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ARPAMEETING DATE: PREPARED BY: DEPARTMENT: SUBJECT: April 20, 2022 Patrick Piatt Senior Management Analyst City Manager's Office AGENDA REPORT City Council DEPT. DIRECTOR: CITY MANAGER: Pamela Antil Pamela Antil American Rescue Plan Act (ARPA) receipt and appropriation of grant funds from the federal government. RECOMMENDED ACTION: 1. Adopt City Council Resolution No. 2022-39 titled "A Resolution of the City Council of the City of Encinitas to Receive an American Rescue Plan Act Grant from the Department of Finance." (Attachment 1). 2. Adopt City Council Resolution 2022-41 titled "A Resolution of the City Council of the City of Encinitas Amending the Fiscal Year 2021-22 Budget." (Attachment 2). STRATEGIC PLAN: This item aligns with the Strategic Plan in the areas of Community Planning and Public Safety. FISCAL CONSIDERATIONS: The City will receive $8,142,344 from the federal government through an allocation from ARPA. BACKGROUND: ARPA was signed into law by the President on March 11, 2021, to provide direct monetary support to communities to mitigate, respond to, and prevent the COVID-19 pandemic. The Department of Treasury Final Rule lays out the eligible use categories for these funds: (1) address public health impacts; (2) address negative economic impacts; (3) provide premium pay to eligible essential workers; (4) lost revenue replacement; and (5) water, sewer, and broadband infrastructure. Within the first two categories, the Treasury provides enumerated uses to address and support those who were impacted by the public health emergency. Under the lost revenue category, the Treasury provides two avenues for determining the amount of revenue lost by the local government due to the public health emergency: (1) a calculation with the 2022-04-20 Item #08G Page 1 of 7 formula provided at four points in time throughout the program or (2) a standard allowance of up to $10 million, not to increase or exceed award amount. Once the amount is determined, local governments may use the money under this category to provide general government services, including the provision of public safety. The City has been allocated $8,142,344 through ARPA and is being provided these funds in two tranches. The first payment of $4,071,172 was received by the City in June of 2021, and the remaining $4,071,172 is expected to be provided in June of 2022. ANALYSIS: Allocating the funds provided to the City through ARPA to the San Diego County Sheriff Agreement will free the General Fund to pay for general operations. This will allow for streamlined expenditure and reporting of ARPA funds which will reduce staff time and allow spending flexibility of the City's General Fund. ENVIRONMENTAL CONSIDERATIONS: The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a "project" under Section 15378(b)(5) of CEQA Guidelines. The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change in the environment. ATTACHMENTS: 1. Resolution No. 2022-39 titled "A Resolution of the City Council of the City of Encinitas to Receive an American Rescue Plan Act Grant from the Department of Finance" 2. Resolution No. 2022-41 titled "A Resolution of the City Council of the City of Encinitas Amending the Fiscal Year 2021-22 Budget" 2022-04-20 Item #08G Page 2 of 7 Attachment 1 RESOLUTION NO. 2022-39 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ENCINITAS TO RECEIVE AN AMERICAN RESCUE PLAN ACT GRANT FROM THE DEPARTMENT OF FINANCE WHEREAS, on March 11, 2021, the President of the United States signed the American Rescue and Recovery Act into law to help to heal an ailing nation from the negative effects of the COVID-19 virus; and WHEREAS, the City of Encinitas has been allocated $8,142,344 from the American Rescue Plan Act to help recover lost revenue; and WHEREAS, the City received half of the American Rescue Plan Act funds in the amount of $4,071,172 in June of 2021 and anticipates receiving the second tranche in the amount of $4,071,172 in June of 2022; and NOW, THEREFORE, BE IT RESOLVED, the City Council of the City of Encinitas hereby resolves as follows: 1. The City Council hereby approves the receipt of the American Rescue Plan Act in the amount of $8,142,344. PASSED AND ADOPTED, by the City Council of the City of Encinitas, this 20th day of April 2022 by the following vote to wit: Catherine S. Blakespear, Mayor ATTEST: Kathy Hollywood, City Clerk APPROVED AS TO FORM: Tarquin Preziosi, City Attorney 2022-04-20 Item #08G Page 3 of 7 CERTIFICATION: I, Kathy Hollywood, City Clerk of the City of Encinitas, California, do hereby certify under penalty of perjury that the foregoing Resolution was duly adopted at a regular meeting of the City Council on the 20th day of April, 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Kathy Hollywood, City Clerk 2022-04-20 Item #08G Page 4 of 7 Attachment 2 RESOLUTION NO. 2022-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ENCINITAS AMENDING THE FISCAL YEAR 2021-22 BUDGET WHEREAS, on June 23, 2021, the City Council of the City of Encinitas adopted Resolution Number 2021-70 adopting the budget for Fiscal Year 2021-22; and WHEREAS, changes in anticipated revenues and/or expenditures of the City of Encinitas necessitates amendments to the appropriations for Fiscal Year 2021-22; and WHEREAS, budgeted expenditures do not exceed anticipated revenue and available fund balance; and WHEREAS, the City Council has reviewed the proposed Fiscal Year 2021-22 budget amendments. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Encinitas that the budget amendments for Fiscal Year 2021-22 as contained in Exhibit A to this resolution are hereby adopted. PASSED, APPROVED AND ADOPTED this 20th day of April, 2022 by the City Council of the City of Encinitas, State of California. ATTEST: Kathy Hollywood, City Clerk APPROVED AS TO FORM: Tarquin Preziosi, City Attorney Catherine S. Blakespear, Mayor 2022-04-20 Item #08G Page 5 of 7 CERTIFICATION: I, Kathy Hollywood, City Clerk of the City of Encinitas, California, do hereby certify under penalty of perjury that the foregoing Resolution was duly adopted at a regular meeting of the City Council on the 20th day of April, 2022 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Kathy Hollywood, City Clerk 2022-04-20 Item #08G Page 6 of 7 Exhibit A to Resolution 2022-39 Revenue/ Expenditure/ Transfer In Transfer Out Organization Object Project Increase Increase Fund Name Code Code No. Description (Decrease) (Decrease) Off Cycle Adjustment to 1. Federal Operating Grants 22300000 331.1 ARP21 Receive Grant Funds $ 8,142,344 Decrease Budget for SD County Sheriff Agreement to be paid 2. General Fund 10161500 433 with ARPA funds $ (8,142,344) Increase Budget for SD County Sheriff Agreement to be paid 3. Federal Operating Grants 22361500 433 ARP21 with ARPA Funds $ 8,142,344 Total 1 $ 8,142,344 1 $ - 2022-04-20 Item #08G Page 7 of 7 AGENDA REPORT E^ RANCH ERGA Board of Directors MEETING DATE: April 26, 2022 PREPARED BY: John McNair, VP of Golf, JC Resorts SUBJECT: Proposed 2021-2022 Adjusted Capital Budget RECOMMENDED ACTION: ERGA Board of Directors approves the removal of the carpet replacement project from the 2021-2022 Capital Budget and replace that project with the resurfacing and sealing of the parking lot. This will reduce project cost by $3,000, bringing the total resurfacing and sealing project to $25,000. We are also asking for approval to increase the front gate replacement project by $8,500, bringing the total cost of the project to $23,500. Finally, we are requesting to add the clubhouse fence replacement project between the clubhouse and the GOIfTec Building. The project will cost $20,500 to complete. FISCAL CONSIDERATIONS: We feel it is in the best interest of Encinitas Ranch Golf Course to adjust our current capital budget by replacing the carpet replacement project with the resurfacing and sealing of our parking lot. The carpet replacement project we propose to remove is listed at $28,000. We propose to replace that project with resurfacing and sealing the parking lot. The total price of the parking lot project is $25,000, a decrease of $3,000. The cost of materials for the front gate replacement project have gone up significantly over the last 12 months and the addition of 2 stucco pillars are prompting an increase to the original budget of $8,500. The total cost of the front gate replacement project is $23,500. The clubhouse fence replacement project will cost $20,500 to complete. The total increase to the 2021-2022 capital budget is $23,754, bringing the total capital expenditure to $208,429. BACKGROUND: The resurfacing and sealing of the parking lot was last completed in September of 2019. It is in need of resealing, patch and paint. We are moving the carpet replacement project to the 2022- 2023 short term capital budget. The front gate is deteriorating and in need of replacement. We will be replacing it with an iron gate and building stucco pillars that match the front entrance monument. The clubhouse fence replacement project is going to replace the fence and sliding gate between the clubhouse and Golftec building. The new fence will be 8 feet tall to reduce visability into the back area. The gate will be automatic with a remote and a key pad. There will also be a door for employees to use instead of the automatic gate. This will upgrade the appearance of the clubhouse and reduce visability into employee areas. ANALYSIS: The proposed change would ugrade our current equipment while making it more aesthetically appealing. MONTHLY REVENUES SHORT-TERM CAPITAL RESERVE: (monthly activity) Monthly Beginning Balance ADD: 3% of Monthly Revenue Deduct: Capital Expenditures LONG-TERM CAPITAL RESERVE: (monthly activity) ENCINITAS RANCH GOLF COURSE SUMMARY OF CAPITAL RESERVE AND EXPENDITURES AS OF MARCH 31, 2022 $570,694 $149,481 $17,121 M1 nnm SHORT TERM CAPITAL RESERVE BALANCE $153,602 Monthly Beginning Balance $448,730 Current Activity $5,707 LONG TERM CAPITAL RESERVE BALANCE $454,437 TOTAL ALL RESERVES $sos,oss.sa CAPITAL PROJECT NUMBER PROJECT ORIGINAL CAPITAL BUDGET ADJUSTMENTS ADJUSTED CAPITAL BUDGET YTD ACTUAL CAPITAL SPENT REMAINING BUDGET PROJECT STATUS NOTES 1-22 John Deere Fairway Mower $38,800 $0 $38,800 $38,787 $13 Closed 2-22 John Deere ProGator $31,250 $0 $31,250 $31,199 $51 Closed 3-22 John Deere Gator $22,625 $0 $22,625 $22,622 $3 Closed 4-22 Front Gate Replacement $15,000 $8,500 $23,500 $13,000 $10,500 Pending Cost increases in materials and the addition of 2 columns for a finished look. 5-22 Replace Cart Barn Fencing $16,000 $0 $16,000 $0 $16,000 Pending 6-22 Replace Garbage/Recyding Enclosure $14,000 $0 $14,000 $0 $14,000 Pending 7-22 Resurface Practice Green Surround $19,000 ($2,246) $16,754 $16,754 ($0) Closed 8-22 Replace Carpet in Clubhouse $28,000 ($28,000) $0 $0 $0 Pending Moving into 2022-2023 budget 9-22 Resurface and Seal Packing lot $25,000 $25,000 $0 $25,000 Pending This will replace the carpet project. 10-22 Clubhouse Fence Replacement Project $20,500 $20,500 $0 $20,500 Pending Total Capital Reserve and Ex enditures $184,675 $23,754 $208,429 1 $122,363 $86,066 FULL FISCAL YEAR ENDING JUNE 30, 2022 (PROJECTED) ANALYSIS OF SHORT-TERM (3%) CAPITAL RESERVE Beginning Balance @ July 1, 2021 Budgeted Additions to Reserve in Fiscal Year: 3% Budgeted Revenue $5,041,742 Budgeted Capital Improvements $184,675 Adjustments $ 23,754 $123,795 $151,252 ($208,429) Remaining to be appropriated $66,618 Project Number Funding Source Drainage 21 CD20A 101 GENERAL FUND 20 CD22A 19 CD05E Total Drainage Facilities 73 CF16A 79 CF18B 76 CF16B 74 CF16F 78 CF20A 101 GENERAL FUND 101 GENERAL FUND 403 FACILITIES FUND CAPITAL PROJECTS 403 FACILITIES FUND CAPITAL PROJECTS 403 FACILITIES FUND CAPITAL PROJECTS 403 FACILITIES FUND CAPITAL PROJECTS 403 FACILITIES FUND CAPITAL PROJECTS NEW TBD 403 FACILITIES FUND CAPITAL PROJECTS 65 WC18D 561 PACIFIC PINES FUND 75 CF16D 403 FACILITIES FUND CAPITAL PROJECTS Total Facilities Mobility Improvements 15 CS16C 101 GENERAL FUND CS178 101 GENERAL FUND CS20G 101 GENERAL FUND CS22B 203 STATE CAPITAL GRANT FUND CS22C 101 GENERAL FUND - CS22C 203 STATE CAPITAL GRANT FUND 5 CS18E 101 GENERAL FUND CS22D 101 GENERALFUND CS22D 203 STATE CAPITAL GRANT FUND 62 CS18D 101 GENERAL FUND 67 CS01E 101 GENERAL FUND 69 CS02F 101 GENERAL FUND 69 CS02F 233 TRAFFIC MIT FUND Total Mobility Improvements Parks and Beaches Proposed Six -Year Capital Improvement Program Projects Funded Projects FY 2022 - 2027 Funded CIP Requests Adopted Proposed Projected Projected Projected Projected SIX -YEAR Project Description FY 2021-22 '_FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 TOTAL COST Cottonwood Creek Basin Maintenance $ - $ - $ - $ - $ - $ - $ - La Costa Stormwater Basin Rehab - 500,000 - - - - 500,000 Storm Drain Repair 250,000 250,000 250,000 250,000 250,000 250,000 1,500,000 $ 250,000 $ 750,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 2,000,000 Civic Center Improvements $ 300,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 800,000 Community Center Improvements 100,000 100,000 100,000 100,000 100,000 100,000 600,000 Fire Stations Improvements 30,000 25,000 25,000 25,000 25,000 25,000 155,000 Library Improvements 150,000 50,000 400,000 50,000 50,000 50,000 750,000 Lifeguard Facility Improvements 25,000 75,000 75,000 2S,000 25,000 25,000 250,000 Park Facilities Improvements - 75,000 75,000 75,000 75,000 75,000 375,000 Pacific Pines Maintenance Schedule 15,172 52,964 64,392 65,072 75,049 25,669 298,318 PW Facility Improvements 50,000 50,000 50,000 50,000 50,000 50,000 300,000 $ 670,172 $ 527,964 $ 889,392 $ 490,072 $ 500,049 $ 450,669 $ 3,528,318 ADA Curb Ramp Project (Transition Plan Compliance) $ S0,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 300,000 Birmingham Drive - Complete Streets $ 187,000 $- $ - $ - $ - $ - $ 187,000` El Camino Real Z-Crossing $ 20,000 $:: $ $ $ $ $ 20,000 Citywide Leading Pedestrian Intervals 1,234,500 1,234,500 Coast Highway 101 Separated Bike Lanes 72,210 72,210 Coast Highway 101 Separated Bike Lanes 649,890 649,890 Total Coast Highway 101 Separated Bike Lanes 722,100 722,100 General Mobility Improvements (57,000) 300,000 300,000 300,000 300,000 300,000 1,443,000 Highway 101 Walkway to Solana Beach 132,770 - - - - - 132,770 Highway 101 Walkway to Solana Beach 708,930 708,930 Total Highway 101 Walkway to Solana Beach 841,700 - - - - - 841,700 Installation of Innovative Bike Lane Treatment (ROW Re-Utiliz 25,000 25,000 25,000 25,000 25,000 25,000 150,000 Safe Rte 2 Schools Program (City) 100,000', 200,000 200,000 200,000 200,000 200,000 1,100,000 Traffic Safety and Calming 100,000 75,000 75,000 75,000 75,000 75,000 475,000 Traffic Safety and Calming (64,596) - - - - - (64,596) Total Traffic Safety and Calming 35,404 75,000 75,000 75,000 75,000 75,000 410,404 $ 3,158,704 $ 650,000 $ 650,000 $ 650,000 $ 650,000 $ 650,000 $ 61408,704 CF18A 101 GENERAL FUND ADA Parking Lot Upgrades (Glen Park) $ 300,000 $ $ $ - $ - $ $ 300,000 CP14B 101 GENERAL FUND Beacon's Beach Access $ (206,462) $ $ $ - $ $ $ (206,462) WB16A 212 COASTAL ZONE MANAGEMENT FUND Beach Habitat Study 801000 40,000 40,000 40,000 40,000; 4C ODO 280,000 11 Z NEW 101 GENERAL FUND Beach Staircase Access Refurbishment - 392,400 - 462,600 855,000 CP22A 101 GENERAL FUND Beacon's Beach Parking Lot 150,000 400,000 - 550,000 WB16C 203 STATE CAPITAL GRANT FUND Coastal Storm Damage Reduction Project 160,000 160,000 12,000,0DO ': - - - 12,320,000 WB16C 212 COASTAL ZONE MANAGEMENT FUND Coastal Storm Damage Reduction Project 20,000 20,000 1S0,000 150,000 150,000 150,000 640,000 Total Coastal Storm Damage Reduction Project 180,000 180,000 12,150,000 150,000 150,000 150,000 12,960,000 CP22B 101 GENERAL FUND El Portal Undercrossing Public Art 129,800 - - - - - 129,800 NEW 101 GENERAL FUND Granddview Staircase - Concept Plan - 250,000 - - - - 250,000 58 CP04G 101 GENERAL FUND Park Improvement Projects 218,048 224,589 235,744 245,203 252,559 260,135 1,436,278 22 CPOOF2 101 GENERAL FUND Rec Trails Development/Trail 82, Rancho Santa Fe Road 100,000 - - - - - 100,000 22 CP001`4 101 GENERAL FUND Rec Trails Development/Trail 95, El Camino Del Norte 505,000 - - - - 505,000 WB08C 212 COASTAL ZONE MANAGEMENT FUND SCOUP-Sand Compatiblity Opportunistic Use Program 100,000 100,000 100,000 100,000 100,000 100,000 600,000 Total Parks and Beaches $ 1,556,386 $ 1,586,989 $ 12,525,744 $ 997,803 $ 542,559 $ 550,135 $ 17,759,616 Streets and Rail Corridor 27 C52ZA CS22A 27 CS22A 27 CS22A CS11C CS11C 7 CSO4D NEW NEW W C22A CS22E CS19E CS19E CS19E 201 H UTA (GAS TAX) F U N D 101 GENERAL FUND 211 TRANSNET FUND 201 HUTA (GAS TAX) FUND 233 TRAFFIC MIT FUND 234 REG TRAFFIC 101 GENERAL FUND 101 GENERAL FUND 211 TRANSNET 101 GENERAL FUND 101 GENERAL FUND 101 GENERAL FUND 222 CDBG FUND 233 TRAFFIC MITIGATION FUND FY2020-21 Annual Street Overlay - HUTA $ 559,981 $ 571,181 $ 582,604 $ 594,256 $ 606,141 $ 618,264 $ 3,532,427 FY2020-21 Annual Street Overlay $ 500,032 $ - $ $ - $ - $ - $ 500,032 FY2020-21 Annual Street Overlay 719,712 1,838,600 1,902,600 " 1,963600 2,021,600 : 2,062,032 10,508,144 FY2020-21 Annual Street Overlay - RMRA SBl Total FY 2020-21 Annual Street Overlay La Costa Avenue Improvements La Costa Avenue Improvements Total La Costa Avenue Improvements Leucadia Streetscape -Future Phases Leucadia Streetscape - B & C Safety & Mobility Leucadia Streetscape B & C Safety & Mobility Rail Safety Study At -Grade Crossings San Elijo Bridge Pavement Failure Repair Santa Fe Drive Corridor Improvements Santa Fe Drive Corridor Improvements Santa Fe Drive Corridor Improvements Total Santa Fe Drive Corridor Improvements 1,238,938 1,263,717 1,288,991 1,314,771 1,341,066 1,367,888 7,815,371 3,018,663 3,673,498 3,774,195 3,872,627 3,968,807 4,048,184 22,355,974 (300,000) (200,000) - - - - (500,000) 300,000 200,000 500,000 3,500000 10,730,000 5,750000 19,980,000 592,084 - 592,094 500,000 500,000 250,000 250,000 475,000 475,000 13,792 1,295,155 578,360 248,000 2,107,723 68 CS17G 295 ELLD FUND 68 CS17G 297 Zone H FUND 70 C502G 233 TRAFFIC MIT FUND Total Streets and Rail Corridor Studies W B06A 56 WC18B 40 WC16D 2 WC17A 58 WC19C 18 WC14B WC22B Z NEW WD16A WD17A WC178 W C22C Total Studies Technology 12 WC18A 12 WC18A 12 WC18A 60 WC01A 61 WC12C 24 WC18E 24 WC18E Street Light & Traffic Signal Replacements Street Light & Traffic Signal Replacements Total Street Light & Traffic Signal Replacements Traffic Signal Modifications 203 STATE CAPITAL GRANT FUND ACOE Shoreline Protection Study 101 GENERAL FUND Assessment of Fair Housing 101 GENERAL FUND Circulation Element of GP 101 GENERAL FUND Climate Action Plan - Mitigation Measures 101 GENERAL FUND Consolidated Plan (CDBG Program) 101 GENERAL FUND Housing Element Update 101 GENERAL FUND Municipal Code Clean -Up 101.00 GENERAL FUND New Sports Courts Study 101 GENERAL FUND Orpheus Green Street 101 GENERAL FUND Stormwater Capture and Reuse Study 101 GENERAL FUND Vulcan and San Elijo ATP Study 101 GENERAL FUND Sixth Cycle Housing Element Implementation 50,000 50,000 40,000 40,000 40,000 40,000 260,000 - - 5,000 5,000 5,000 5,000 20,000 50,000 S0,000 45,000 45,000 45,000 45,000 280,000 50,000 50,000 50,000 50,000 50,000 50,000 300,000 $ 6,230,902 $ 7,851,858 $ 14,847,195 $ 9,717,627 $ 4,063,807 $ 4,143,184 $ 46,640,781 $ 5,000 $ 5,000 $ 5,000 $ S,000 $ 5,000 $ 5,000 $ 30,000 - - 50,000 - - S0,000 50,000 - - - - - 50,000 136,500 201,500 86,500 86,500 86,500 136,500 734,000 - - 50,000 - - - 50,000 (25,000) 500,000 500,000 975,000 100,000 - - 100,000 - 30,000 30,000 (1,454) (1,454) (44,447) (44,447) (89,721) (89,721) 7.5,000 50,000 - - - - 125,000 $ 205,878 $ 786,500 $ 691,500 $ 91,500 $ 91,500 $ 141,500 $ 2,008,378 101 GENERAL FUND 800 MHZ Radio Upgrades $ 84,674 $ $ $ $ $ $ 84,674 230 CSA 17A 800 MHZ Radio Upgrades 16,700 16,700 223 FEDERAL CAPITAL GRANT FUND 800 MHZ Radio Upgrades ( FY16 SHSP Grant) 39,882 39,882 Total 800 MHZ Radio Upgrades 141,256 141,256 101 GENERAL FUND GIS Basemap Updates and Enhancements - 40,000 40,000 40,000 40,000 40,000 200,000 213 GOVERNMENTAL/EDUCATIONAL ACCESS Governmental/Educational Access Project -Equipment Update 160,000 155,000 90,000 85,000 50,000 50,000 590,000 101 GENERAL FUND Tech Infrastructure Replacement 512,000 339,815 353,959 389,111 366,550 548,049 2,509,484 213 GOVT EDUC ACCESS FUND Tech Infrastructure Replacement 31,667 17,885 25,881 20,480 19,292 28,845 144,050 Total Tech Infrastructure Replacement 543,667 357,700 379,840 409,591 385,842 576,894 2,653,534 71 WC16A 101 GENERAL FUND Tyler Enterprise (formerly Enterprise Workflow Management 23,400 60,000 40,000 40,000 30,000 30,000 223,400 Total Technology $ 868,323 $ 612,700 $ 549,840 $ 574,591 $ 505,842 $ 696,894 $ 3,808,190 Wastewater CE04A 522 ESD CAPITAL PROJECTS CE21B 522 ESD CAPITAL PROJECTS CE04H 522 ESD CAPITAL PROJECTS CC04E 512 CSD CAPITAL PROJECTS CE22D 522 ESD CAPITAL PROJECTS CC04J 512 CSD CAPITAL PROJECTS Batiquitos 2004 Pump Station Improvement CIPs at Encina Collection System Rehabilitation CSD Collection System Rehab Moonlight Beach Pump Station Rehabilitation Olivenhain Trunk Improvements $ 127,300 $ 125,000 $ 125,000 $ 125,000 $ 125,000 $ 125,000 $ 752,300 875,876 1,200,488 1,300,229 1,450,116 1,403,434 1,497,304 7,727,447 500,000 500,000 500,000 500,000 S00,000 500,000 3,000,000 300,000 300,000 300,000 300,000 300,000 300,000 1,800,000 375,000 375,000 - - - - 7S0,000 700,000 700,000 700,000 2,100,000 CC21A 512 CSD CAPITAL PROJECTS SEJPA Plant Improvements 530,208 550,000 550,000 550,000 S50,000 550,000 3,280,208 Total Wastewater $ 3,408,384 $ 3,750,488 $ 3,475,229 $ 2,925,116 $ 2,878,434 $ 2,972,304 $ 19,409,955 Grand Total $ 16,348,749 $ 16,516,499 $ 33,878,900 $ 15,696,709 $ 9,482,191 $ 9,854,686 $101,763,942 BEST BEST & KMEGER ATTORNEYS AT LAW CONFIDENTIAL ATTORNEY/CLIENT PRIVILEGE Memorandum To: Pat Piatt Senior Management Analyst City Manager's Office City of Encinitas From: Ana Schwab Date: October 24, 2021 Re: City of Encinitas' Proposed Spending Plan — Compliance with ARPA INTRODUCTION This memo provides a review of the City of Encinitas's ("the City") spending plan for compliance with the American Rescue Plan Act of 2021 ("ARPA"). The projects in the spending plan are classified as (1) eligible, (2) eligible if addressing public health or economic disparities, (3) requiring further clarification or explanation, and (4) ineligible. For projects that are not outright eligible, this memo provides guidance for how the City can strengthen compliance with ARPA and Treasury guidelines. ARPA SPENDING REOUIREMENTS The American Rescue Plan Act ("ARPA") was signed into law in March 2021. ARPA contained a section, the Coronavirus State and Local Fiscal Recovery Fund ("SLFRF"), to provide monetary support to local governments to respond to, mitigate, and recover from the COVID-19 public health emergency. In May 2021, the U.S. Treasury released an Interim Final Rule providing further guidance on SLFRF. Under the Statute and Rule, there are six categories of eligible user Support public health expenditures; ii. Address negative economic impacts caused by the public health emergency; iii. Serve the hardest -hit communities and families; ' American Rescue Plan Act of 2021, Pub. L. No. 117-2, § 603(c)(1); Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 (May 17, 2021) (codified at 31 C.F.R. Part 35) [hereinafter "Interim Final Rule']. BEST BEST & KRIEGER ATTORNEYS AT LAW iv. Replace lost public sector revenue; V. Provide premium pay to eligible workers; and vi. Invest in water, sewer, and broadband infrastructure. The City has asked for review of projects specifically in the categories of infrastructure, lost revenue, premium pay, public health, and transfer of funds: A. Public Health ARPA affords significant flexibility for cities to identify local needs and determine the best use of ARPA funding for their communities and populations. Funds may be used to meet a wide range of public health and economic needs resulting from COVID-19. The funds, however, must be used in response to the disease itself or harmful economic impacts resulting from the public health emergency. Thus, where the COVID-19 nexus for a City project is not sufficiently clear, the City should articulate a stronger link between the project and COVID-19. The Rule provides a non-exclusive list of programs and services that are eligible uses and qualify as responding to COVID-19 or the negative economic impacts of the COVID-19 public health emergency.' To assess whether additional uses are eligible, the City should be able to articulate whether and how the use would respond to the COVID-19 public health emergency. The City should (1) identify a need or negative impact of the COVID-19 public health emergency, and (2) identify how the program, service, or other intervention addresses the identified need or impact.3 More specifically, to establish that a project responds to a public health need, the City should (1) identify an effect of COVID-19 on public health, including either or both of immediate effects or effects that may manifest over months or years, and (2) assess how the use would respond to or address the identified need.' B. Economic Impacts The Rule gives recipients ability the to provide direct assistance to households, individuals, and impacted industries.' The Rule goes on to also allow recipients to rehire government staff to pre -pandemic levels, invest in communities disproportionately impacted by the public health emergency.6 For projects addressing economic impacts, the City should assess (1) whether, and the extent to which, there has been an economic harm, such as loss of earnings or revenue, that resulted from Z 31 C.F.R. § 35.6, Eligible Uses. 3 86 Fed. Reg. 26786 at 26,788; 31 CFR § 35.6(b)(1)(iii). ' Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 at 26,790 (May 17, 2021). 