Title
American Rescue Plan Act February 2024 Reallocation
Description
This report provides an update on American Rescue Plan Act (ARPA) spending to date and the reallocation of current unspent ARPA funds. The City is on track to meet all ARPA spending deadlines.
Report
Summary
The federal government allocated $396 million to the City of Phoenix as part of ARPA. On June 8, 2021, and June 7, 2022, City Council approved the ARPA Strategic Plan and at several subsequent Council meetings, approved additional programs which included new programs in affordable housing and homelessness funded through the first large reallocation in December 2022. Additional homelessness programs were funded through the second reallocation in November 2023.
There are currently 70 programs across 19 City departments and as of Jan. 31, 2024, over $236 million (nearly 60 percent) has been spent.
Reallocation of Unused, Underspent, or Reprioritized ARPA Funds
During the June 7, 2022, City Council Formal meeting, staff indicated reallocation exercises would be performed throughout the remaining duration of the grant to analyze all programs with unused, underspent, or reprioritized funding that may be used for other ARPA eligible uses. The intent of the reallocation exercises is to ensure full utilization of all awarded ARPA funds. The ARPA covered period will end Dec. 31, 2024, and after this date, staff will be unable to reallocate funding to other programs and any unspent funds must be returned to the United States Treasury. To avoid this, staff plans to complete at least one additional reallocation exercise before June 2024 to ensure all funds are obligated and will be spent by the expenditure deadline of Dec. 31, 2026.
The first reallocation exercise resulted in the approval of $21.2 million, for three affordable housing and homelessness projects. The second reallocation exercise resulted in the approval of $19.6 million to fund various homelessness programs. The second reallocation included four programs that required additional funding which had not yet been identified. This had been reduced to three programs and funding has been identified in this reallocation totaling $3.84 million. See further information in the Reallocation Programs section of this report.
The third reallocation exercise is seeking to approve approximately $15 million to various programs. The potential range of funding has been identified due to savings in contracts and program spending and include the following programs: Digital Divide, Financial Assistance for Phoenix Refugee and Asylee Communities, COVID-19 Health Care Expenses, Vacant Storefront program, and various administrative savings.
Reallocation Programs
As the City continues to work towards providing solutions for homelessness and increasing the supply of affordable housing units, staff, with the assistance of City Council and community feedback, has identified 11 programs for feedback which target these high-need areas. Funding has also been prioritized to provide resources to programs that would otherwise require General Fund resources to continue. Given the anticipated budget status, using ARPA funds to alleviate this pressure is a sound financial decision.
Continuing Partially Funded Programs - $3,840,000
Three programs required additional funding from the November 2023 reallocation: Temporary Lodging, Heat Response/Temporary Shelter - Washington Shelter, and CASS Haven Project. Due to limited funding in the last reallocation, these programs were only partially funded. Funding has now been identified to fully support these programs, several of which will end in June 2025.
Homelessness Projects - Rio Fresco - $3,000,000
This is an existing program and is a contract with Community Bridges, Inc., for the operation of the Rio Fresco shelter. Funding will cover operational costs until June 2025.
Library Technology, Capital and Staff Support - Outdoor LED Signage - $2,000,000
This is an existing project and includes installing outdoor LED signage at all library locations. Capital costs have significantly increased since the start of the pandemic and additional funding will allow the project to install 18 signs across the library system. Signs are critical to provide information to the community on important messaging, such as summer heat respite information, public safety information, and more.
Homeless Services - General - $1,413,044
Many City projects have experienced increased costs of doing business due to the pandemic, inflation, etc. Due to these continued increases in costs, staff recommends allocating a portion of reallocation funds to be used on current ARPA homeless projects as needs arise this calendar year. This will also assist in staff meeting the ARPA obligation deadline.
Homeless Services - Central Arizona Shelter Services (CASS) - $1,068,000
This is a new program. Funding will assist CASS with a budget shortfall this fiscal year to support the Single Adult Shelter and the Vista Colina Family Shelter.
Keys to Change Contract - $911,870
The City currently has a contract with Keys to Change (formerly known as the Human Services Campus) and will be entering into a new contract to continue to provide homeless services. Funding will cover costs until June 2025.
Overnight Summer Heat Respite - $700,000
This program was part of the November 2023 reallocation and included an allocation of $1,800,000. Additional funding will cover heat-related costs until June 2025. Staff will be presenting a detailed report to Council on summer heat relief at the Feb. 27, 2024, Policy Session.
Temporary Lodging - $600,000
This project was part of the November 2023 reallocation and included an increase of $5,000,000 to the current Community Bridges, Inc., contract under the Homelessness Projects Program to provide temporary lodging to individuals experiencing homelessness. Additional funds are required due to an unforeseen increase in overall project costs.
Safe Outdoor Space - $570,000
This program increase was part of the November 2023 reallocation and included an increase of $3,000,000. Additional funding will cover program costs until June 2025.
Cooling Pavilion - $500,000
This is a new project with Steel and Spark and would be in partnership with the State of Arizona. A cooling pavilion is proposed to provide heat relief to individuals experiencing homelessness. Staff is working collaboratively with Steel and Spark to identify the ideal location.
Human Services Department Administrative Services - $80,000
This is a new administrative cost for ARPA and will cover the Human Services Department financial monitoring contract. Staff has experienced a sharp increase in contracts due to grant funding and need additional funding to cover the financial monitoring costs of the additional contracts. This funding will cover costs associated with the increase of ARPA contracts and assist with ensuring compliance with federal regulations.
Attachment A summarizes each proposed program and funding amounts.
Recommendation
Staff requests approval to reallocate approximately $15 million for the programs listed on Attachment A to support the City’s efforts to assist residents experiencing homelessness. Approval will also provide departments adequate time to complete procurement processes and contract authorizations.
Department
Responsible Department
This item is submitted by City Manager Jeffrey Barton and the City Manager's Office.