVID-19 related expenses paid by the Health Care Benefits Trust and the Workers' Compensation Program.
On Feb. 2, 2022, City Council approved $25 million of the second tranche for at-home COVID-19 tests, personal protective equipment, emergency and community outreach services, and other expenses related to COVID-19. Of the $25 million, $15 million was dedicated to community testing and vaccine services and $10 million was dedicated to the Combating COVID Kits which include at-home tests, high quality masks, and informational materials. Since this approval, staff determined only $5 million was needed for the Combating COVID Kits and the remaining $5 million was returned to the unallocated portion of the second tranche.
On March 29, 2022, City Council approved the City of Phoenix 2022 Heat Response Plan, including the allocation of $2.6 million in ARPA funding to support the shelter at 2730 E. Washington Street. After further analysis, staff requests City Council approval of an additional allocation of $13.4 million for capital improvements and ongoing operational costs that will fund the shelter until Dec. 31, 2024.
Lastly, as part of the June 8, 2021 approval of the first tranche, City Council approved $15 million for the Workforce Training Facility and Training Program. The approval to purchase the former Kmart building located at 2526 W. Northern Ave. for this project will be on the agenda for the April 20, 2022 City Council Formal Meeting. Staff requests City Council approval of an additional allocation $3.5 million in second tranche funding for building rehabilitation costs.
Proposed Strategic Plan Programs
After accounting for these items, $118.4 million of the second tranche is available to address City Council and community priorities. Attachment A is the draft strategic plan for the second tranche and includes several focus areas such as affordable housing and homelessness; workforce and education; neighborhood sustainability; resilient food system; and better health and community outcomes. Currently, the strategic plan needs to be reduced by approximately $14 million and as such, staff is seeking City Council feedback and direction regarding which programs should receive second tranche allocations and which programs should be prioritized, reduced, or eliminated. Staff will return to City Council at a later date for final approval of the strategic plan.
Department
Responsible Department
This item is submitted by City Manager Jeffrey Barton and the City Manager's Office.