5 31 C.F.R. § 35.6(b). 6 31 C.F.R. § 35(b)(3); (b)(12). -2- BEST BEST & KMEGER ATTORNEYS AT LAW the COVID-19 public health emergency and (2) whether, and the extent to which, the use would respond or address the identified harm? Finally, under this category, the Rule goes on to state that to utilize funds under this category, the use "must be in response to the disease itself or the harmful consequences of economic disruptions resulting from or exacerbated by the COVID-19 public health emergency." C. Addressing Disparities The Rule provides that certain services and programs are presumed to respond to the public health emergency when provided in communities that have been disproportionately impacted by COVID-19.8 Such communities include those located in a Qualified Census Tract ("QCT"), and households, businesses, and populations that have otherwise been disproportionately impacted by COVID-19.9 The Rule provides some specific examples of eligible services and programs to disproportionately impacted communities. For these listed services, the City only needs to show that the services are being provided to communities in a QCT, or communities otherwise disproportionately impacted. In identifying these disproportionately impacted communities, the City should be able to support its determination that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations, households, or geographic areas to be served.10 D. Lost Revenue ARPA funds may be used by recipients to replace lost public sector revenue. 11 The Rule provides a methodology to calculate the lost revenue by comparing actual revenue to an alternative representative what could have been expected to occur in the absence of the pandemic. The lost revenue is based on revenue from own sources collected by the City "and generated from its underlying economy."12 The revenue does not include revenue from utilities or insurance trusts, nor does it include intergovernmental transfers from the Federal Government.13 There are four steps to. calculating lost revenue:14 86 Fed. Reg. 26786 at 26,793-96. '31 C.F.R. § 35.6(b)(12). 9 31 C.F.R. § 35.6(b)(12). 10 86 Fed. Reg. 26786 at 26,795. 11 31 CFR § 35.5(d). 12 86 Fed. Reg. 26786 at 26,779. 13 Utility Revenue is defined by the Census Bureau's Government Finance and Employment Classification Manual as "[g]ross receipts from sale of utility commodities or services to the public or other governments by publicly - owned and controlled utilities." The Rule FAQ goes on to indicate that "[t]his includes revenue from operations of publicly -owned and controlled water supply systems, electric power systems, gas supply systems, and public mass transit system." Treasury FAQs No. 3.15. 14 86 Fed. Reg. 26786 at 26,800-01. -3- BEST BEST & VMEGER ATTORNEYS AT LAW (1) Identify revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. (2) Estimate counterfactual revenue, which is equal to base year revenue [(1+growth adjustment)A(n/12)], where n is the number of months elapsed since the end of the base year to the calculation date, and growth adjustment is the greater of 4.1 perfect and the recipient's average annual revenue growth in the three full fiscal years prior to the COVID-19 public health emergency. (3) Identify actual revenue, which equals revenues collected over the past twelve months as of the calculation date. (4) The extent of the reduction in revenue is equal to the counterfactual revenue leis actual revenue. If actual revenue exceeds counterfactual, the extent of the reduction in revenue is set to zero for that calculation date. The City must calculate lost revenue with the equation above as of the following four dates: December 31, 2020; December 31, 2021; December 31, 2022; and December 31, 2023.15 Once lost revenue is determined, the City may utilize the funds, under this category, broadly for government services, up to the amount calculated for the year.16 General government services do not include "obligations under instruments evidencing financial indebtedness for borrowed money... interest or principal on outstanding debt; satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or regulatory proceeding, except if the judgment or settlement required the provision of government services."" Lastly, funds may not be used to be put into a pension program (with the exception of when the City is paying an employee's salary and included benefits, in an eligible manner).18 E. Providing Premium Pay to Eligible Workers The Rule states an eligible use of ARPA funds includes the ability to provide premium pay to eligible workers performing essential work during the COVID-19 public health emergency.19 Once determined to provide premium pay, the Rule permits pay "up to $13 per hour in addition to wages or renumeration the worker otherwise receives and in an aggregate amount not to exceed $25,000 per eligible worker."24 Further, the premium pay cannot exceed the employee beyond 150 percent of the state, in which the employee resides, average annual wage for all occupations. Eligible workers are those who faced heighted risks due to the nature of their work and is defined under the Rule as those " 31 CFR § 35.6(d)(1). 16 86 Fed. Reg. 26786 at 26,799. 17 86 Fed. Reg. 26786 at 26,801. 'g 86 Fed. Reg. 26786 at 26,806. 19 31 CFR § 35.6(c). -4- BEST BEST & KRIEGER ATTORNEYS AT LAW ...needed to maintain continuity of operations of essential critical infrastructure sectors, including health care; emergency response; sanitation, disinfection, and cleaning work; maintenance work; grocery stores, restaurants, food production, and food delivery; pharmacy; biomedical research; behavioral health work; medical testing and diagnostics; home- and community -based healthcare or assistance with activities of daily living; family or child care; social services work; public health work; vital services to Tribes; any work performed by an employee of a State, local, or Tribal government; educational work, school, nutrition work, and other work required to operate a school facility; laundry work; elections work; solid waste or hazardous materials management, response, and cleanup work; work requiring physical interaction with patients; dental care work; transportation and warehousing; work at hotel and commercial lodging facilities that are used for COVID-19 mitigation and containment; work in a mortuary; work in critical clinical research, development, and testing necessary for COVID-19 response.20 While the definition provides a broad list of sectors eligible under this category, the Rule lays discretion with the "chief executive of each recipient" to designate additional sectors that were/are critical to protect the public health and safety.21 Important to note, the SLFRF Compliance and Reporting Guidance indicates that a "User's Guide" is forthcoming which will provide further clarification on the sectors designated as critical to the health of the residents.22 In addition to being an eligible worker, the worker must perform essential work, which is limited to work done only in person and with regular interactions with others or the regular handling of physical items23 Key to those who may receive premium pay is that employees cannot receive premium pay for teleworking24 When determining whether to provide premium pay, the City must contemplate whether the premium pay would "respond to" the essential work performed by the eligible employee(s) 25 Unique to the premium pay provision is that the City can provide grants to private employers, for the private employers to give premium pay to their critical sector designated employees26 An example of this is a grocery store in the City — the City can provide a grant to the grocery store for their workers to receive premium pay under this provision of the Rule. Finally, the Rule allows for premium pay to be provided retroactively, to compensate the employee on -top of their regular wages, for the work done and risk taken during the public health 20 31 CFR § 35.3. 21 86 Fed. Reg. 26786 at 26,797. 22 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 20. 23 31 CFR § 35.3. 24 86 Fed. Reg. 26786 at 26,797. 25 Id 26 Id -5- BEST BEST & KRIEGER ATTORNEYS AT LAW emergency."" The funds cannot be used to replace monies earned or owed to an employee, but rather are to be used to compensate for the additional risk/work. 29 A key to the premium pay eligible use is that it must be "in addition' to the wages an employee receives and the obligation to provide the premium pay must not have been incurred by the recipient prior to March 3, 2021.11 F. Water, Sewer, and Broadband Infrastructure ARPA funds may be used to make necessary investments in water, sewer, and broadband infrastructure.31 Cities may use the funds for a wide range of drinking water, wastewater, and stormwater infrastructure. Projects that would be eligible to receive financial assistance through the Environmental Protection Agency's Clean Water State Revolving Fund or Drinking Water State Revolving Fund are likewise eligible under ARPA.32 For broadband, the City may invest in projects that are designed to provide service to unserved or underserved households and businesses.33 The City must comply with specific requirements regarding speed reliability. G. Additional Notes The City is able to use the funds as describe above. With a few small exceptions, eligible expenses must have been incurred after March 3, 2021.34 Funds must be obligated by December 31, 2024 and expended by December 31, 2026.35 Further, ARPA funds are bound to the provisions of 2 CFR 200, the Uniform Guidance.36 Under this provision, the City has specific procurement rules that need to be followed. Should the City have specific questions on the implementation of 2 CFR 200, BB&K is available to provide more information. 2' 86 Fed. Reg. 26786 at 26,797. 28 The Interim Final Rule defines the public health emergency as beginning on January 27, 2020 and continuing until the termination of the national emergency declaration. 31 CFR § 35.3. 1186 Fed. Reg. 26786 at 26,797. 31 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 4.7. 31 31 C.F.R. § 35.6(e). 32 31 C.F.R. § 35.6(e)(1). 33 31 C.F.R. § 35.6(e)(2). 34 31 C.F.R. § 35.5(a). 35 Id 36 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 9.3. -6- BEST BEST & KRIEGER ATTORNEYS AT LAW DISCUSSION This Discussion classifies the City projects as (1) eligible, (2) eligible if addressing public health or economic disparities, (3) requiring further clarification or explanation, and (4) ineligible. Examples of additional explanations are provided as hypothetical suggestions. A. Public Health (1) Eligible Vaccination Incentives for those who are not already vaccinated ARPA funds may be used to address the public health emergency. Specifically, the Rule states that an eligible use includes "[e]xpenditures for the mitigation and prevention of COVID- 19, including: [e]xpenses related to COVID-19 vaccination programs and sites..."37 Treasury has further defined this section to include vaccine incentive programs, such as cash, in -kind transfers, lotter programs, or other incentives for individuals who receive vaccines.38 (2) Requires Further Clarification Vaccination Incentives for those already vaccinated As discussed above, the Rule allows for ARPA funds to be used for vaccine programs and Treasury further defined this section of the Rule to include vaccine incentive programs. Currently, as it is written, the funds are to incentive those who are currently unvaccinated to receive the COVID-19 vaccine. A goal of the City was to provide the incentive to those City employees who were vaccinated prior to the start of this program. The City may be able to do this under this describe section of ARPA but would require clarification from Treasury to ensure its eligibility. There are three additional options for how the City could provide a vaccine incentive to employees vaccinated prior to the program: (1) Provide incentive for employees to receive a COVID-19 booster vaccine; (2) Utilize the lost revenue category of ARPA as a general government service; or (3) utilize the City's general fund for these employees. Should the City want to pursue utilizing the public health section of ARPA eligibility, it is recommended that further clarification is sought from Treasury, which BB&K could facilitate on behalf of the City. 37 31 C.F.R. § 35.6(b)(lxi). 38 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 2.12. -7- BEST BEST & KRIEGER ATTORNEYS AT LAW B. City Fiscal Health (1) Eligible IT Expenditures Microsoft Teams VMWare Tyler (Online Permitting) Open Gov Storage Area Network Expansion VM Horizon Licenses 24/7 SOC Nth Services for VDI Zoom Website ARPA provides an equation, described above, for the City to calculate its lost revenue due to the COVID-19 public health emergency, and based on the results of the equation the City may utilize any determined lost revenue to provide general government services, as prescribed in the Rule. Included within the provision of general government services, the City may use the funds for "modernization of cybersecurity, including hardware, software, and protection of critical infrastructure..."39 (2) Requires Further Clarification IT Expenditures Increased Network Bandwidth in City Hall Increased Network Bandwidth in Communications Center ARPA allows for investment in broadband infrastructure, however there are very specific speed requirements 40 The download speedy needs to be less than 100 Mbps and the upload speed of less than 20 Mbps.41 Further, the Rule states that the projects under this category are "expected to focus on locations that are unserved or underserved.1142 Under the broadband category, the City could not use the funds for the increased network bandwidth in City Hall or the Communications Center unless the City can show compliance with the Rule requirements. While the broadband category may not be eligible for these expenses, the City may be able to use its funds calculated under the lost revenue category should the City have the funds the increase of both of these networks is to provide general government services as defined in the 39 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 3.8. ao 86 Fed. Reg. 26786 at 26,805. 41 Id 42 Id -8- BEST BEST & KmEGER ATTORNEYS AT LAW Rule. If the City provides further information these two network increases, this may be answered more definitively. Purchase land and construct affordable housing units ARPA allows for the City to utilize calculated lost revenue for the provision of general government services, this could include the purchasing of land and construction of affordable housing. ARPA also allows for the City to utilize the funds to address disparities, as described above. This could also include the "development of affordable housing."43 However, ARPA currently is bound to most of the provisions of 2 CFR 200, the Uniform Guidance 44 As of now this includes 2 CFR 200.311(c), Disposition of Real Property." Under 2 CFR 200.311 the title of real property would vest with the non -Federal entity upon acquisition, but when the "real property is no longer needed for the originally authorized purpose, the non -Federal entity must obtain disposition instructions from the Federal awarding agency ... "46 It is recommended that should the City want to proceed with the purchase of land and development of affordable housing, under either the lost revenue category or the addressing disparities category, that clarification be sought from Treasury as to whether or not 2 CFR 200.311(c) would apply or if the title would vest clear to the City. Should the City want to proceed with this, BB&K can seek the clarification from Treasury on the City's behalf. Railroad Crossings As with the purchasing of land for affordable housing, there may be consideration of the land needed to do the Railroad Crossing projects the City seeks to pursue. Should the City want to proceed with this, BB&K can seek the clarification from Treasury on the City's behalf. Unlike the purchasing of land for affordable housing, it is likely that the use of funds for railroad crossings would only be eligible under the lost revenue category, as a general government service. As stated above, the lost revenue category funds may be used up to the amount calculated for the year — requiring the City to prioritize the use and order of projects under this category. as U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 2.11. as U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 9.3. as 2 C.F.R. § 200(c). ab 2 C.F.R. § 200(c). -9- I Del pok BEST BEST & "IEGER ATTORNEYS AT LAW C. Premium Pay (1) Eligible Hero Pay Program for City Employees The Rule allows for ARPA funds to be used to provide premium pay to eligible workers performing essential work during the COVID-19 public health emergency 47 These employees must have been working in person, telework employees are not eligible.48 The Rule provides a list of eligible sectors and also provides the discretion with the "chief executive of each recipient" to designate additional sectors that were/are critical to protect the public health and safety49 Lastly, as described above, the Rule provides for financial parameters that must be met to provide funds under this category. With those boundaries in mind, this would be an eligible expense. When Reporting, the City should be prepared to provide a written description of "how the premium pay ... is responsive to workers performing essential work during the public health emergency."" This is further explained in the Reporting and Compliance Guidance issued by Treasury." D. Water, Sewer, Broadband Infrastructure (1) Eligible Stormwater Projects San Dieguito Water District Capital Improvement Projects FY22 ARPA funds are allowed to be used for necessary investments in water and sewer infrastructure.52 Projects under this category are eligible for the Environmental Protection Agency's (EPA) Clean Water and Drinking Water State Revolving Loan Fund Programs (CWSRF and DWSRF).53 The Reporting and Compliance Guidance provides the specific information the City will need to report regarding funds used under this category.54 47 31 CFR § 35.6(c). 48 86 Fed. Reg. 26786 at 26,797. 49 86 Fed. Reg. 26786 at 26,797. so U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 20. 51 Id 52 86 Fed. Reg. 26786 at 26,802. 53 Id 14 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 21-2. -10- BEST BEST & KMEGER' ATTORNEYS AT LAW Eligible stormwater projects under the CWSRF include:" • Tradition stormwater conveyance pipe, storage, and treatment systems; • Sediment controls including filter fences, storm drain inlet protection, street sweepers, and vacuum trucks; • Green roofs; • Permeable pavement; • Infiltration basins; • Rainwater harvesting collection, storage, management, and distribution systems; • Wetland/riparian/shoreline protection and restoration; • Establishment/restoration of urban tree canopy; • Constructed wetlands; • Bioretention/bioswales including rain gardens, curb bump outs, and tree boxes; and • Replacement of gray infrastructure with green infrastructure. The projects identified by the San Dieguito Water District Capital Improvement Projects FY22 are eligible as long as they too are eligible under one of the SRF programs. In reviewing their project list, it appears most are eligible projects, the only one that appears to require further clarification from the Water District is the "Water Main Extension Cambridge Avenues." The DWSRF allows for main lines to be eligible when: (1) "[n]ew water main extensions to serve existing residents not served by a safe supply of potable water" and (2) the "distribution pipe replacement or rehabilitation will reduce water loss and prevent water main breaks."16 Transfer of Funds to the Water District The Rule allows for the City to transfer ARPA funds to a specialized -unit of local government, who did not receive its own funds through this ARPA program. When the City does this, the specialized -unit of local government becomes a subrecipient. Both the City and the subrecipient have to ensure that the funds are used in an eligible manner and are bound to the restrictions of the Rule, its guidance, and 2 CFR 200. It is recommended that subrecipients maintain all records on projects done with the use of ARPA funds for five (5) years after all of the funds have been expended, or December 31, 2026, whichever is later. Reporting and Compliance Guidance state that the City needs to evaluate the Recipient's risk of noncompliance prior to the awarding of Grant Funds.57 This evaluation is to include, but not be limited to, the following: prior experience in managing Federal funds, previous audits, ss Environmental Protection Agency (EPA), Funding Stormwater Management with the Clean Water State Revolving Fund (July 2016). 16 Environmental Protection Agency (EPA), Drinking Water State Revolving Fund Eligibility Handbook (June 2017). 57 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 9. -11- BEST BEST & KMEGER ATTORNEYS AT LAW personnel, and policies or procedures for Grant Funds execution and oversight. Lastly, the City is to conduct ongoing monitoring of any subrecipient. CONCLUSION The following projects are eligible uses under ARPA and the Treasury Interim Final Rule and guidelines: Vaccination Incentives for those who are not already vaccinated IT Expenditures Microsoft Teams VMWare Tyler (Online Permitting) Open Gov Storage Area Network Expansion VM Horizon Licenses 24/7 SOC Nth Services for VDI Zoom Website Hero Pay Program for City Employees Stormwater Projects San Dieguito Water District Capital Improvement Projects FY22 Transfer of Funds to the Water District The following projects require further clarification or explanation from Treasury, the City, or another source in order to determine eligibility. Vaccination Incentives for those already vaccinated IT Expenditures Increased Network Bandwidth in City Hall Increased Network Bandwidth in Communications Center Purchase land and construct affordable housing units Railroad Crossings Should the City have any additional questions or would like to review any of the above further, please do not hesitate to reach out. Ana D. Schwab -12- Potential Storm Water Projects for American Rescue Plan Act Funding Available: $8.1M May be used for expenses after March 3, 2021. Expenses must be Incurred by 12/31/2024 or obligated by 12/31/2024 and spent by 12/31/2026. necommenaea rroiects rrroiects are runaea or nave a snort turnarounar Project Description / Justification Estimate Timeline Issues / Notes 1 North Highway 101 Drainage Improvements (La North Highway 101 Drainage Improvements would 101 help $ 5,000,000 See also Project #10: North Highway 101 Drainage Improvements Costa to Jupiter) provide additional capacity on the to alleviate Design is complete. (Jupiter to Basil) flooding. The Leucadla Streetscape storm drain work provides Estimated storm drain completion in early 2022. 2 Streetscape - Phase 1 new drainage capacity which will reduce flooding on $ 1,660,000 Project In the 101. The project is in construction. Storm Water construction. This project is largely funded with General and TransNet funds. work began after March 3, 2021 El Portal project stormdrain work includes a sump at Stormwater work will begin in Fall 2021 and will be completed by the undercrossing low point, as well as a detention Spring 2022. 3 El Portal basin and other infrastructure that connects to $ 900'000 Project in drainage In the 101. Project is in construction. The construction. This project is largely funded with grant funding and general funds Storm Water portion will begin after March 3, 2021 (match). ARPA funds could be used to supplant the General funds that were utilized for this project. Three existing storm drain barrels under the volleyball Design is complete. Work would need to occur in Fall or Spring. 4 Moonlight Beach Barrels courts at Moonlight Beach need to be relined. Design $ 1,000,000 Seeking CON is complete. funding. The only available funding source is General funds. A list of CMP in need of repair/lining was created in 2015. The list and estimated costs need to be updated. 5 Storm Water Repairs Lining and/or repairs to Stormwater Corregated Metal $ 500 000 Pipe (CMP). The Storm Water Repair project (CSOSE) receives $250,000 of general funds annually. This project was used to fund the design of the Lake Drive Storm Drain. TOTAL $ 9,060,000 Recommended Prolects (Timing of Protects Is uncertain) The Lake Drive Storm Drain Replacement project will 6a Lake Drive Storm Drain Replacement - Design replace a failed 48" CMP with a 60" CMP. Project $ Construction will begin once CEQA and permitting are complete. and Environmental design and environmental analysis are underway. 124,016 In design See Project #5 below for the Construction phase. The design contract of $52,170 is funded with General funds. The environmental work would also be funded with general funds. The Lake Drive Storm Drain Replacement project will Environmental permitting may take longer than the funding Lake Drive Storm Drain Replacement - replace a failed 48" CMP with a 60" CMP. Project timeline allows. 6b Construction design and environmental analysis are underway. See $ 4,000,000 Project is in design. The 50%design plans are due mid -August 2021 and should Project # 3 above for the design and environmental provide staff with a better cost estimate. Would be eligible if phase. timing works. C:\Users\ppiatt\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\CSNBHAM4\ARPA-Storm Water Projects 7-28-2021 Project design is The Birmingham Drive Improvements Project includes nearly complete. This project includes undergrounding. Construction phase cost is 7 Birmingham Drive Improvements. bioretention and infiltration along with traditional $ 450,000 Working on approximately $8.6M. stormdrains Permitting. Seeking CON funding. 8 H y8 eia Roundabout at Leucadia Boulevard Drainage improvements include catch basins, RCP $ 225,000 Design is complete. Seeking CON The Leucadia Blvd/Hygeia Roundabout will require over $2.1M of Pipes, PVC Pipes, and vegetated BMP. funding. additional funding for construction. Other Proiects Considered. but not Recommended Project Description Amount Timeline Issues / Notes The Storm Water Master Plan would analyze drainage 9 Storm Water Master Plan City-wide and provide prioritized recommendations "$350,000 Not initiated We have requested funding from ACOE for this master plan/study. for improvement projects. Awaiting their response. North Highway 101 Drainage Improvements North Highway 101 Drainage Improvements would —$10M See also Protect #1: North Highway 101 Drainage Improvements 10 Ju (Jupiter to Basil) provide additional capacity on the 101 to help alleviate Design is complete (La Costa to Jupiter). Project cost exceeds the amount available. flooding. 11 Vulcan Avenue Drainage Improvements Vulcan Avenue drainage improvements would provide TBD Design has not been It is anticipated that the costs would be similar to Streetscape - additional capacity on Vulcan to help alleviate flooding. Initiated segment C. Initial hydrology and hydraulics need to be completed. Culvert on Vulcan (north of Jason St) to alleviate May need to be The project may need to be redesigned based on the temporary 12 Jason Street Storm Drain Project flooding at Jason/Vulcan. —$400,000 redesigned. parking and drainage that was recently completed. Would be ell ible if timing works out. 13 Stormwater Capture - Leucadia Roadside Park P Project includes storing water under the park and $1,200,000 Not initiated The estimate in 2017 for construction only was approx. $1M. slowin releasingit into existingdrains. Would be eligible if timing works out. C:\Users\ppiatt\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\CSNBHAM4\ARPA - Storm Water Projects 7-28-2021 Item Category Description Expense Facilitates remote communication and Microsoft Teams Telecommuting collabortion between staff and outside $150,000 agencies. VMWare Telecommuting Part of telecommuting infrastructure. $44,982 Tyler (Online Permitting) Digital Public Service Enables the public to pay bills online, report issues, and submit permits online. $44, 848 Open Gov Digital Public Service Enables the budget to be viewed online by the public. $85,645 Provides storage for digital content Storage Area Network Expansion Telecommuting / Digital Public Service created by both staff and the public conducting business virtually. $229,853 Provides network bandwidth for digital Increased Network Bandwidth City Hall Telecommuting / Digital Public Service content created by both staff and the public conducting business virtually. $24,553 Provides network bandwidth for digital Increased Network Bandwidth Com Cer Telecommuting / Digital Public Service content created by both staff and the public conducting business virtually. $6,545 VM Horizon licenses Cybersecurity Enables two factor authentication for $2,556 remote users. 24/7 SOC Cybersecurity Enances cybersecurity coverage due to increased cybersecurity risk. $27,790 Nth services for VDI Telecommuting Network architecture services to support $2,540 telecommuting. Zoom Digital Public Service Provides public meeting streaming and $8,838 webinar capabilities. Website IDigital Public Service Hosts online public services. $91200 TOTAL $637,350 San Dieguito Water District Capital Improvement Proiects FY 22 Priority PROJECT PROJECT SUMMARY FUNDING PROJECT PROJECT REQUEST COST STATUS 1 Transmission Main Air Replacement and repair of air release $1.1 million $1.1 million 75% Design Releases and Blow -Off and blow -off valves and appurtenances (Dudek) Replacements on 14 miles of 30-inch and 36-inch transmission mains, and the installation of one 16-inch butterfly valve at Balour Reservoir. 2 Water Main Extension New main line construction to improve $250,000 $250,000 75% Design Cambridge Avenue water quality for the area and eliminate the (Dudek) need for flushing. Project will construct 650 LF of 8-inch water main, new valves, and reconnect various services. 3 Distribution Valve Project is to replace 70 distribution valves $750,000 $750,000 Design to start Replacement Project rangingin size from 6-inch 8-inch 12- August 2021 inch valves. Most of the valves are 45 to (Dudek) 55 years old and have reached the end of their useful life. District staff, through its valve testing program, has found that some of the valves have begun to malfunction. Replacing these aging water valves will help to increase operational efficiencies and decrease customer impacts during shutdowns for both routine maintenance and emergency situations. 4 Large Diameter Replacement of 24-inch and 30-inch $975,000 975,000 Design to start Transmission Main Valve butterfly valves on the transmission mains. August 2021 Replacement on the 30- This is the second phase of the project— the (Dudek) Inch and 36-Inch first phase was completed in 2016. Transmission Mains 5 Fire Protection for Increase the main size in Oceanic Drive, $675,000 $675,000 Preparing Oceanic Drive; Candor replacing 1,000 feet and replacing existing scope of work. Street; and Various fire hydrants. New construction of Other Areas in the City pressure reducing valve station at Caudor of Encinitas Street and Burgundy Street. This project will supplement fire, obtaining a City of Encinitas requirement of 1,500 gpm. This project also includes the construction of ten new fire hydrants in various parts of the City of Encinitas. AMI Meter Replacement Replace 12,000 Potable Automated Meter $5 million $5 million Program Reading (AMR) drive -by system with an Automated Meter Infrastructure (AMI) system. Upgrading 12,000 meters to AMI would provide real-time meter reading data to the District, which will allow District employees to find potential leaks on customer plumbing remotely. AMI also provides the customers a portal that would help them measure their own consumption, check for leaks, and make adjustments to their indoor and outdoor, which could have significant impact on improving their water conservation efforts. An AMI system would eliminate the need to drive a vehicle to collect reads, reducing carbon footprints and reduce staff meter reading. Teresa McBroome From: Sent: To: Subject: Do you understand this thread? Pat Piatt Monday, October 25, 2021 2:45 PM Teresa McBroome FW: Memorandum on ARPA Spending Patrick Platt Senior Management Analyst City Manager's Office 760-633-2613 direct ppiatt@encinitasca.gov From: Ana Schwab <Ana,Schwab@bbklaw.com> Sent: Monday, October 25, 2021 2:42 PM To: Pat Piatt <ppiatt@encinitasca.gov> Subject: RE: Memorandum on ARPA Spending [NOTICE: Caution: External Email] Hi Pat, \1k Thanks so much. On the revenue replacement, as of right now (before the Final Rule is published by Treasury) Revenue loss is able to be used up to the amount calculated for the year. I believe, and we can clarify with Treasury, but as I have understood with colleagues, the amount if not used for the year can be carried forward but the City needs to show how the funds are drawn down for the particular year. What cannot be done is that the City cannot predetermine what the lost revenue will be ahead of the four points in time. If that doesn't make sense let me know — happy to explain further, it is a bit confusing. Very best, Ana . W& Ana D. Schwab Director of Government Relations ana.schwab@bbklaw.com L T: (202) 370-5311 C: (202) 603-2348 1800 K Street NW, Suite 725, Washington, DC 20006 www.13131(law.corn 0 V From: Pat Platt <ppiattC@encinitasca.gov> Sent: Monday, October 25, 2021 2:40 PM To: Ana Schwab <Ana.Schwab@bbklaw.com> Cc: Ana Schwab <Ana.Schwab@bbklaw.com> Subject: RE: Memorandum on ARPA Spending Hi Ana, thanks for he memo. This is good work. Will you remind me, or clarify the revenue replacement; can we save and accumulate our funds each year to spend on one big project or item, or do we have to spend each years recovered funds within that year? Patrick Platt Senior Management Analyst City Manager's Office 760-633-2613 direct ppiatt@encinitasca.gov From: Ana Schwab <Ana.Schwab@bbklaw.com> Sent: Monday, October 25, 20213:55 AM To: Pat Piatt <ppiatt@encinitasca.gov> Subject: Memorandum on ARPA Spending [NOTICE: Caution: External Email] Hi Pat, I hope you are well. Attached, please find the memorandum to the City on ARPA spending. Please review and let me know if you would like to connect to discuss any of this further. Lastly, when the City has chosen its projects (for this year and ongoing) please know I am happy to put together specific information on the reporting and compliance information required. Very best, 2 Ana Ana D. Schwab Director of Government Relations l[(ZO2) 370-5311 [(2D2)G03'234D This email and any files or attachments transmitted with it may contain privileged or otherwise confidential information. If you are not the intended recipient, or believe that you may have received this communication in error, please advise the sender via reply email and immediately delete the email you received. BEST BEST & KRIEGER A'r'rORNEYS AT LAW CONFIDENTIAL ATTORNEY/CLIENT PRIVILEGE Memorandum To: Pat Piatt Senior Management Analyst City Manager's Office City of Encinitas From: Ana Schwab Date: October 24, 2021 Re: City of Encinitas' Proposed Spending Plan — Compliance with ARPA INTRODUCTION This memo provides a review of the City of Encinitas's ("the City") spending plan for compliance with the American Rescue Plan Act of 2021 ("ARPA"). The projects in the spending plan are classified as (1) eligible, (2) eligible if addressing public health or economic disparities, (3) requiring further clarification or explanation, and (4) ineligible. For projects that are not outright eligible, this memo provides guidance for how the City can strengthen compliance with ARPA and Treasury guidelines. ARPA SPENDING REQUIREMENTS The American Rescue Plan Act ("ARPA") was signed into law in March 2021. ARPA contained a section, the Coronavirus State and Local Fiscal Recovery Fund ("SLFRF"), to provide monetary support to local governments to respond to, mitigate, and recover from the COVID-19 public health emergency. In May 2021, the U.S. Treasury released an Interim Final Rule providing further guidance on SLFRF. Under the Statute and Rule, there are six categories of eligible use:' Support public health expenditures; ii. Address negative economic impacts caused by the public health emergency; iii. Serve the hardest -hit communities and families; ' American Rescue Plan Act of 2021, Pub. L. No. 117-2, § 603(c)(1); Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 (May 17, 2021) (codified at 31 C.F.R. Part 35) [hereinafter "Interim Final Rule"]. IHW BEST BEST & KRIEGER ATTORNEYS AT LAW iv. Replace lost public sector revenue; V. Provide premium pay to eligible workers; and vi. Invest in water, sewer, and broadband infrastructure. The City has asked for review of projects specifically in the categories of infrastructure, lost revenue, premium pay, public health, and transfer of funds. A. Public Health ARPA affords significant flexibility for cities to identify local needs and determine the best use of ARPA funding for their communities and populations. Funds may be used to meet a wide range of public health and economic needs resulting from COVID-19. The funds, however, must be used in response to the disease itself or harmful economic impacts resulting from the public health emergency. Thus, where the COVID-19 nexus for a City project is not sufficiently clear, the City should articulate a stronger link between the project and COVID-19. The Rule provides a non-exclusive list of programs and services that are eligible uses and qualify as responding to COVID-19 or the negative economic impacts of the COVID-19 public health emergency.2 To assess whether additional uses are eligible, the City should be able to articulate whether and how the use would respond to the COVID-19 public health emergency. The City should (1) identify a need or negative impact of the COVID-19 public health emergency, and (2) identify how the program, service, or other intervention addresses the identified need or impact.' More specifically, to establish that a project responds to a public health need, the City should (1) identify an effect of COVID-19 on public health, including either or both of immediate effects or effects that may manifest over months or years, and (2) assess how the use would respond to or address the identified need.' B. Economic Impacts The Rule gives recipients ability the to provide direct assistance to households, individuals, and impacted industries.5 The Rule goes on to also allow recipients to rehire government staff to pre -pandemic levels, invest in communities disproportionately impacted by the public health emergency.' For projects addressing economic impacts, the City should assess (1) whether, and the extent to which, there has been an economic harm, such as loss of earnings or revenue, that resulted from z 31 C.F.R. § 35.6, Eligible Uses. s 86 Fed. Reg. 26786 at 26,788; 31 CFR § 35.6(b)(1)(iii). a Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 at 26,790 (May 17, 2021). 5 31 C.F.R. § 35.6(b). 6 31 C.F.R. § 35(b)(3); (b)(12). -2- I lei lk BEST BEST & KRIEGER ATTORNEYS AT LAW the COVID-19 public health emergency and (2) whether, and the extent to which, the use would respond or address the identified harm.' Finally, under this category, the Rule goes on to state that to utilize funds under this category, the use "must be in response to the disease itself or the harmful consequences of economic disruptions resulting from or exacerbated by the COVID-19 public health emergency." C. Addressing Disparities The Rule provides that certain services and programs are presumed to respond to the public health emergency when provided in communities that have been disproportionately impacted by COVID-19.1 Such communities include those located in a Qualified Census Tract ("QCT"), and households, businesses, and populations that have otherwise been disproportionately impacted by COVID-19.9 The Rule provides some specific examples of eligible services and programs to disproportionately impacted communities. For these listed services, the City only needs to show that the services are being provided to communities in a QCT, or communities otherwise disproportionately impacted. In identifying these disproportionately impacted communities, the City should be able to support its determination that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations, households, or geographic areas to be served.10 D. Lost Revenue ARPA funds may be used by recipients to replace lost public sector revenue.l 1 The Rule provides a methodology to calculate the lost revenue by comparing actual revenue to an alternative representative what could have been expected to occur in the absence of the pandemic. The lost revenue is based on revenue from own sources collected by the City "and generated from its underlying economy."12 The revenue does not include revenue from utilities or insurance trusts, nor does it include intergovernmental transfers from the Federal Government.13 There are four steps to calculating lost revenue:14 86 Fed. Reg. 26786 at 26,793-96. e 31 C.F.R. § 35.6(b)(12). '31 C.F.R. § 35.6(b)(12). 10 86 Fed. Reg. 26786 at 26,795. 1 31 CFR § 35.5(d). 12 86 Fed. Reg. 26786 at 26,779. 13 Utility Revenue is defined by the Census Bureau's Government Finance and Employment Classification Manual as "[g]ross receipts from sale of utility commodities or services to the public or other governments by publicly - owned and controlled utilities." The Rule FAQ goes on to indicate that "[t]his includes revenue from operations of publicly -owned and controlled water supply systems, electric power systems, gas supply systems, and public mass transit system." Treasury FAQs No. 3.15. la 86 Fed. Reg. 26786 at 26,800-01. -3- BEST BEST & KRIEGER ATTORNEYS A'[' LAW (1) Identify revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. (2) Estimate counterfactual revenue, which is equal to base year revenue [(1+growth adjustment)^(n/12)], where n is the number of months elapsed since the end of the base year to the calculation date, and growth adjustment is the greater of 4.1 perfect and the recipient's average annual revenue growth in the three full fiscal years prior to the COVID-19 public health emergency. (3) Identify actual revenue, which equals revenues collected over the past twelve months as of the calculation date. (4) The extent of the reduction in revenue is equal to the counterfactual revenue less actual revenue. If actual revenue exceeds counterfactual, the extent of the reduction in revenue is set to zero for that calculation date. The City must calculate lost revenue with the equation above as of the following four dates: December 31, 2020; December 31, 2021; December 31, 2022; and December 31, 2023.11 Once lost revenue is determined, the City may utilize the funds, under this category, broadly for government services, up to the amount calculated for the year. 1I General government services do not include "obligations under instruments evidencing financial indebtedness for borrowed money... interest or principal on outstanding debt; satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or regulatory proceeding, except if the judgment or settlement required the provision of government services."17 Lastly, funds may not be used to be put into a pension program (with the exception of when the City is paying an employee's salary and included benefits, in an eligible manner).1I E. Providing Premium Pay to Eligible Workers The Rule states an eligible use of ARPA funds includes the ability to provide premium pay to eligible workers performing essential work during the COVID-19 public health emergency.19 Once determined to provide premium pay, the Rule permits pay "up to $13 per hour in addition to wages or renumeration the worker otherwise receives and in an aggregate amount not to exceed $25,000 per eligible worker."24 Further, the premium pay cannot exceed the employee beyond 150 percent of the state, in which the employee resides, average annual wage for all occupations. Eligible workers are those who faced heighted risks due to the nature of their work and is defined under the Rule as those 15 31 CFR § 35.6(d)(1). 16 86 Fed. Reg. 26786 at 26,799. 1186 Fed. Reg. 26786 at 26,801. 1186 Fed. Reg. 26786 at 26,806. 19 31 CFR § 35.6(c). -4- ICj:� BEST BEST & KRIEGER ATTORNEYS AT LAW ...needed to maintain continuity of operations of essential critical infrastructure sectors, including health care; emergency response; sanitation, disinfection, and cleaning work; maintenance work; grocery stores, restaurants, food production, and food delivery; pharmacy; biomedical research; behavioral health work; medical testing and diagnostics; home- and community -based healthcare or assistance with activities of daily living; family or child care; social services work; public health work; vital services to Tribes; any work performed by an employee of a State, local, or Tribal government; educational work, school, nutrition work, and other work required to operate a school facility; laundry work; elections work; solid waste or hazardous materials management, response, and cleanup work; work requiring physical interaction with patients; dental care work; transportation and warehousing; work at hotel and commercial lodging facilities that are used for COVID-19 mitigation and containment; work in a mortuary; work in critical clinical research, development, and testing necessary for COVID-19 response.20 While the definition provides a broad list of sectors eligible under this category, the Rule lays discretion with the "chief executive of each recipient" to designate additional sectors that were/are critical to protect the public health and safety.21 Important to note, the SLFRF Compliance and Reporting Guidance indicates that a "User's Guide" is forthcoming which will provide further clarification on the sectors designated as critical to the health of the residents.22 In addition to being an eligible worker, the worker must perform essential work, which is limited to work done only in person and with regular interactions with others or the regular handling of physical items.23 Key to those who may receive premium pay is that employees cannot receive premium pay for teleworking.24 When determining whether to provide premium pay, the City must contemplate whether the premium pay would "respond to" the essential work performed by the eligible employee(s).25 Unique to the premium pay provision is that the City can provide grants to private employers, for the private employers to give premium pay to their critical sector designated employees.26 An example of this is a grocery store in the City — the City can provide a grant to the grocery store for their workers to receive premium pay under this provision of the Rule. Finally, the Rule allows for premium pay to be provided retroactively, to compensate the employee on -top of their regular wages, for the work done and risk taken during the public health 20 31 CFR § 35.3. 2' 86 Fed. Reg. 26786 at 26,797. 22 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 20. 2131 CFR § 35.3. 21 86 Fed, Reg. 26786 at 26,797. 25 Id. 26 id. -5- BEST BEST & KRIEGER ATTORNEYS AT LAW emergency."" The funds cannot be used to replace monies earned or owed to an employee, but rather are to be used to compensate for the additional risk/work. 29 A key to the premium pay eligible use is that it must be "in addition" to the wages an employee receives and the obligation to provide the premium pay must not have been incurred by the recipient prior to March 3, 202 L" F. Water, Sewer, and Broadband Infrastructure ARPA funds may be used to make necessary investments in water, sewer, and broadband infrastructure.31 Cities may use the funds for a wide range of drinking water, wastewater, and stormwater infrastructure. Projects that would be eligible to receive financial assistance through the Environmental Protection Agency's Clean Water State Revolving Fund or Drinking Water State Revolving Fund are likewise eligible under ARPA .31 For broadband, the City may invest in projects that are designed to provide service to unserved or underserved households and businesses .3' The City must comply with specific requirements regarding speed reliability. G. Additional Notes The City is able to use the funds as describe above. With a few small exceptions, eligible expenses must have been incurred after March 3, 2021.31 Funds must be obligated by December 31, 2024 and expended by December 31, 2026.31 Further, ARPA funds are bound to the provisions of 2 CFR 200, the Uniform Guidance.36 Under this provision, the City has specific procurement rules that need to be followed. Should the City have specific questions on the implementation of 2 CFR 200, BB&K is available to provide more information. 2' 86 Fed. Reg. 26786 at 26,797. 28 The Interim Final Rule defines the public health emergency as beginning on January 27, 2020 and continuing until the termination of the national emergency declaration. 31 CFR § 35.3. z9 86 Fed. Reg. 26786 at 26,797. 3o U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 4.7. 31 31 C.F.R. § 35.6(e). 32 31 C.F.R. § 35.6(e)(1). 33 31 C.F.R. § 35.6(e)(2). 34 31 C.F.R. § 35.5(a). 35 Id. se U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 9.3. -6- I M Isk BEST BEST & KRIEGER ATTORNEYS AT LAW DISCUSSION This Discussion classifies the City projects as (1) eligible, (2) eligible if addressing public health or economic disparities, (3) requiring further clarification or explanation, and (4) ineligible. Examples of additional explanations are provided as hypothetical suggestions. A. Public Health (1) Eligible Vaccination Incentives for those who are not already vaccinated ARPA funds may be used to address the public health emergency. Specifically, the Rule states that an eligible use includes "[e]xpenditures for the mitigation and prevention of COVID- 19, including: [e]xpenses related to COVID-19 vaccination programs and sites..."37 Treasury has further defined this section to include vaccine incentive programs, such as cash, in -kind transfers, lotter programs, or other incentives for individuals who receive vaccines.38 (2) Requires Further Clarification Vaccination Incentives for those already vaccinated As discussed above, the Rule allows for ARPA funds to be used for vaccine programs and Treasury further defined this section of the Rule to include vaccine incentive programs. Currently, as it is written, the funds are to incentive those who are currently unvaccinated to receive the COVID-19 vaccine. A goal of the City was to provide the incentive to those City employees who were vaccinated prior to the start of this program. The City may be able to do this under this describe section of ARPA but would require clarification from Treasury to ensure its eligibility. There are three additional options for how the City could provide a vaccine incentive to employees vaccinated prior to the program: (1) Provide incentive for employees to receive a COVID-19 booster vaccine; (2) Utilize the lost revenue category of ARPA as a general government service; or (3) utilize the City's general fund for these employees. Should the City want to pursue utilizing the public health section of ARPA eligibility, it is recommended that further clarification is sought from Treasury, which BB&K could facilitate on behalf of the City. 37 31 C.F.R. § 35.6(b)(1)(i). 38 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 2.12. -7- BEST BEST & "IEGER ATTORNEYS AT LAW B. City Fiscal Health (1) Eligible IT Expenditures Microsoft Teams VMWare Tyler (Online Permitting) Open Gov Storage Area Network Expansion VM Horizon Licenses 24/7 SOC Nth Services for VDI Zoom Website ARPA provides an equation, described above, for the City to calculate its lost revenue due to the COVID-19 public health emergency, and based on the results of the equation the City may utilize any determined lost revenue to provide general government services, as prescribed in the Rule. Included within the provision of general government services, the City may use the funds for "modernization of cybersecurity, including hardware, software, and protection of critical infrastructure..."39 (2) Requires Further Clarification IT Expenditures Increased Network Bandwidth in City Hall Increased Network Bandwidth in Communications Center ARPA allows for investment in broadband infrastructure, however there are very specific speed requirements.40 The download speedy needs to be less than 100 Mbps and the upload speed of less than 20 Mbps.41 Further, the Rule states that the projects under this category are "expected to focus on locations that are unserved or underserved."42 Under the broadband category, the City could not use the funds for the increased network bandwidth in City Hall or the Communications Center unless the City can show compliance with the Rule requirements. While the broadband category may not be eligible for these expenses, the City may be able to use its funds calculated under the lost revenue category should the City have the funds the increase of both of these networks is to provide general government services as defined in the s9 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 3.8. ao 86 Fed. Reg. 26786 at 26,805. 41 Id. 42 Id. BEST BEST & KRIEGER ATTORNEYS A'r LAW Rule. If the City provides further information these two network increases, this may be answered more definitively. Purchase land and construct affordable housing units ARPA allows for the City to utilize calculated lost revenue for the provision of general government services, this could include the purchasing of land and construction of affordable housing. ARPA also allows for the City to utilize the funds to address disparities, as described above. This could also include the "development of affordable housing."a3 However, ARPA currently is bound to most of the provisions of 2 CFR 200, the Uniform Guidance.44 As of now this includes 2 CFR 200.311(c), Disposition of Real Property.45 Under 2 CFR 200.311 the title of real property would vest with the non -Federal entity upon acquisition, but when the "real property is no longer needed for the originally authorized purpose, the non -Federal entity must obtain disposition instructions from the Federal awarding agency... "46 It is recommended that should the City want to proceed with the purchase of land and development of affordable housing, under either the lost revenue category or the addressing disparities category, that clarification be sought from Treasury as to whether or not 2 CFR 200.31 l (c) would apply or if the title would vest clear to the City. Should the City want to proceed with this, BB&K can seek the clarification from Treasury on the City's behalf. Railroad Crossings As with the purchasing of land for affordable housing, there may be consideration of the land needed to do the Railroad Crossing projects the City seeks to pursue. Should the City want to proceed with this, BB&K can seek the clarification from Treasury on the City's behalf. Unlike the purchasing of land for affordable housing, it is likely that the use of funds for railroad crossings would only be eligible under the lost revenue category, as a general government service. As stated above, the lost revenue category funds may be used up to the amount calculated for the year — requiring the City to prioritize the use and order of projects under this category. 43 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 2.11. as U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Frequently Asked Questions, 9.3. as 2 C.F.R. § 200(c). ab 2 C.F.R. § 200(c). -9- BEST BEST & KRIEGER ATTORNEYS AT LAW C. Premium Pay (1) Eligible Hero Pay Program for City Employees The Rule allows for ARPA funds to be used to provide premium pay to eligible workers performing essential work during the COVID-19 public health emergency.41 These employees must have been working in person, telework employees are not eligible.41 The Rule provides a list of eligible sectors and also provides the discretion with the "chief executive of each recipient" to designate additional sectors that were/are critical to protect the public health and safety.49 Lastly, as described above, the Rule provides for financial parameters that must be met to provide funds under this category. With those boundaries in mind, this would be an eligible expense. When Reporting, the City should be prepared to provide a written description of "how the premium pay ... is responsive to workers performing essential work during the public health emergency."so This is further explained in the Reporting and Compliance Guidance issued by Treasury. 5 1 D. Water, Sewer, Broadband Infrastructure (1) Eligible Stormwater Projects San Dieguito Water District Capital Improvement Projects FY22 ARPA funds are allowed to be used for necessary investments in water and sewer infrastructure.52 Projects under this category are eligible for the Environmental Protection Agency's (EPA) Clean Water and Drinking Water State Revolving Loan Fund Programs (CWSRF and DWSRF).53 The Reporting and Compliance Guidance provides the specific information the City will need to report regarding funds used under this category.54 47 31 CFR § 35.6(c). 48 86 Fed. Reg. 26786 at 26,797. 49 86 Fed. Reg. 26786 at 26,797. 50 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 20. 51 Id. 52 86 Fed. Reg. 26786 at 26,802. 53 Id. 54 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 21-2. -10- 110 to BEST BEST & KRIEGER s ATTORNEYS AT LAW Eligible stormwater projects under the CWSRF include:" • Tradition stormwater conveyance pipe, storage, and treatment systems; • Sediment controls including filter fences, storm drain inlet protection, street sweepers, and vacuum trucks; • Green roofs; • Permeable pavement; • Infiltration basins; • Rainwater harvesting collection, storage, management, and distribution systems; • Wetland/riparian/shoreline protection and restoration; • Establishment/restoration of urban tree canopy; • Constructed wetlands; • Bioretention/bioswales including rain gardens, curb bump outs, and tree boxes; and • Replacement of gray infrastructure with green infrastructure. The projects identified by the San Dieguito Water District Capital Improvement Projects FY22 are eligible as long as they too are eligible under one of the SRF programs. In reviewing their project list, it appears most are eligible projects, the only one that appears to require further clarification from the Water District is the "Water Main Extension Cambridge Avenues." The DWSRF allows for main lines to be eligible when: (1) "[n]ew water main extensions to serve existing residents not served by a safe supply of potable water" and (2) the "distribution pipe replacement or rehabilitation will reduce water loss and prevent water main breaks.1156 Transfer of Funds to the Water District The Rule allows for the City to transfer ARPA funds to a specialized -unit of local government, who did not receive its own funds through this ARPA program. When the City does this, the specialized -unit of local government becomes a subrecipient. Both the City and the subrecipient have to ensure that the funds are used in an eligible manner and are bound to the restrictions of the Rule, its guidance, and 2 CFR 200. It is recommended that subrecipients maintain all records on projects done with the use of ARPA funds for five (5) years after all of the funds have been expended, or December 31, 2026, whichever is later. Reporting and Compliance Guidance state that the City needs to evaluate the Recipient's risk of noncompliance prior to the awarding of Grant Funds.57 This evaluation is to include, but not be limited to, the following: prior experience in managing Federal funds, previous audits, ss Environmental Protection Agency (EPA), Funding Stormwater Management with the Clean Water State Revolving Fund (July 2016). " Environmental Protection Agency (EPA), Drinking Water State Revolving Fund Eligibility Handbook (June 2017). 57 U.S. Department of Treasury, State and Local Fiscal Recovery Funds, Compliance and Reporting Guidance, pg. 9. - 11 - BEST BEST & KRIEGER ATTORNEYS AT LAW personnel, and policies or procedures for Grant Funds execution and oversight. Lastly, the City is to conduct ongoing monitoring of any subrecipient. CONCLUSION The following projects are eligible uses under ARPA and the Treasury Interim Final Rule and guidelines: Vaccination Incentives for those who are not already vaccinated IT Expenditures Microsoft Teams VMWare Tyler (Online Permitting) Open Gov Storage Area Network Expansion VM Horizon Licenses 24/7 SOC Nth Services for VDI Zoom Website Hero Pay Program for City Employees Stormwater Projects San Dieguito Water District Capital Improvement Projects FY22 Transfer of Funds to the Water District The following projects require further clarification or explanation from Treasury, the City, or another source in order to determine eligibility. Vaccination Incentives for those already vaccinated IT Expenditures Increased Network Bandwidth in City Hall Increased Network Bandwidth in Communications Center Purchase land and construct affordable housing units Railroad Crossings Should the City have any additional questions or would like to review any of the above further, please do not hesitate to reach out. Ana D. Schwab -12- 3/9/22, 4:28 PM https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 AGENDA Regular City Council Meeting - 6:00 p.m. Wednesday, March 9, 2022 Encinitas City Council Chambers 505 South Vulcan Avenue Encinitas, California 92024 A copy of the Council meeting packet may be viewed by the public in the City Hall lobby and on the City's webpage at www.encinitasca.gov. Members of City Council Catherine S. Blakespear Mayor Joe Mosca Deputy Mayor Kellie Shay Hinze Council Member Tony Kranz Council Member Joy Lyndes Council Member The Encinitas City Council welcomes you and encourages your continued interest and involvement in the City's decision -making process. KNOW YOUR RIGHTS UNDER THE OPEN GOVERNMENT LAWS: Government's duty is to serve the public, reaching its decisions in full view of the public. Commissions, boards, councils and other agencies of the City exist to conduct the people's business. For more information on your rights under the Brown Act and other State laws, visit the city's webpage at www.encinitasca.gov under the heading Resources. Any writings or documents provided to a majority of the City Council regarding any item on this agenda received after the posting of the agenda and prior to the meeting will be made available for public inspection in the City Hall lobby during normal business hours. In compliance with the Americans with Disabilities Act/Section 504 Rehabilitation Act of 1973 and Title VI, this agency is an equal opportunity public entity and does not discriminate on the basis of race, color, ethnic origin, national origin, sex, religion, veteran status or physical or mental disability in employment or the provision of service. If you require special assistance to participate in this meeting, please contact the City Clerk at 760-633-2601 at least 72 hours prior to the meeting. https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 1/5 3/9/22, 4:28 PM https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 INFORMATION ON CLOSED SESSIONS When necessary, the City Council may convene a special meeting closed session. The closed session agenda will be posted on the City's webpage and outside City Hall at least 24 hours prior to the scheduled closed session. Members of the public may speak on closed session items on the agenda following opening of the special meeting prior to the City Council adjourning to closed session. VISUAL MATERIALS FOR CITY COUNCIL MEETINGS To ensure that the City meets your needs when addressing the City Council, all presentation materials which require the use of visual equipment need to be submitted to the City's IT Division no later than 5:30 p.m. on the day of the actual meeting. This includes photographs, Microsoft Office documents (PowerPoint, Word, Excel), audio and visual CD's, DVD's, and USB thumb/flash drives. All materials must be in PC format. Please label all materials with the agenda item number you are representing. We prefer that digital presentation items be emailed to helpdesk@encinitasca.gov at least 24 hours in advance of the meeting. (except for appeal hearings where materials must be submitted 7 days in advance). Should technical assistance be necessary, it will be available to presenters from 5:30 p.m. to 5:50 p.m. on the day of the meeting. Presentation of video/digital/photographs are considered part of the maximum time limit provided to speakers. PROCEDURES FOR ADDRESSING THE COUNCIL (Speaker Slips will be accepted no earlier than 30 minutes before the start of the meeting. Please be aware that the Mayor has the authority to reduce equally each speaker's time to accommodate a larger number of speakers.) - The audience and speakers are asked to be respectful and courteous - no clapping, cheering, jeering or booing. Please address your comments to the Council as a whole and avoid personal attacks against members of the public, elected officials and city staff. ORAL COMMUNICATIONS: Thirty (30) minutes are set aside at each meeting for citizens who wish to address an issue not on the agenda. The purpose of oral communications is to bring to the attention of the Council a matter or matters which do not appear on the agenda. Remarks shall be addressed to City Council as a body and not to any member of the City Council, staff or the public. State law prohibits Council action on non -agenda items because the public would be unaware prior to the meeting of any potential action. If needed, Oral Communication items will be referred to the City Manager either for resolution by administrative action or placement on a future agenda. Each speaker is allowed three (3) minutes to address the City Council. Please submit a "WHITE" speaker slip to the City Clerk. CONSENT CALENDAR: Those matters which are considered routine by the City Manager shall be initially placed on the Consent Calendar. Before adopting the Consent Calendar, the Chair will ask members of the public and members of the City Council whether anyone wishes to add an agenda item to the Consent Calendar or to remove a matter from the Consent Calendar. Any member of the public may remove an item from the Consent Calendar by submitting a "PINK" speaker slip to the City Clerk. Council will then proceed with consideration of the remaining Consent Calendar. The Consent Calendar will be enacted upon with one motion, and the ordinances being read by title will be waived. There will be no separate discussion of these matters. Items pulled from the Consent Calendar will be considered immediately following adoption of the remaining Consent Calendar, and staff reports will only be given if requested by the person who pulled the item. Each speaker is allowed three (3) minutes to address the City Council. Please submit a "PINK" speaker slip to the City Clerk. https:Hencinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 2/5 3/9/22, 4:28 PM https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 AGENDA ITEMS: To speak on items listed on the agenda (other than Oral Communications), please submit a "PINK" speaker slip to the City Clerk. In addition, a person in attendance who wishes to register support or opposition to a recommended action without speaking may do so by completing a "PINK" speaker slip and checking the appropriate box and the box "but do not wish to speak". Each speaker is allowed three (3) minutes to address the City Council. Live broadcasting of the Encinitas City Council meetings will be transmitted for each regularly scheduled meetings which are held on the second, third and fourth Wednesdays of each month beginning at 6:00 p.m. on Channel 19 on Cox Communications, Channel 24 on Time Warner Cable f(duplicate coverage on Channel 128 has been discontinued), and Channel 99 on AT&T U-Verse (Program Name: "City of Encinitas Broadcasts"). The Council meetings are also broadcasted live via the Internet on our website at https:Hencinitasca.gov/Government/Agendas-Webcasts. Past meetings will also be archived for viewing via the internet. 1. CALL TO ORDER 2. ROLL CALL 3. 4. 5. PLEDGE OF ALLEGIANCE SPECIAL PRESENTATIONS AND PROCLAMATIONS ORAL COMMUNICATIONS / POSSIBLE DIRECTION TO STAFF (30 MINUTES) Each speaker is allowed three (3) minute s 2022-03-09 Item 05 Oral Communications Received REPORT FROM CLOSED SESSION (IF HELD) 7. CHANGES TO THE AGENDA Announcements of administrative changes to the agenda, in compliance with the Brown Act. 8. CONSENT CALENDAR The recommendations on the following Consent Calendar will be enacted in one motion unless an item is removed from the Calendar. Any member of the public may remove an item by submitting a "PINK" speaker slip to the City Clerk. Items removed from the Consent Calendar by a Council Member or the public will be considered immediately following the Consent Calendar. If a public hearing item is part of the consent calendar, the public hearing shall be deemed held if the item is not removed from the consent calendar for discussion and possible action. https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 3/5 3/9/22, 4:28 PM https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 8A. Approval of the Minutes of the February 9, 2022 Regular Meeting, February 16, 2022 Special Meeting, February 16, 2022 Regular Meeting, February 23, 2022 Special -Closed Session Meeting, and the February 23, 2022 Regular Meeting. Contact Person: City Clerk Hollywood Recommended Action: Approve the Minutes. 2022-03-09 Item 08A Minutes 8B. Approval of the Warrants List (Register of Demands). Contact Person: Finance Manager Dinh Recommended Action: Staff recommends that the City Council review and approve the warrants. 2022-03-09 Item 08B Approval of Warrants List 9. ITEMS REMOVED FROM THE CONSENT CALENDAR Staff reports will be given only if requested by the person who pulled the item. 10. ACTION ITEMS To speak on action items, please submit a "PINK" speaker slip to the City Clerk. Each speaker is allowed three (3) minutes to address the City Council. 10A. TIME CERTAIN 6:30 P.M. Fourth and final Public Hearing in the redistricting process to begin at 6:30 pm. Contact Persons: Administrative Services Director Schwarm and Special Counsel Skinnel Recommended Action: 1) Open the public hearing 6:30 p.m.; 2) Receive a presentation from the demographic consultants regarding draft district maps, including those prepared by the demographers and those submitted by members of the public using the City's various options on its redistricting website; 3) Conduct a public hearing to solicit public testimony regarding the proposed district maps; 4) Choose a preferred map and adopt Resolution No. 2022-26 approving the use of the selected map for council elections beginning in 2022; and 5) Direct City Clerk to post the Resolution and chosen map in the official newspaper at least once within 15 days after approval. 2022-03-09 Item 10A Redistricting Public Hearing #4 2022-03-09 Item 10A Redistricting Public Hearing #4 agenda report- Spanish 2022-03-09 Item 10A Redistricting Public Hearing #4 Resolution 2022-26 - Spanish `z'�, 10B. The American Rescue Plan Act of 2021. Contact Person: City Manager Antil � Recommended Action: Receive public input regarding the $8.1 million in https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 4/5 3/9/22, 4:28 PM https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 federal American Rescue Plan Act of 2021 funds to be expended or committed by December 31, 2024. 2022-03-09 Item 10B American Rescue Plan Act Public Input 2022-03-09 Item 10B American Rescue Plan Act Public Input - Public Comments 11. INFORMATIONAL ITEMS - NONE 12. COUNCIL MEMBER INITIATED AGENDA ITEM - NONE 13. CITY COUNCIL MEMBER REPORTS PURSUANT TO AB1234 (GC 53232.3(d)) / POSSIBLE DIRECTION TO STAFF 14. CITY MANAGER REPORTS 15. CITY ATTORNEY REPORTS 16. ADJOURNMENT - THE NEXT REGULAR CITY COUNCIL MEETING WILL BE HELD ON MARCH 16, 2022 https://encinitas.granicus.com/GeneratedAgendaViewer.php?view_id=7&event_id=3528 5/5 Nl� AGENDA REPORT City Council MEETING DATE: March 9, 2022 PREPARED BY: Pamela Antil DEPT. DIRECTOR: DEPARTMENT: City Manager CITY MANAGER: Pamela Antil SUBJECT: The American Rescue Plan Act of 2021 RECOMMENDED ACTION: Receive public input regarding the $8.1 million in federal American Rescue Plan Act of 2021 funds to be expended or committed by December 31, 2024. FISCAL CONSIDERATIONS: While the formal process of designating the use of the $8,142,344 million in funding is to be determined, the City has been tracking COVID related costs to date. Staff has determined that the City will need to set aside approximately $1 to $1.1 million of the funds for direct COVID related costs including required employee personal protection equipment (PPE); employee COVID testing; COVID related overtime incurred by the Fire Department; essential worker/wellness pay; and other miscellaneous related costs incurred during the ARPA time frame. This will leave approximately $7 million in undesignated funding to be expended or committed by December 31, 2024, and expended by December 31, 2026 if the funds are committed before December 31, 2024. BACKGROUND: The American Rescue Plan Act of 2021 is a $1.9 trillion coronavirus rescue package designed to facilitate the United States' recovery from the devastating economic and health effects of the COVID-19 pandemic. Included in the rescue package is $350 billion designated for aid to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. These funds are referred to as the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. The City of Encinitas has received $4,071,172million to date and will receive another $4,071,172million in June 2022, for a total of $8,142,344million to be expended or committed by December 31, 2024, and expended by December 31, 2026, if the funds are committed before December 31, 2024. The SLFRF program provides governments across the country with the resources needed to 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 7n77.n-,4.nU Itam tti m Pana I of 7 the crisis; and build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity. Recipients may use SLFRF funds to: • Replace lost public sector revenue, using this funding to provide government services up to the amount of revenue lost due to the pandemic; • Respond to the far-reaching public health and negative economic impacts of the pandemic, by supporting public safety, the health of communities, and helping households, small businesses, impacted industries, nonprofits, and the public sector recover from economic impacts; • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical sectors; and • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater infrastructure, and to expand affordable access to broadband internet. Since the time of the adoption, the final rule issued by the Department of Treasury have granted jurisdictions receiving less than $10 million, like Encinitas, additional flexibility to meet local needs within these eligible use categories through the $10 million revenue loss standard allowance. ANALYSIS: Council will have several opportunities during the next few weeks as part of the budget process to discuss and determine how the SLFRF funds should be budgeted for use. The purpose of this item is to receive public input prior to Council taking formal action to designate the remaining funds for use during the ARPA required time frame. 9n99.n�.n4 1*ahm :91 nR pnnah 9 nf 9 From: Kathleen Stiven To: Council Members; City Clerk Subject: Item 10B Date: Sunday, March 6, 2022 2:12:07 PM [NOTICE: Caution: External Email] Dear City Council members, This important item on your agenda provides me with the opportunity to request that AFFORDABLE HOUSING be included in the discussion of SLFRF. The need for affordable housing certainly fits into the goal for equitable recovery, support for growth and opportunity. Investments in long term are the way to really make our city be the city we all hope for. Please consider affordable housing when designating these monies. Thank you, Kathleen Stiven 1109 Lagoon View Ct Cardiff, CA KAS From: Theresa Beauchamp To: Council Members; City Clerk Subject: Public Written Comment Agenda Item 10B March 9 City Council Meeting Date: Monday, March 7, 2022 10:19:01 PM [NOTICE: Caution: External Email] Dear Mayor and City Council Members: I am requesting that you consider investing the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) into homelessness prevention and the provision of a 100% affordable housing community. The COVID-19 pandemic increased the existing inequities of our most economically vulnerable neighbors. In the short term, we need to invest SLFR Funds in the prevention of homelessness for our community members who suffered job and income losses due to pandemic related issues. It is cost saving and compassionate to provide rental, utility and other financial assistance to prevent Encinitans from losing their current housing. The loss of stable housing puts our residents in a downward spiral that increases physical and mental health challenges and places them at great risk of being obstructed from finding stable housing in the future. The best medicine in the houseless crisis is prevention. It is my hope, for the long term, that a large portion of the SLFR Funds will be committed to build a 100% Affordable Community for our essential workers, college graduates who were raised here and seniors who built our community. This is a priority of BOTH the City of Encinitas and local affordable housing advocates. These funds coupled with city owned land provide the city with an opportunity to be competitive to seek county, state and federal subsidies to make a 100% affordable community a reality. N*M.01 Housing opportunity matters in Encinitas and the prevention of houselessness and the creation of a 100% affordable community are critical for our most vulnerable neighbors to thrive. Thank you for your service. Theresa Beauchamp Encinitas 4 Equality Housing Committee From: Kathy Hollywood To: Peter Weichers Subject: FW: item 10B - 3/9 council meeting Date: Tuesday, March 8, 2022 10:06:11 AM Attachments: Kathy Hollywood City Clerk, City of Encinitas 505 S. Vulcan Avenue, Encinitas, CA 92024 760.633.2601 khollywoodo,encinitasca aov www.encinitasca.gov Correspondents should be aware that all communications to and from this address are subject to public disclosure and may be reviewed by third parties. From: Teresa Baggot Roberts <phiIhoopist@gmail.com> Sent: Monday, March 7, 2022 4:58 PM To: City Clerk <CityClerk@encinitasca.gov> Subject: item 10B - 3/9 council meeting [NOTICE: Caution: External Email] in I sent this to all the Council members a day or two ago but then got to wondering if I needed to send it to you, too. So, here it is, attached. Thanks, Teresa Baggot Roberts Dear City Council Members, I would like to request that, as you consider how to commit funds from the American Rescue Plan of 2021, you earmark a very large portion to address affordable housing, homelessness prevention, and food insecurity —all negative health and economic impacts of the pandemic. As a member of the Society of St. Vincent de Paul and the food pantry leadership team at St. John the Evangelist Parish, my colleagues and I regularly meet with people who are struggling. We are currently seeing people who tell us they have never been to a food bank or sought other social services in their lives, but jobs lost to COVID and so many ripple effects are causing them to do so now. In my meetings with the Community Homeless Action Plan Work Group, I have heard from other members that seniors, in particular, are especially impacted by rising rents and inflation due to living on small, fixed incomes. Heartbreakingly, here are many who face having to move away from their lifelong community toward the end of their lives. This is not right and is truly a crisis. We must find solutions and the funds to enact those solutions to make a difference in people's lives. Please take this unique opportunity to first benefit Encinitas residents who are in the most need. Thank you, Teresa Baggot Roberts From: James Stiven To: City Clerk; Council Members Subject: Agenda Item 10b Date: Tuesday, March 8, 2022 9:31:47 AM [NOTICE: Caution: External Email] Mayor and Councilmembers — I am aware that the council is seeking citizen input on how to best allocate the substantial funds the city is receiving from the American Rescue Plan (Item 10b on your Agenda). There are so many needs and worthy causes, but we (speaking for the Housing Committee of St Andrew's Faith in Action) believe that putting some of the funds to use to aide the Housing insecure should be a high priority. The focus, at the city's discretion, can be on Homelessness, Transitional Housing or Affordable Housing for those citizens who live and/or work in Encinitas. We trust you can discern the highest and best use of these much needed funds. Thank You. Jim Stiven From: Tom O Scott To: Council Members; City Clerk Subject: Public Written Comment Agenda Item 10B March 9 City Council Meeting Date: Wednesday, March 9, 2022 10:48:01 AM Nw.." [NOTICE: Caution: External Email] Dear Mayor and City Council Members: The American Rescue Plan Act of 2021, which made available around $7 million for future commitments, presents our city with a unique opportunity to address some of our most pressing housing issues. As you know, housing is not a single focus issue; rather, it's a moving conveyor belt, representing a continuum from homelessness to mansions with plenty of land. If one part of that conveyor belt gets no attention, this affects every part of housing. Heretofore, we have built almost as many large homes as the growth in population required. But we have fallen woefully short in building homes for very low income, low income, and "missing middle" residents. As a result, homeless people who have found better conditions have nowhere to go, because there are no units available for people in their income bracket. And low income people who have improved circumstances can't afford to leave their homes because there is no missing middle housing available. On top of that, the pandemic and general income inequality have ,ft.-, left many people one unfortunate event away from homelessness. This is a crisis, and it is my fervent hope that you take a substantial portion of the $7 million now available to address it. Specifically, I hope you consider the following: • Rental, financial, and/or utility assistance for people with lower incomes who are in danger of losing their homes. • More innovative programs for homeless people, such as the Safe Parking Program. • Construction of a 1.00% affordable community for very -low and low income residents. • A comprehensive plan to develop housing for the "missing middle." Many people say they want to preserve our "community character." When we don't have affordable housing available for front line workers, teachers, etc., we are losing our community character. Most of us don't want a town in which our children can't live because it's unaffordable. Thank you for your commitment to making Encinitas a great place to live for all of �..• us, Tom Scott Encinitas resident for 27 years Encinitas4Equality Housing Committee From: Bob Kent To: Catherine Blakesoear; Joe Mosca; Joy Lvndes; Kellie Shay Hinze; Tony Kranz; Council Members Cc: Cry Clerk Subject: Item 10 B - American Rescue Plan Act of 2021 - Funding N.W., Date: Wednesday, March 9, 2022 12:08:00 PM [NOTICE: Caution: External Email] Dear Mayor and City Council Members: I respectfully request that you consider investing the Coronavirus State and Local Recovery Funds to help individuals and households that are at risk of experiencing homelessness through homelessness prevention and rapid rehousing efforts, along with the building of more affordable homes. As we work to solve our housing affordability challenges, many lower income households are still without a strong financial footing, and are living one paycheck, one car repair or medical emergency away from not being able to pay their rent. The COVID-19 pandemic has only exacerbated this situation, with people earning lower incomes (many who are our essential service workers) and seniors on a fixed income, hit the hardest economically. Future residential evictions may very well increase as rising rents and a lack of affordable homes are now coupled with broad based inflation: increasing costs for gasoline, food, household items and utilities will only further exacerbate our lower income households' rent burden —particularly for seniors on a fixed income, In the short term, these households that are imminently at risk, would directly benefit from rental support, utility payments, and other financial assistance which could be the difference between staying in their homes and/or finding more stable housing, versus experiencing an episode of homelessness. In the end, helping people stay in their homes is stabilizing and healthy; it's also more cost efficient; and it's just the right thing to do. The root cause of these challenges is a shortage of affordable homes, so I respectfully request that the city commit a portion of the Recovery funds to help build a 100% affordable community for our workers and family residents (at the very low-income level) who earn $15-$25/hour and for our seniors on a fixed income. These funds will serve to leverage county, state and federal funds and truly move the needle in building more affordable homes in our community. This is an impactful and generational decision to provide a stable home and a future with opportunity and dignity for our workers (many who serve us every day), along with families with children and our seniors. Lastly, I encourage the city to engage with local service providers, along with the county and neighboring cities, so that these funds are deployed most effectively. Thank you for your service. Bob Kent, Encinitas Resident Keys4Homes From: Rebecca Nussbaum To: Catherine Blakespear; Joe o ; Joy Lvndes; Kellie Shay Hinze; Tony Kranz; Council Members Cc: City Clerk Subject: Item 10 B - American Rescue Plan Act of 2021 - Funding Date: Wednesday, March 9, 2022 12:54:02 PM Attachments: Community Input- The American Rescue Plan Act of 2021.pdf [NOTICE: Caution: External Email] Dear Mayor and City Council Members, Please see the attached letter of input for the Coronavirus State and Local Recovery Funds from Community Resource Center. Thank you for your service. Warmly, Rebecca Nussbaum Chief Program Officer I Community Resource Center o. 760.230.6318 LGBTQ & Child Safe Zone Pronouns: She/Her/Hers Providing essential food, shelter & safety since 1979. Get help ) Give helms CONFIDENTIALITY NOTICE: This electronic message, together with its attachments, if any, is intended to be viewed only by the individual to whom it is addressed. It may contain information that is privileged, confidential, protected health information and/or exempt from disclosure under applicable law. Any dissemination, distribution or copying of this communication is strictly prohibited without our prior permission. If the reader of this message is not the intended recipient or if you have received this communication in error, please notify us immediately by return e-mail and delete the original message and any copies of it from your computer system. lover L R L ' COMMUNITY RESOURCE CENTER 650 2nd Street, Encinitas, CA 92024 • (760) 753-1156 • CRCNCC.org N..." Date: March 9, 2022 To: Encinitas City Council From: John Van Cleef, CEO Community Resource Center 760-230-6309 johnvancleef@crcncc.org Subject: The American Rescue Plan Act of 2021 Dear Mayor and City Councilmembers, On behalf of CRC and the people we serve, I am writing to request investment of the American Rescue Plan Act of 2021 funds, also known as the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, to support families struggling with the pandemic's public health and economic impacts. Critical and urgent investment is needed in Encinitas to address food insecurity, prevent homelessness in particular for seniors, and support affordable housing development. The pandemic has exacerbated food and nutrition insecurity not only nationwide, but in Encinitas and San Diego County. The San Diego Hunger Coalition estimates that as of March 2021, approximately 1 in 3 San Diegans experience nutrition insecurity, or are unable to provide three nutritious meals per day. This is an increase from 1 in 4 San Diegans from 2019. At CRC during the first year of the pandemic, we experienced over 30% more visits per hour to our Food and Nutrition Center. Access to healthy and nutritious food is essential for any community. Investment in food and nutrition security is needed to support families and children who are living on the brink and having to make choices between food and other essentials. In addition to food as an essential need, housing is critical. San Diego now has the unattractive title of becoming the least affordable city in the county. This is now compounded with the fact that nation-wide we are witnessing the greatest inflation in 40 years. This is dramatically impacting Encinitas seniors who are on a fixed income and individuals and families living on a the margins, barely making a living wage. Urgent investment is needed to keep our neighbors housed who are just one vehicle repair, one medical bill, or one unexpected cost away from losing their homes. Flexible funding is a proven method of moving upstream to prevent homelessness. In addition, we need funding to support those who are unsheltered so that they can return to housing. Stable housing means making sure that every Encinitan has the opportunity to succeed. It is only when everyone in need has a stable housing situation can they improve their economic well-being. Finally, investment in affordable housing in Encinitas is critical. Encinitas is now deemed a million dollar city, meaning that the typical home value has reached $1 million. That is increasingly out of reach for seniors, our essential workers, and individuals and families to continue to call Encinitas their home. Housing at a price that people can afford is essential and common sense. With this letter, I request to you and the City Staff to consider investing in the critical areas of food security, homelessness prevention, and affordable housing. As a voice for the vulnerable in the city of Encinitas and north county San Diego, I implore you to consider the needs of our most at -risk neighbors as you decide how to allocate these needed resources. Thank you for your service to our community as elected leaders. Community Resource Center is a 501(c)(3) charitable tax-exempt organization; Tax identification #95-3497926 Warm regards, John Van Cleef Chief Executive Officer Rebecca Nussbaum Chief Program Officer From: Nivardo Valenzuela To: Council Members Subject: Item 10B - The American Rescue Plan Act of 2021 Date: Wednesday, March 9, 2022 1:57:49 PM [NOTICE: Caution: External Email) Dear Mayor, Deputy Mayor and Council Members, Please commit some funds to: 1. Fund homeless prevention assistance as a direct result of COVID through rental and utilities assistance. 2. Some of the funds should also be made available to mitigate food insecurity and programs that would make food assistance more available. For example, the City could partner with Coastal Root Farms and deliver fresh organically grown vegetables to seniors. Or vegetables could be purchased by the City and made available through the food pantry at St. John the Evangelist Parish. 3. The city could also make funds available to cover broadband internet installation and up to a year of service to those who might not be economically stable as a result of the pandemic at the moment. Long term the city should consider funding a social services unit with emphasis on wellness and health. Thank you for your time and consideration, Nivardo Valenzuela N../ 01M From: Mali E4E ^ To: Cry Clerk; Annemarie Clisbv; Council Members; Kathy Hollywood Subject: SLFR agenda item Date: Wednesday, March 9, 2022 2:36:21 PM [NOTICE: Caution: External Email] Dear Mayor and City Council Members: I am requesting that you consider investing the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) into the following buckets: 1. homelessness prevention and support for our existing unhoused who were effected and lost work and housing during the pandemic - in order to do this I ask that organizations like CRC are considered in the budgeting of funds - I also ask that rental support vouchers and funds are made available to our communities most in need 2. Support of mental health through organizations and nonprofits that offer mental health care to our most vulnerable community members who have been effected by financial stresses, lack of connection and isolation, and for those who are suffering from the grief of loss during the ^ pandemic. 3. Continue to strive to seek a project and opportunity to create a 100% affordable housing community. I believe that Covid-19 most exacerbated issues and inequities that previously existed in our most vulnerable communities : elderly, children, low income, and communities of color or monolingual cultures. Utilizing the SLFR funds to support these communities with rental assistance, utilities support, food scarcity is often the difference between being sheltered and unsheltered, hopeful and hopeless, and maintaining safe environments for children. It is also far more cost saving to provide these funds prior to families and individuals becoming displaced and unsheltered. It is also my hope that rather than simply looking at the past and present struggle, that we also take what we have learned during the pandemic to look forward. Forward thinking means looking at possibilities for 100% affordable housing opportunities and setting funds aside for these projects. Some of our "heroes" during the pandemic are living on the brink of being displaced from Encinitas due to the rising cost of housing and inflation. To maintain our community character, we must maintain our community. This means creating affordable hosting for our seniors, college graduates, teachers, frontline essential workers, and our veterans. I believe we would all love to move from the pandemic to an endemic with the ability to honor the grief and struggle with something we can all be proud to have funded. Housing, food, and mental well being are the foundation of which we all flourish from. Please consider using the SLFR funds to support our community. Thank you for your service Mali Woods -Drake Encinitas4equality President & Co-founder Sent from my iPhone `1%.e From: Joshua Lazerson To: City Cler ; Council Members Subject: Agenda Item 10B Date: Wednesday, March 9, 2022 3:00:09 PM [NOTICE: Caution: External Email] Dear Encinitas City Council Members, In considering the uses to which the ARPA funding might be put, I hope you will consider how at least a portion of these funds might address short-term and long-term housing needs. A portion of these funds, put to rent subsidy for Encinitas residents who currently are struggling, could be of great benefit to some of our most vulnerable residents, including older residents. At the same time, this relative windfall offers an opportunity to set aside funds that could serve as a meaningful 'down payment' toward a 100% affordable housing project's development in Encinitas. I believe that this is the only fully meaningful route to address our dearth of affordable housing. Perhaps this is a moment to seriously consider taking steps in that direction. Thank you. Joshua Lazerson llkft� N%..Ol Coronavirus State & Local qlk-o Fiscal Recovery Funds: Overview of the Final Rule U.S. DEPARTMENT OF THE TREASURY U.S. DEPARTMENT OF THE TREASURY *N. The Overview of the Final Rule provides a summary of major provisions of the final rule for informational purposes and is intended as a brief, simplified user guide to the final rule provisions. The descriptions provided in this document summarize key provisions of the final rule but are non -exhaustive, do not describe all terms and conditions associated with the use of SURF, and do not describe all requirements that may apply to this funding. Any SLFRF funds received are also subject to the terms and conditions of the agreement entered into by Treasury and the respective jurisdiction, which incorporate the provisions of the final rule and the guidance that implements this program. "IRMW Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 2 U.S. DEPARTMENT OF THE TREASURY -� Contents Introduction..................................................................................................................................................4 Overviewof the Program..............................................................................................................................6 Replacing Lost Public Sector Revenue..........................................................................................................9 Responding to Public Health and Economic Impacts of COVID-19.............................................................12 Responding to the Public Health Emergency..........................................................................................14 Responding to Negative Economic Impacts............................................................................................16 Assistanceto Households...................................................................................................................17 Assistanceto Small Businesses...........................................................................................................21 Assistanceto Nonprofits.....................................................................................................................23 Aidto Impacted Industries..................................................................................................................24 PublicSector Capacity.............................................................................................................................26 Public Safety, Public Health, and Human Services Staff.....................................................................26 Government Employment and Rehiring Public Sector Staff...............................................................27 EffectiveService Delivery ....................................................................................................................28 Capital Expenditures ............................................................................................................................... 30 Framework for Eligible Uses Beyond those Enumerated.......................................................................32 PremiumPay...............................................................................................................................................35 Water& Sewer Infrastructure....................................................................................................................37 BroadbandInfrastructure...........................................................................................................................39 Restrictionson Use.....................................................................................................................................41 ProgramAdministration.............................................................................................................................43 Coronovirus State & local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 3 AFROW U.S. DEPARTMENT OF THE TREASURY Introduction `.- The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. The program ensures that governments have the resources needed to: • 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, and • Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity. EARLY PROGRAM IMPLEMENTATION In May 2021, Treasury published the Interim final rule (IFR) describing eligible and ineligible uses of funds (as well as other program provisions), sought feedback from the public on these program rules, and began to distribute funds. The IFR went immediately into effect in May, and since then, governments have used SLFRF funds to meet their immediate pandemic response needs and begin building a strong and equitable recovery, such as through providing vaccine incentives, development of affordable housing, and construction of infrastructure to deliver safe and reliable water. As governments began to deploy this funding in their communities, Treasury carefully considered the feedback provided through its public comment process and other forums. Treasury received over 1,500 comments, participated in hundreds of meetings, and received correspondence from a wide range of governments and other stakeholders. KEY CHANGES AND CLARIFICATIONS IN THE FINAL RULE The final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in the comment process. Among other clarifications and changes, the final rule provides the features below. Replacing Lost Public Sector Revenue The final rule 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 — in many cases their full award — for government services, with streamlined reporting requirements. Public Health and Economic Impacts In addition to programs and services, the final rule clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response. For example, recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects consistent with final rule requirements. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 4 U.S. DEPARTMENT OF THE TREASURY .-� In addition, the final rule provides an expanded set of households and communities that are presumed to be "impacted" and "disproportionately impacted" by the pandemic, thereby allowing recipients to provide responses to a broad set of households and entities without requiring additional analysis. Further, the final rule provides a broader set of uses available for these communities as part of COVID- 19 public health and economic response, including making affordable housing, childcare, early learning, and services to address learning loss during the pandemic eligible in all impacted communities and making certain community development and neighborhood revitalization activities eligible for disproportionately impacted communities. Further, the final rule 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 experienced pay cuts or furloughs, avoiding layoffs, and providing retention incentives. Premium Pay The final rule delivers 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. Water, Sewer & Broadband Infrastructure 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 lead remediation and stormwater management projects. FINAL RULE EFFECTIVE DATE The final rule takes effect on April 1, 2022. Until that time, the interim final rule remains in effect; funds used consistently with the IFR while it is in effect are in compliance with the SLFRF program. However, recipients can choose to take advantage of the final rule's flexibilities and simplifications now, even ahead of the effective date. Treasury will not take action to enforce the interim final rule to the extent that a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. Recipients may consult the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule, which can be found on Treasury's website, for more information on compliance with the interim final rule and the final rule. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 5 U.S. DEPARTMENT OF THE TREASURY Overview of the Program The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program provides substantial flexibility for each jurisdiction to meet local needs within the four separate eligible use categories. This Overview of the Final Rule addresses the four eligible use categories ordered from the broadest and most flexible to the most specific. Recipients may use SLFRF funds to: • Replace lost public sector revenue, using this funding to provide government services up to the amount of revenue loss due to the pandemic. • Recipients may determine their revenue loss by choosing between two options: • A standard allowance of up to $10 million in aggregate, not to exceed their award amount, during the program; • Calculating their jurisdiction's specific revenue loss each year using Treasury's formula, which compares actual revenue to a counterfactual trend. • Recipients may use funds up to the amount of revenue loss for government services; generally, services traditionally provided by recipient governments are government services, unless Treasury has stated otherwise. • Support the COVID-19 public health and economic response by addressing COVID-19 and its impact on public health as well as addressing economic harms to households, small businesses, \..� nonprofits, impacted industries, and the public sector. • Recipients can use funds for programs, services, or capital expenditures that respond to the public health and negative economic impacts of the pandemic. • To provide simple and clear eligible uses of funds, Treasury provides a list of enumerated uses that recipients can provide to households, populations, or classes (i.e., groups) that experienced pandemic impacts. • Public health eligible uses include COVID-19 mitigation and prevention, medical expenses, behavioral healthcare, and preventing and responding to violence. • Eligible uses to respond to negative economic impacts are organized by the type of beneficiary: assistance to households, small businesses, and nonprofits. Each category includes assistance for "impacted" and "disproportionately impacted" classes: impacted classes experienced the general, broad -based impacts of the pandemic, while disproportionately impacted classes faced meaningfully more severe impacts, often due to preexisting disparities. • To simplify administration, the final rule presumes that some populations and groups were impacted or disproportionately impacted and are eligible for responsive services. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 6 U.S. DEPARTMENT OF THE TREASURY Eligible uses for assistance to impacted households include aid for re- employment, job training, food, rent, mortgages, utilities, affordable housing development, childcare, early education, addressing learning loss, and many more uses. Eligible uses for assistance to impacted small businesses or nonprofits include loans or grants to mitigate financial hardship, technical assistance for small businesses, and many more uses. Recipients can also provide assistance to impacted industries like travel, tourism, and hospitality that faced substantial pandemic impacts, or address impacts to the public sector, for example by re -hiring public sector workers cut during the crisis. • Recipients providing funds for enumerated uses to populations and groups that Treasury has presumed eligible are clearly operating consistently with the final rule. Recipients can also identify (1) other populations or groups, beyond those presumed eligible, that experienced pandemic impacts or disproportionate impacts and (2) other programs, services, or capital expenditures, beyond those enumerated, to respond to those impacts. • Provide premium pay for eligible workers performing essential work, offering additional support to those who have and will bear the greatest health risks because of their service in critical sectors. Recipients may provide premium pay to eligible workers — generally those working in - person in key economic sectors — who are below a wage threshold or non-exempt from the Fair Labor Standards Act overtime provisions, or if the recipient submits justification that the premium pay is responsive to workers performing essential work. Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater and stormwater infrastructure, and to expand affordable access to broadband internet. Recipients may fund a broad range of water and sewer projects, including those eligible under the EPA's Clean Water State Revolving Fund, EPA's Drinking Water State Revolving Fund, and certain additional projects, including a wide set of lead remediation, stormwater infrastructure, and aid for private wells and septic units. • Recipients may fund high-speed broadband infrastructure in areas of need that the recipient identifies, such as areas without access to adequate speeds, affordable options, or where connections are inconsistent or unreliable; completed projects must participate in a low-income subsidy program. While recipients have considerable flexibility to use funds to address the diverse needs of their communities, some restrictions on use apply across all eligible use categories. These include: • For states and territories: No offsets of a reduction in net tax revenue resulting from a change in state or territory law. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 7 U.S. DEPARTMENT OF THE TREASURY For all recipients except for Tribal governments: No extraordinary contributions to a pension S%.i fund for the purpose of reducing an accrued, unfunded liability. For all recipients: No payments for debt service and replenishments of rainy day funds; no satisfaction of settlements and judgments; no uses that contravene or violate the American Rescue Plan Act, Uniform Guidance conflicts of interest requirements, and other federal, state, and local laws and regulations. Under the SLFRF program, funds must be used for costs incurred on or after March 3, 2021. Further, funds must be obligated by December 31, 2024, and expended by December 31, 2026. This time period, during which recipients can expend SLFRF funds, is the "period of performance." In addition to SLFRF, the American Rescue Plan includes other sources of funding for state and local governments, including the Coronavirus Capital Proiects Fund to fund critical capital investments including broadband infrastructure; the Homeowner Assistance Fund to provide relief for our country's most vulnerable homeowners; the Emergency Rental Assistance Program to assist households that are unable to pay rent or utilities; and the State Small Business Credit Initiative to fund small business credit expansion initiatives. Eligible recipients are encouraged to visit the Treasury website for more information. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule u U.S. Department of the Treasury 8 Admbk t U.S. DEPARTMENT OF THE TREASURY __-N Replacing Lost Public Sector Revenue The Coronavirus State and Local Fiscal Recovery Funds provide needed fiscal relief for recipients that have experienced revenue loss due to the onset of the COVID-19 public health emergency. Specifically, SLFRF funding may be used to pay for "government services" in an amount equal to the revenue loss experienced by the recipient due to the COVID-19 public health emergency. Government services generally include any service traditionally provided by a government, including construction of roads and other infrastructure, provision of public safety and other services, and health and educational services. Funds spent under government services are subject to streamlined reporting and compliance requirements. In order to use funds under government services, recipients should first determine revenue loss. They may, then, spend up to that amount on general government services. DETERMINING REVENUE LOSS Recipients have two options for how to determine their amount of revenue loss. Recipients must choose one of the two options and cannot switch between these approaches after an election is made. 1. Recipients may elect a "standard allowance" of $10 million to spend on government services through the period of performance. Under this option, which is newly offered in the final rule Treasury presumes that up to $10 ---� million in revenue has been lost due to the public health emergency and recipients are permitted to use that amount (not to exceed the award amount) to fund "government services." The standard allowance provides an estimate of revenue loss that is based on an extensive analysis of average revenue loss across states and localities, and offers a simple, convenient way to determine revenue loss, particularly for SLFRF's smallest recipients. All recipients may elect to use this standard allowance instead of calculating lost revenue using the formula below, including those with total allocations of $10 million or less. Electing the standard allowance does not increase or decrease a recipient's total allocation. 2. Recipients may calculate their actual revenue loss according to the formula articulated in the final rule. Under this option, recipients calculate revenue loss at four distinct points in time, either at the end of each calendar year (e.g., December 31 for years 2020, 2021, 2022, and 2023) or the end of each fiscal year of the recipient. Under the flexibility provided in the final rule, recipients can choose whether to use calendar or fiscal year dates but must be consistent throughout the period of performance. Treasury has also provided several adjustments to the definition of general revenue in the final rule. To calculate revenue loss at each of these dates, recipients must follow a four -step process: Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 9 U.S. DEPARTMENT OF THE TREASURY a. Calculate revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date: n base year revenue x (1 + growth adjustment)12 The growth adjustment is the greater of either a standard growth rate-5.2 percent —or the recipient's average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date. Under the final rule, recipients must adjust actual revenue totals for the effect of tax cuts and tax increases that are adopted after the date of adoption of the final rule (January 6, 2022). Specifically, the estimated fiscal impact of tax cuts and tax increases adopted after January 6, 2022, must be added or subtracted to the calculation of actual revenue for purposes of calculation dates that occur on or after April 1, 2022. Recipients may subtract from their calculation of actual revenue the effect of tax increases enacted prior to the adoption of the final rule. Note that recipients that elect to remove the effect of tax increases enacted before the adoption of the final rule must also remove the effect of tax decreases enacted before the adoption of the final rule, such that they are accurately removing the effect of tax policy changes on revenue. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. If actual revenue exceeds counterfactual revenue, the loss is set to zero for that twelve-month period. Revenue loss for the period of performance is the sum of the revenue loss on for each calculation date. The supplementary information in the final rule provides an example of this calculation, which recipients may find helpful, in the Revenue Loss section. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 10 U.S. DEPARTMENT OF THE TREASURY SPENDING ON GOVERNMENT SERVICES Recipients can use SLFRF funds on government services up to the revenue loss amount, whether that be the standard allowance amount or the amount calculated using the above approach. Government services generally include any service traditionally provided by a government, unless Treasury has stated otherwise. Here are some common examples, although this list is not exhaustive: ✓ Construction of schools and hospitals ✓ Road building and maintenance, and other infrastructure ✓ Health services ✓ General government administration, staff, and administrative facilities ✓ Environmental remediation ✓ Provision of police, fire, and other public safety services (including purchase of fire trucks and police vehicles) Government services is the most flexible eligible use category under the SLFRF program, and funds are subject to streamlined reporting and compliance requirements. Recipients should be mindful that certain restrictions, which are detailed further in the Restrictions on Use section and apply to all uses of funds, apply to government services as well. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 11 U.S. DEPARTMENT OF THE TREASURY Responding to Public Health and Economic Impacts of COVID-19 The Coronavirus State and Local Fiscal Recovery Funds provide resources for governments to meet the public health and economic needs of those impacted by the pandemic in their communities, as well as address longstanding health and economic disparities, which amplified the impact of the pandemic in disproportionately impacted communities, resulting in more severe pandemic impacts. The eligible use category to respond to public health and negative economic impacts is organized around the types of assistance a recipient may provide and includes several sub -categories: • public health, • assistance to households, • assistance to small businesses, • assistance to nonprofits, • aid to impacted industries, and • public sector capacity. In general, to identify eligible uses of funds in this category, recipients should (1) identify a COVID-19 public health or economic impact on an individual or class (i.e., a group) and (2) design a program that responds to that impact. Responses should be related and reasonably proportional to the harm identified and reasonably designed to benefit those impacted. To provide simple, clear eligible uses of funds that meet this standard, Treasury provides a non - exhaustive list of enumerated uses that respond to pandemic impacts. Treasury also presumes that some populations experienced pandemic impacts and are eligible for responsive services. In other words, recipients providing enumerated uses of funds to populations presumed eligible are clearly operating consistently with the final rule.' Recipients also have broad flexibility to (1) identify and respond to other pandemic impacts and (2) serve other populations that experienced pandemic impacts, beyond the enumerated uses and presumed eligible populations. Recipients can also identify groups or "classes" of beneficiaries that experienced pandemic impacts and provide services to those classes. 1 However, please note that use of funds for enumerated uses may not be grossly disproportionate to the harm. Further, recipients should consult the Capital Expenditures section for more information about pursuing a capital expenditure; please note that enumerated capital expenditures are not presumed to be reasonably proportional responses to an identified harm except as provided in the Capital Expenditures section. I%W.11 Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 12 U.S. DEPARTMENT OF THE TREASURY Step 1. Identify COVID-19 public health or economic impact 2. Design a response that addresses or responds to the impact Analysis . Can identify impact to a specific • Types of responses can include a household, business or nonprofit or program, service, or capital to a class of households, businesses, expenditure or nonprofits (i.e., group) • Response should be related and • Can also identify disproportionate reasonably proportional to the harm impacts, or more severe impacts, to • Response should also be reasonably a specific beneficiary or to a class designed to benefit impacted individual or class Simplifying • Final Rule presumes certain • Final Rule provides non -exhaustive Presumptions populations and classes are impacted list of enumerated eligible uses that and disproportionately impacted respond to pandemic impacts and disproportionate impacts To assess eligibility of uses of funds, recipients should first determine the sub -category where their use of funds may fit (e.g., public health, assistance to households, assistance to small businesses), based on the entity that experienced the health or economic impact.' Then, recipients should refer to the relevant section for more details on each sub -category. While the same overall eligibility standard applies to all uses of funds to respond to the public health and negative economic impacts of the pandemic, each sub -category has specific nuances on its application. In addition: • Recipients interested in using funds for capital expenditures (i.e., investments in property, facilities, or equipment) should review the Capital Expenditures section in addition to the eligible use sub -category. • Recipients interested in other uses of funds, beyond the enumerated uses, should refer to the section on "Framework for Eligible Uses Beyond Those Enumerated." 2 For example, a recipient interested in providing aid to unemployed individuals is addressing a negative economic impact experienced by a household and should refer to the section on assistance to households. Recipients should also be aware of the difference between "beneficiaries" and "sub -recipients." Beneficiaries are households, small businesses, or nonprofits that can receive assistance based on impacts of the pandemic that they experienced. On the other hand, sub -recipients are organizations that carry out eligible uses on behalf of a government, often through grants or contracts. Sub -recipients do not need to have experienced a negative economic impact of the pandemic; rather, they are providing services to beneficiaries that experienced an impact. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 13 U.S. DEPARTMENT OF THE TREASURY RESPONDING TO THE PUBLIC HEALTH EMERGENCY While the country has made tremendous progress in the fight against COVID-19, including a historic vaccination campaign, the disease still poses a grave threat to Americans' health and the economy. Providing state, local, and Tribal governments the resources needed to fight the COVID-19 pandemic is a core goal of the Coronavirus State and Local Fiscal Recovery Funds, as well as addressing the other ways that the pandemic has impacted public health. Treasury has identified several public health impacts of the pandemic and enumerated uses of funds to respond to impacted populations. • COVID-19 mitigation and prevention. The.pandemic has broadly impacted Americans and recipients can provide services to prevent and mitigate COVID-19 to the general public or to small businesses, nonprofits, and impacted industries in general. Enumerated eligible uses include: ✓ Vaccination programs, including vaccine incentives and vaccine sites ✓ Testing programs, equipment and sites ✓ Monitoring, contact tracing & public health surveillance (e.g., monitoring for variants) ✓ Public communication efforts ✓ Public health data systems ✓ COVID-19 prevention and treatment equipment, such as ventilators and ambulances ✓ Medical and PPE/protective supplies ✓ Support for isolation or quarantine ✓ Ventilation system installation and improvement ✓ Technical assistance on mitigation of COVID-19 threats to public health and safety ✓ Transportation to reach vaccination or testing sites, or other prevention and mitigation services for vulnerable populations ✓ Support for prevention, mitigation, or other services in congregate living facilities, public facilities, and schools ✓ Support for prevention and mitigation strategies in small businesses, nonprofits, and impacted industries ✓ Medical facilities generally dedicated to COVID-19 treatment and mitigation (e.g., ICUs, emergency rooms) Temporary medical facilities and other measures to increase COVID-19 treatment capacity ✓ Emergency operations centers & emergency response equipment (e.g., emergency response radio systems) ✓ Public telemedicine capabilities for COVID- 19 related treatment Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 14 1"N, Admahk tyU.S. DEPARTMENT OF THE TREASURY • Medical expenses. Funds may be used for expenses to households, medical providers, or others that incurred medical costs due to the pandemic, including: ✓ Unreimbursed expenses for medical care for COVID-19 testing or treatment, such as uncompensated care costs for medical providers or out-of-pocket costs for individuals ✓ Paid family and medical leave for public employees to enable compliance with COVID-19 public health precautions ✓ Emergency medical response expenses ✓ Treatment of long-term symptoms or effects of COVID-19 • Behavioral health care, such as mental health treatment, substance use treatment, and other behavioral health services. Treasury recognizes that the pandemic has broadly impacted Americans' behavioral health and recipients can provide these services to the general public to respond. Enumerated eligible uses include: ✓ Prevention, outpatient treatment, inpatient treatment, crisis care, diversion programs, outreach to individuals not yet engaged in treatment, harm reduction & long-term recovery support ✓ Enhanced behavioral health services in schools ✓ Services for pregnant women or infants born with neonatal abstinence syndrome ✓ Support for equitable access to reduce disparities in access to high -quality treatment ✓ Peer support groups, costs for residence in supportive housing or recovery housing, and the 988 National Suicide Prevention Lifeline or other hotline services ✓ Expansion of access to evidence -based services for opioid use disorder prevention, treatment, harm reduction, and recovery ✓ Behavioral health facilities & equipment • Preventing and responding to violence. Recognizing that violence — and especially gun violence — has increased in some communities due to the pandemic, recipients may use funds to respond in these communities through: ✓ Referrals to trauma recovery services for victims of crime ✓ Community violence intervention programs, including: • Evidence -based practices like focused deterrence, with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance ✓ In communities experiencing increased gun violence due to the pandemic: • Law enforcement officers focused on advancing community policing • Enforcement efforts to reduce gun violence, including prosecution • Technology & equipment to support law enforcement response Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 15 Alahk U.S. DEPARTMENT OF THE TREASURY RESPONDING TO NEGATIVE ECONOMIC IMPACTS The pandemic caused severe economic damage and, while the economy is on track to a strong recovery, much work remains to continue building a robust, resilient, and equitable economy in the wake of the crisis and to ensure that the benefits of this recovery reach all Americans. While the pandemic impacted millions of American households and businesses, some of its most severe impacts fell on low-income and underserved communities, where pre-existing disparities amplified the impact of the pandemic and where the most work remains to reach a full recovery. The final rule recognizes that the pandemic caused broad -based impacts that affected many communities, households, and small businesses across the country; for example, many workers faced unemployment and many small businesses saw declines in revenue. The final rule describes these as "impacted" households, communities, small businesses, and nonprofits. At the same time, the pandemic caused disproportionate impacts, or more severe impacts, in certain communities. For example, low-income and underserved communities have faced more severe health and economic outcomes like higher rates of COVID-19 mortality and unemployment, often because pre- existing disparities exacerbated the impact of the pandemic. The final rule describes these as "disproportionately impacted" households, communities, small businesses, and nonprofits. To simplify administration of the program, the final rule presumes that certain populations were "impacted" and "disproportionately impacted" by the pandemic; these populations are presumed to be eligible for services that respond to the impact they experienced. The final rule also enumerates a non - exhaustive list of eligible uses that are recognized as responsive to the impacts or disproportionate impacts of COVID-19. Recipients providing enumerated uses to populations presumed eligible are clearly S%.Ov operating consistently with the final rule. As discussed further in the section Framework for Eligible Uses Beyond Those Enumerated, recipients can also identify other pandemic impacts, impacted or disproportionately impacted populations or classes, and responses. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 16 n U.S. DEPARTMENT OF THE TREASURY Assistance to Households Impacted Households and Communities Treasury presumes the following households and communities are impacted by the pandemic: ✓ Low- or -moderate income households or communities ✓ Households that experienced unemployment ✓ Households that experienced increased food or housing insecurity ✓ Households that qualify for the Children's Health Insurance Program, Childcare Subsidies through the Child Care Development Fund (CCDF) Program, or Medicaid ✓ When providing affordable housing programs: households that qualify for the National Housing Trust Fund and Home Investment Partnerships Program ✓ When providing services to address lost instructional time in K-12 schools: any student that lost access to in -person instruction for a significant period of time Low- or moderate -income households and communities are those with (i) income at or below 300 percent of the Federal Poverty Guidelines for the size of the household based on the most recently published poverty guidelines or (ii) income at or below 65 percent of the area median income for the county and size of household based on the most recently published data. For the vast majority of communities, the Federal Poverty Guidelines are higher than the area's median income and using the Federal Poverty Guidelines would result in more households and communities being presumed eligible. Treasury has provided an easy -to -use spreadsheet with Federal Poverty Guidelines and area median income levels on its website. Recipients can measure income for a specific household or the median income for the community, depending on whether the response they plan to provide serves specific households or the general community. The income thresholds vary by household size; recipients should generally use income thresholds for the appropriate household size but can use a default household size of three when easier for administration or when measuring income for a general community. The income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $65,880 per year.3 In other words, recipients can always presume that a household earning below this level, or a community with median income below this level, is impacted by the pandemic and eligible for services to respond. Additionally, by following the steps detailed in the section Framework for Eligible Uses Beyond Those Enumerated, recipients may designate additional households as impacted or disproportionately impacted beyond these presumptions, and may also pursue projects not listed below in response to these impacts consistent with Treasury's standards. 3 For recipients in Alaska, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $82,350 per year. For recipients in Hawaii, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $75,780 per year. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 17 U.S. DEPARTMENT OF THE TREASURY Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as eligible to respond to impacts of the pandemic on households and communities: ✓ Food assistance & food banks ✓ Emergency housing assistance: rental assistance, mortgage assistance, utility assistance, assistance paying delinquent property taxes, counseling and legal aid to prevent eviction and homelessness & emergency programs or services for homeless individuals, including temporary residences for people experiencing homelessness ✓ Health insurance coverage expansion ✓ Benefits for surviving family members of individuals who have died from COVID-19 ✓ Assistance to individuals who want and are available for work, including job training, public jobs programs and fairs, support for childcare and transportation to and from a jobsite or interview, incentives for newly - employed workers, subsidized employment, grants to hire underserved workers, assistance to unemployed individuals to start small businesses & development of job and workforce training centers ✓ Financial services for the unbanked and underbanked ✓ Burials, home repair & home weatherization ✓ Programs, devices & equipment for internet access and digital literacy, including subsidies for costs of access ✓ Cash assistance ✓ Paid sick, medical, and family leave programs ✓ Assistance in accessing and applying for public benefits or services ✓ Childcare and early learning services, home visiting programs, services for child welfare - involved families and foster youth & childcare facilities ✓ Assistance to address the impact of learning loss for K-12 students (e.g., high -quality tutoring, differentiated instruction) ✓ Programs or services to support long-term housing security: including development of affordable housing and permanent supportive housing ✓ Certain contributions to an Unemployment Insurance Trust Fund 4 Recipients may only use SLFRF funds for contributions to unemployment insurance trust funds and repayment of the principal amount due on advances received under Title XII of the Social Security Act up to an amount equal to (i) the difference between the balance in the recipient's unemployment insurance trust fund as of January 27, 2020 and the balance of such account as of May 17, 2021, plus (ii) the principal amount outstanding as of May 17, 2021 on any advances received under Title XII of the Social Security Act between January 27, 2020 and May 17, 2021. Further, recipients may use SLFRF funds for the payment of any interest due on such Title XII advances. Additionally, a recipient that deposits SLFRF funds into its unemployment insurance trust fund to fully restore the pre -pandemic balance may not draw down that balance and deposit more SLFRF funds, back up to the pre -pandemic balance. Recipients that deposit SLFRF funds into an unemployment insurance trust fund, or use SLFRF funds to repay principal on Title XII advances, may not take action to reduce benefits available to unemployed workers by changing the computation method governing regular unemployment compensation in a way that results in a reduction of average weekly benefit amounts or the number of weeks of benefits payable (i.e., maximum benefit entitlement). Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 18 ,. N U.S. DEPARTMENT OF THE TREASURY Disproportionately Impacted Households and Communities Treasury presumes the following households and communities are disproportionately impacted by the pandemic: ✓ Low -income households and communities ✓ Households residing in Qualified Census Tracts ✓ Households that qualify for certain federal benefits' ✓ Households receiving services provided by Tribal governments ✓ Households residing in the U.S. territories or receiving services from these governments Low-income households and communities are those with (i) income at or below 185 percent of the Federal Poverty Guidelines for the size of its household based on the most recently published poverty guidelines or (ii) income at or below 40 percent of area median income for its county and size of household based on the most recently published data. For the vast majority of communities, the Federal Poverty Guidelines level is higher than the area median income level and using this level would result in more households and communities being presumed eligible. Treasury has provided an easy -to -use spreadsheet with Federal Poverty Guidelines and area median income levels on its website. Recipients can measure income for a specific household or the median income for the community, depending on whether the service they plan to provide serves specific households or the general community. The income thresholds vary by household size; recipients should generally use income thresholds for the appropriate household size but can use a default household size of three when easier for administration or when measuring income for a general community. The income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $40,626 per year.6 In other words, recipients can always presume that a household earning below this level, or a community with median income below this level, is disproportionately impacted by the pandemic and eligible for services to respond. 5 These programs are Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Free- and Reduced -Price Lunch (NSLP) and/or School Breakfast (SBP) programs, Medicare Part D Low -Income Subsidies, Supplemental Security Income (SSI), Head Start and/or Early Head Start, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Section 8 Vouchers, Low -Income Home Energy Assistance Program (LIHEAP), and Pell Grants. For services to address educational disparities, Treasury will recognize Title I eligible schools as disproportionately impacted and responsive services that support the school generally or support the whole school as eligible. 6 For recipients in Alaska, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $50,783 per year. For recipients in Hawaii, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $46,731 per year Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 19 U.S. DEPARTMENT OF THE TREASURY Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as eligible to respond to disproportionate impacts of the pandemic on households and communities: ✓ Pay for community health workers to help households access health & social services ✓ Remediation of lead paint or other lead hazards ✓ Primary care clinics, hospitals, integration of health services into other settings, and other investments in medical equipment & facilities designed to address health disparities ✓ Housing vouchers & assistance relocating to neighborhoods with higher economic opportunity ✓ Investments in neighborhoods to promote improved health outcomes ✓ Improvements to vacant and abandoned properties, including rehabilitation or maintenance, renovation, removal and remediation of environmental contaminants, demolition or deconstruction, greening/vacant lot cleanup & conversion to affordable housing' ✓ Services to address educational disparities, including assistance to high -poverty school districts & educational and evidence -based services to address student academic, social, emotional, and mental health needs ✓ Schools and other educational equipment & facilities Please see the final rule for further details and conditions applicable to this eligible use. This includes Treasury's presumption that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for low- and moderate -income individuals in an area where the availability of such housing is lower than the need for such housing is ineligible for support with SURF funds. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule 0110i ,%.We U.S. Department of the Treasury 20 U.S. DEPARTMENT OF THE TREASURY Assistance to Small Businesses Small businesses have faced widespread challenges due to the pandemic, including periods of shutdown, declines in revenue, or increased costs. The final rule provides many tools for recipients to respond to the impacts of the pandemic on small businesses, or disproportionate impacts on businesses where pre-existing disparities like lack of access to capital compounded the pandemic's effects. Small businesses eligible for assistance are those that experienced negative economic impacts or disproportionate impacts of the pandemic and meet the definition of "small business," specifically: 1. Have no more than 500 employees, or if applicable, the size standard in number of employees established by the Administrator of the Small Business Administration for the industry in which the business concern or organization operates, and 2. Are a small business concern as defined in section 3 of the Small Business Act' (which includes, among other requirements, that the business is independently owned and operated and is not dominant in its field of operation). Impacted Small Businesses Recipients can identify small businesses impacted by the pandemic, and measures to respond, in many ways; for example, recipients could consider: ✓ Decreased revenue or gross receipts ✓ Financial insecurity ✓ Increased costs ✓ Capacity to weather financial hardship ✓ Challenges covering payroll, rent or mortgage, and other operating costs Assistance to small businesses that experienced negative economic impacts includes the following enumerated uses: ✓ Loans or grants to mitigate financial hardship, such as by supporting payroll and benefits, costs to retain employees, and mortgage, rent, utility, and other operating costs Disproportionately Impacted Small Businesses ✓ Technical assistance, counseling, or other services to support business planning Treasury presumes that the following small businesses are disproportionately impacted by the pandemic: 8 15 U.S.C. 632. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 21 U.S. DEPARTMENT OF THE TREASURY ✓ Small businesses operating in Qualified Census Tracts ✓ Small businesses operated by Tribal governments or on Tribal lands ✓ Small businesses operating in the U.S. territories Assistance to disproportionately impacted small businesses includes the following enumerated uses, which have been expanded under the final rule: ✓ Rehabilitation of commercial properties, storefront improvements & fagade improvements ✓ Technical assistance, business incubators & grants for start-up or expansion costs for small businesses ✓ Support for microbusinesses, including financial, childcare, and transportation costs Coronovirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 22 U.S. DEPARTMENT OF THE TREASURY Assistance to Nonprofits Nonprofits have faced significant challenges due to the pandemic's increased demand for services and changing operational needs, as well as declines in revenue sources such as donations and fees. Nonprofits eligible for assistance are those that experienced negative economic impacts or disproportionate impacts of the pandemic and meet the definition of "nonprofit" —specifically those that are 501(c)(3) or 501(c)(19) tax-exempt organizations. Impacted Nonprofits Recipients can identify nonprofits impacted by the pandemic, and measures to respond, in many ways; for example, recipients could consider: ✓ Decreased revenue (e.g., from donations and fees) ✓ Financial insecurity ✓ Increased costs (e.g., uncompensated increases in service need) ✓ Capacity to weather financial hardship ✓ Challenges covering payroll, rent or mortgage, and other operating costs Assistance to nonprofits that experienced negative economic impacts includes the following enumerated uses: ✓ Loans or grants to mitigate financial hardship Disproportionately Impacted Nonprofits ✓ Technical or in -kind assistance or other services that mitigate negative economic impacts of the pandemic Treasury presumes that the following nonprofits are disproportionately impacted by the pandemic: ✓ Nonprofits operating in Qualified Census Tracts ✓ Nonprofits operated by Tribal governments or on Tribal lands ✓ Nonprofits operating in the U.S. territories Recipients may identify appropriate responses that are related and reasonably proportional to addressing these disproportionate impacts. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 23 U.S. DEPARTMENT OF THE TREASURY Aid to Impacted Industries Recipients may use SURF funding to provide aid to industries impacted by the COVID-19 pandemic. Recipients should first designate an impacted industry and then provide aid to address the impacted industry's negative economic impact. This sub -category of eligible uses does not separately identify disproportionate impacts and corresponding responsive services. 1. Designating an impacted industry. There are two main ways an industry can be designated as "impacted." 1. If the industry is in the travel, tourism, or hospitality sectors (including Tribal development districts), the industry is impacted. 2. If the industry is outside the travel, tourism, or hospitality sectors, the industry is impacted if: The industry experienced at least 8 percent employment loss from pre -pandemic levels,' or b. The industry is experiencing comparable or worse economic impacts as the national tourism, travel, and hospitality industries as of the date of the final rule, based on the totality of economic indicators or qualitative data (if quantitative data is unavailable), and if the impacts were generally due to the COVID-19 public health emergency. Recipients have flexibility to define industries broadly or narrowly, but Treasury encourages recipients to define narrow and discrete industries eligible for aid. State and territory recipients also have flexibility to define the industries with greater geographic precision; for example, a state may identify a particular industry in a certain region of a state as impacted. 2. Providing eligible aid to the impacted industry. Aid may only be provided to support businesses, attractions, and Tribal development districts operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic. Further, aid should be generally broadly available to all businesses within the impacted industry to avoid potential conflicts of interest, and Treasury encourages aid to be first used for operational expenses, such as payroll, before being used on other types of costs. 9 Specifically, a recipient should compare the percent change in the number of employees of the recipient's identified industry and the national Leisure & Hospitality sector in the three months before the pandemic's most severe impacts began (a straight three-month average of seasonally -adjusted employment data from December 2019, January 2020, and February 2020) with the latest data as of the final rule (a straight three-month average of seasonally -adjusted employment data from September 2021, October 2021, and November 2021). For parity and simplicity, smaller recipients without employment data that measure industries in their specific jurisdiction may use data available for a broader unit of government for this calculation (e.g., a county may use data from the state in which it is located; a city may use data for the county, if available, or state in which it is located) solely for purposes of determining whether a particular industry is an impacted industry. Coronovirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 24 U.S. DEPARTMENT OF THE TREASURY Treasury recognizes the enumerated projects below as eligible responses to impacted industries. ✓ Aid to mitigate financial hardship, such as supporting payroll costs, lost pay and benefits for returning employees, support of operations and maintenance of existing equipment and facilities ✓ Technical assistance, counseling, or other services to support business planning ✓ COVID-19 mitigation and infection prevention measures (see section Public Health) As with all eligible uses, recipients may pursue a project not listed above by undergoing the steps outlined in the section Framework for Eligible Uses Beyond Those Enumerated. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 25 0 U.S. DEPARTMENT OF THE TREASURY PUBLIC SECTOR CAPACITY Recipients may use SLFRF funding to restore and bolster public sector capacity, which supports government's ability to deliver critical COVID-19 services. There are three main categories of eligible uses to bolster public sector capacity and workforce: Public Safety, Public Health, and Human Services Staff; Government Employment and Rehiring Public Sector Staff; and Effective Service Delivery. Public Safety, Public Health, and Human Services Staff SLFRF funding may be used for payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government, for the portion of the employee's time spent responding to COVID-19. Recipients should follow the steps below. 1. Identify eligible public safety, public health, and human services staff. Public safety staff include: ✓ Police officers (including state police officers) ✓ Sheriffs and deputy sheriffs ✓ Firefighters ✓ Emergency medical responders Public health staff include: ✓ Employees involved in providing medical and other physical or mental health services to patients and supervisory personnel, including medical staff assigned to schools, prisons, and other such institutions ✓ Laboratory technicians, medical examiners, morgue staff, and other support services essential for patient care Human services staff include: ✓ Employees providing or administering social services and public benefits ✓ Child welfare services employees ✓ Correctional and detention officers ✓ Dispatchers and supervisor personnel that directly support public safety staff ✓ Employees of public health departments directly engaged in public health matters and related supervisory personnel ✓ Child, elder, or family care employees 2. Assess portion of time spent on COVID-19 response for eligible staff. Recipients can use a variety of methods to assess the share of an employees' time spent responding to COVID-19, including using reasonable estimates —such as estimating the share of time based on discussions with staff and applying that share to all employees in that position. For administrative convenience, recipients can consider public health and safety employees entirely devoted to responding to COVID-19 (and their payroll and benefits fully covered by SLFRF) if the Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 26 U.S. DEPARTMENT OF THE TREASURY r� employee, or his or her operating unit or division, is "primarily dedicated" to responding to COVID- 19. Primarily dedicated means that more than half of the employee, unit, or division's time is dedicated to responding to COVID-19. Recipients must periodically reassess their determination and maintain records to support their assessment, although recipients do not need to track staff hours. 3. Use SLFRF funding for payroll and covered benefits for the portion of eligible staff time spent on COVID-19 response. SLFRF funding may be used for payroll and covered benefits for the portion of the employees' time spent on COVID-19 response, as calculated above, through the period of performance. Government Employment and Rehiring Public Sector Staff Under the increased flexibility of the final rule, SLFRF funding may be used to support a broader set of uses to restore and support public sector employment. Eligible uses include hiring up to a pre -pandemic baseline that is adjusted for historic underinvestment in the public sector, providing additional funds for employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention incentives, and paying for ancillary administrative costs related to hiring, support, and retention. • Restoring pre -pandemic employment. Recipients have two options to restore pre -pandemic employment, depending on the recipient's needs. • If the recipient simply wants to hire back employees for pre -pandemic positions: Recipients may use SLFRF funds to hire employees for the same positions that existed on January 27, 2020 but that were unfilled or eliminated as of March 3, 2021. Recipients may use SLFRF funds to cover payroll and covered benefits for such positions through the period of performance. • If the recipient wants to hire above the pre -pandemic baseline and/or would like to have flexibility in positions: Recipients may use SLFRF funds to pay for payroll and covered benefits associated with the recipient increasing its number of budgeted FTEs up to 7.5 percent above its pre -pandemic baseline. Specifically, recipients should undergo the following steps: a. Identify the recipient's budgeted FTE level on January 27, 2020. This includes all budgeted positions, filled and unfilled. This is called the pre -pandemic baseline. b. Multiply the pre -pandemic baseline by 1.075. This is called the adjusted pre - pandemic baseline. c. Identify the recipient's budgeted FTE level on March 3, 2021, which is the beginning of the period of performance for SLFRF funds. Recipients may, but are not required to, exclude the number of FTEs dedicated to responding to the COVID-19 public health emergency. This is called the actual number of FTEs. d. Subtract the actual number of FTEs from the adjusted pre -pandemic baseline to calculate the number of FTEs that can be covered by SLFRF funds. Recipients do not have to hire for the same roles that existed pre -pandemic. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 27 U.S. DEPARTMENT OF THE TREASURY Recipients may use SLFRF funds to cover payroll and covered benefits through the period of \..i performance; these employees must have begun their employment on or after March 3, 2021. Recipients may only use SLFRF funds for additional FTEs hired over the March 3, 2021 level (i.e., the actual number of FTEs). Supporting and retaining public sector workers. Recipients can also use funds in other ways that support the public sector workforce.10 These include: o Providing additional funding for employees who experienced pay reductions or were furloughed since the onset of the pandemic, up to the difference in the employee's pay, taking into account unemployment benefits received. o Maintaining current compensation levels to prevent layoffs. SLFRF funds maybe used to maintain current compensation levels, with adjustments for inflation, in order to prevent layoffs that would otherwise be necessary. o Providing worker retention incentives, including reasonable increases in compensation to persuade employees to remain with the employer as compared to other employment options. Retention incentives must be entirely additive to an employee's regular compensation, narrowly tailored to need, and should not exceed incentives traditionally offered by the recipient or compensation that alternative employers may offer to compete for the employees. Treasury presumes that retention incentives that are less than 25 percent of the rate of base pay for an individual employee or 10 percent for a group or category of employees are reasonably proportional to the need to retain employees, as long as other requirements are met. • Covering administrative costs associated with administering the hiring, support, and retention programs above. Effective Service Delivery SURF funding may be used to improve the efficacy of public health and economic programs through tools like program evaluation, data, and outreach, as well as to address administrative needs caused or exacerbated by the pandemic. Eligible uses include: • Supporting program evaluation, data, and outreach through: io Recipients should be able to substantiate that these uses of funds are substantially due to the public health emergency or its negative economic impacts (e.g., fiscal pressures on state and local budgets) and respond to its impacts. See the final rule for details on these uses. �i Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 28 U.S. DEPARTMENT OF THE TREASURY ✓ Program evaluation and evidence resources ✓ Data analysis resources to gather, assess, share, and use data ✓ Technology infrastructure to improve access to and the user experience of government IT systems, as well as technology improvements to increase public access and delivery of government programs and services • Addressing administrative needs, including: ✓ Community outreach and engagement activities ✓ Capacity building resources to support using data and evidence, including hiring staff, consultants, or technical assistance support ✓ Administrative costs for programs ✓ responding to the public health emergency and its economic impacts, including non-SLFRF and non -federally funded programs Address administrative needs caused or exacerbated by the pandemic, including addressing backlogs caused by shutdowns, increased repair or maintenance needs, and technology infrastructure to adapt government operations to the pandemic (e.g., video-conferencing software, data and case management systems) Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 29 U.S. DEPARTMENT OF THE TREASURY CAPITAL EXPENDITURES As described above, the final rule clarifies that recipients may use funds for programs, services, and capital expenditures that respond to the public health and negative economic impacts of the pandemic. Any use of funds in this category for a capital expenditure must comply with the capital expenditure requirements, in addition to other standards for uses of funds. Capital expenditures are subject to the same eligibility standard as other eligible uses to respond to the pandemic's public health and economic impacts; specifically, they must be related and reasonably proportional to the pandemic impact identified and reasonably designed to benefit the impacted population or class. For ease of administration, the final rule identifies enumerated types of capital expenditures that Treasury has identified as responding to the pandemic's impacts; these are listed in the applicable sub- category of eligible uses (e.g., public health, assistance to households, etc.). Recipients may also identify other responsive capital expenditures. Similar to other eligible uses in the SLFRF program, no pre - approval is required for capital expenditures. To guide recipients' analysis of whether a capital expenditure meets the eligibility standard, recipients (with the exception of Tribal governments) must complete and meet the requirements of a written justification for capital expenditures equal to or greater than $1 million. For large-scale capital expenditures, which have high costs and may require an extended length of time to complete, as well as most capital expenditures for non -enumerated uses of funds, Treasury requires recipients to submit their written justification as part of regular reporting. Specifically: If a project has and the use is enumerated by Treasury and the use is beyond those total capital as eligible, then enumerated by Treasury as eligible, expenditures then of Less than $1 No Written Justification required No Written Justification required million Greater than or equal to $1 Written Justification required but million, but recipients are not required to submit as less than $10 part of regular reporting to Treasury Written Justification required and million recipients must submit as part of regular reporting to Treasury $10 million or Written Justification required and recipients must submit as part of regular more reporting to Treasury A Written Justification includes: Description of the harm or need to be addressed. Recipients should provide a description of the specific harm or need to be addressed and why the harm was exacerbated or caused by the public health emergency. Recipients may provide quantitative information on the extent and the type of harm, such as the number of individuals or entities affected. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 30 n U.S. DEPARTMENT OF THE TREASURY • Explanation of why a capital expenditure is appropriate. For example, recipients should include an explanation of why existing equipment and facilities, or policy changes or additional funding to pertinent programs or services, would be inadequate. • Comparison of proposed capital project against at least two alternative capital expenditures and demonstration of why the proposed capital expenditure is superior. Recipients should consider the effectiveness of the capital expenditure in addressing the harm identified and the expected total cost (including pre -development costs) against at least two alternative capital expenditures. Where relevant, recipients should consider the alternatives of improving existing capital assets already owned or leasing other capital assets. Treasury presumes that the following capital projects are generally ineligible: x Construction of new correctional facilities as a response to an increase in rate of crime x Construction of new congregate facilities to decrease spread of COVID-19 in the facility x Construction of convention centers, stadiums, or other large capital projects intended for general economic development or to aid impacted industries In undertaking capital expenditures, Treasury encourages recipients to adhere to strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 31 0 U.S. DEPARTMENT OF THE TREASURY FRAMEWORK FOR ELIGIBLE USES BEYOND THOSE ENUMERATED U As described above, recipients have broad flexibility to identify and respond to other pandemic impacts and serve other populations that experienced pandemic impacts, beyond the enumerated uses and presumed eligible populations. Recipients should undergo the following steps to decide whether their project is eligible: Step 1. Identify COVID-19 public health or economic impact 2. Design a response that addresses or responds to the impact Analysis • Can identify impact to a specific • Types of responses can include a household, business or nonprofit or to program, service, or capital a class of households, businesses or expenditure nonprofits (i.e., group) 0 Response should be related and • Can also identify disproportionate reasonably proportional to the harm impacts, or more severe impacts, to a • Response should also be reasonably specific beneficiary or to a class designed to benefit impacted individual or class 1. Identify a COVID-19 public health or negative economic impact on an individual or a class. Recipients should identify an individual or class that is "impacted" or "disproportionately impacted" by the COVID-19 public health emergency or its negative economic impacts as well as the specific impact itself. • "Impacted" entities are those impacted by the disease itself or the harmful \..i consequences of the economic disruptions resulting from or exacerbated by the COVID- 19 public health emergency. For example, an individual who lost their job or a small business that saw lower revenue during a period of closure would both have experienced impacts of the pandemic. • "Disproportionately impacted" entities are those that experienced disproportionate public health or economic outcomes from the pandemic; Treasury recognizes that pre- existing disparities, in many cases, amplified the impacts of the pandemic, causing more severe impacts in underserved communities. For example, a household living in a neighborhood with limited access to medical care and healthy foods may have faced health disparities before the pandemic, like a higher rate of chronic health conditions, that contributed to more severe health outcomes during the COVID-19 pandemic. The recipient may choose to identify these impacts at either the individual level or at a class level. If the recipient is identifying impacts at the individual level, they should retain documentation supporting the impact the individual experienced (e.g., documentation of lost revenues from a small business). Such documentation can be streamlined in many cases (e.g., self -attestation that a household requires food assistance). Recipients also have broad flexibility to identify a "class" — or a group of households, small businesses, or nonprofits — that experienced an impact. In these cases, the recipients should Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 32 U.S. DEPARTMENT OF THE TREASURY first identify the class and the impact that it faced. Then, recipients only need to document that the individuals served fall within that class; recipients do not need to document a specific impact to each individual served. For example, a recipient could identify that restaurants in the downtown area faced substantial declines in revenue due to decreased foot traffic from workers; the recipient could develop a program to respond to the impact on that class and only needs to document that the businesses being served are restaurants in the downtown area. Recipients should keep the following considerations in mind when designating a class: • There should be a relationship between the definition of the class and the proposed response. Larger and less -specific classes are less likely to have experienced similar harms, which may make it more difficult to design a response that appropriately responds to those harms. • Classes may be determined on a population basis or on a geographic basis, and the response should be appropriately matched. For example, a response might be designed to provide childcare to single parents, regardless of which neighborhood they live in, or a response might provide a park to improve the health of a disproportionately impacted neighborhood. • Recipients may designate classes that experienced disproportionate impact, by assessing the impacts of the pandemic and finding that some populations experienced meaningfully more severe impacts than the general public. To determine these disproportionate impacts, recipients: o May designate classes based on academic research or government research publications (such as the citations provided in the supplementary information in the final rule), through analysis of their own data, or through analysis of other existing data sources. o May also consider qualitative research and sources to augment their analysis, or when quantitative data is not readily available. Such sources might include resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments. o Should consider the quality of the research, data, and applicability of analysis to their determination in all cases. Some of the enumerated uses may also be appropriate responses to the impacts experienced by other classes of beneficiaries. It is permissible for recipients to provide these services to other classes, so long as the recipient determines that the response is also appropriate for those groups. Recipients may designate a class based on income level, including at levels higher than the final rule definition of "low- and moderate -income." For example, a recipient may identify that households in their community with incomes above the final rule threshold for low-income nevertheless experienced disproportionate impacts from the pandemic and provide responsive services. 2. Design a response that addresses or responds to the impact. Programs, services, and other interventions must be reasonably designed to benefit the individual or class that experienced Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 33 U.S. DEPARTMENT OF THE TREASURY the impact. They must also be related and reasonably proportional to the extent and type of impact experienced. For example, uses that bear no relation or are grossly disproportionate to L/ the type or extent of the impact would not be eligible. "Reasonably proportional" refers to the scale of the response compared to the scale of the harm, as well as the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide a very small amount of aid to a group that experienced severe harm and a much larger amount to a group that experienced relatively little harm. Recipients should consider relevant factors about the harm identified and the response to evaluate whether the response is reasonably proportional. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the response. For disproportionately impacted communities, recipients may design interventions that address broader pre-existing disparities that contributed to more severe health and economic outcomes during the pandemic, such as disproportionate gaps in access to health care or pre-existing disparities in educational outcomes that have been exacerbated by the pandemic. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 34 U.S. DEPARTMENT OF THE TREASURY Premium Pay The Coronavirus State and Local Fiscal Recovery Funds may be used to provide premium pay to eligible workers performing essential work during the pandemic. Premium pay may be awarded to eligible workers up to $13 per hour. Premium pay must be in addition to wages or remuneration (i.e., compensation) the eligible worker otherwise receives. Premium pay may not exceed $25,000 for any single worker during the program. Recipients should undergo the following steps to provide premium pay to eligible workers. 1. Identify an "eligible" worker. Eligible workers include workers "needed to maintain continuity of operations of essential critical infrastructure sectors." These sectors and occupations are eligible: Health care Emergency response Sanitation, disinfection & cleaning Maintenance Grocery stores, restaurants, food production, and food delivery Pharmacy Biomedical research Behavioral health Medical testing and diagnostics Home and community -based health care or assistance with activities of daily living Family or child care Social services Public health Mortuary Critical clinical research, development, and testing necessary for COVID-19 response ✓ State, local, or Tribal government workforce ✓ Workers providing vital services to Tribes ✓ Educational, school nutrition, and other work required to operate a school facility ✓ Laundry ✓ Elections ✓ Solid waste or hazardous materials management, response, and cleanup ✓ Work requiring physical interaction with patients ✓ Dental care ✓ Transportation and warehousing ✓ Hotel and commercial lodging facilities that are used for COVID-19 mitigation and containment Beyond this list, the chief executive (or equivalent) of a recipient government may designate additional non-public sectors as critical so long as doing so is necessary to protecting the health and wellbeing of the residents of such jurisdictions. 2. Verify that the eligible worker performs "essential work," meaning work that: • Is not performed while teleworking from a residence; and • Involves either: a. regular, in -person interactions with patients, the public, or coworkers of the individual that is performing the work; or b. regular physical handling of items that were handled by, or are to be handled by, patients, the public, or coworkers of the individual that is performing the work. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 35 U.S. DEPARTMENT OF THE TREASURY 3. Confirm that the premium pay "responds to" workers performing essential work during the COVID-19 public health emergency. Under the final rule, which broadened the share of eligible workers who can receive premium pay without a written justification, recipients may meet this requirement in one of three ways: Eligible worker receiving premium pay is earning (with the premium included) at or below 150 percent of their residing state or county's average annual wage for all occupations, as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics whichever is higher, on an annual basis; or Eligible worker receiving premium pay is not exempt from the Fair Labor Standards Act overtime provisions; or If a worker does not meet either of the above requirements, the recipient must submit written justification to Treasury detailing how the premium pay is otherwise responsive to workers performing essential work during the public health emergency. This may include a description of the essential worker's duties, health, or financial risks faced due to COVID-19, and why the recipient determined that the premium pay was responsive. Treasury anticipates that recipients will easily be able to satisfy the justification requirement for front-line workers, like nurses and hospital staff. Premium pay may be awarded in installments or lump sums (e.g., monthly, quarterly, etc.) and may be awarded to hourly, part-time, or salaried or non -hourly workers. Premium pay must be paid in addition to wages already received and may be paid retrospectively. A recipient may not use SLFRF to merely reimburse itself for premium pay or hazard pay already received by the worker, and premium pay may N%.011 not be paid to volunteers. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 36 U.S. DEPARTMENT OF THE TREASURY Water & Sewer Infrastructure The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in water and sewer infrastructure. State, local, and Tribal governments have a tremendous need to address the consequences of deferred maintenance in drinking water systems and removal, management, and treatment of sewage and stormwater, along with additional resiliency measures needed to adapt to climate change. Recipients may undertake the eligible projects below: PROJECTS ELIGIBLE UNDER EPA'S CLEAN WATER STATE REVOLVING FUND (CWSRF) Eligible projects under the CWSRF, and the final rule, include: ✓ Construction of publicly owned treatment works ✓ Projects pursuant to implementation of a nonpoint source pollution management program established under the Clean Water Act (CWA) ✓ Decentralized wastewater treatment systems that treat municipal wastewater or domestic sewage ✓ Management and treatment of stormwater or subsurface drainage water ✓ Water conservation, efficiency, or reuse measures ✓ Development and implementation of a conservation and management plan under the CWA ✓ Watershed projects meeting the criteria set forth in the CWA ✓ Energy consumption reduction for publicly owned treatment works ✓ Reuse or recycling of wastewater, stormwater, or subsurface drainage water ✓ Security of publicly owned treatment works Treasury encourages recipients to review the EPA handbook for the CWSRF for a full list of eligibilities. PROJECTS ELIGIBLE UNDER EPA'S DRINKING WATER STATE REVOLVING FUND (DWSRF) Eligible drinking water projects under the DWSRF, and the final rule, include: ✓ Facilities to improve drinking water quality ✓ Transmission and distribution, including improvements of water pressure or prevention of contamination in infrastructure and lead service line replacements ✓ New sources to replace contaminated drinking water or increase drought resilience, including aquifer storage and recovery system for water storage ✓ Green infrastructure, including green roofs, rainwater harvesting collection, permeable pavement ✓ Storage of drinking water, such as to prevent contaminants or equalize water demands ✓ Purchase of water systems and interconnection of systems ✓ New community water systems Treasury encourages recipients to review the EPA handbook for the DWSRF for a full list of eligibilities. Coronovirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 37 0 U.S. DEPARTMENT OF THE TREASURY ADDITIONAL ELIGIBLE PROJECTS With broadened eligibility under the final rule, SLFRF funds may be used to fund additional types of projects— such as additional stormwater infrastructure, residential wells, lead remediation, and certain rehabilitations of dams and reservoirs — beyond the CWSRF and DWSRF, if they are found to be "necessary" according to the definition provided in the final rule and outlined below. ✓ Culvert repair, resizing, and removal, replacement of storm sewers, and additional types of stormwater infrastructure ✓ Infrastructure to improve access to safe drinking water for individual served by residential wells, including testing initiatives, and treatment/remediation strategies that address contamination ✓ Dam and reservoir rehabilitation if primary purpose of dam or reservoir is for drinking water supply and project is necessary for provision of drinking water A "necessary" investment in infrastructure must be: ✓ Broad set of lead remediation projects eligible under EPA grant programs authorized by the Water Infrastructure Improvements for the Nation (WIIN) Act, such as lead testing, installation of corrosion control treatment, lead service line replacement, as well as water quality testing, compliance monitoring, and remediation activities, including replacement of internal plumbing and faucets and fixtures in schools and childcare facilities (1) responsive to an identified need to achieve or maintain an adequate minimum level of service, which may include a reasonable projection of increased need, whether due to population growth or otherwise, (2) a cost-effective means for meeting that need, taking into account available alternatives, and (3) for investments in infrastructure that supply drinking water in order to meet projected population growth, projected to be sustainable over its estimated useful life. Please note that DWSRF and CWSRF-eligible projects are generally presumed to be necessary investments. Additional eligible projects generally must be responsive to an identified need to achieve or maintain an adequate minimum level of service. Recipients are only required to assess cost- effectiveness of projects for the creation of new drinking water systems, dam and reservoir rehabilitation projects, or projects for the extension of drinking water service to meet population growth needs. Recipients should review the supplementary information to the final rule for more details on requirements applicable to each type of investment. APPLICABLE STANDARDS & REQUIREMENTS Treasury encourages recipients to adhere to strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule 1 ./ U.S. Department of the Treasury 38 U.S. DEPARTMENT OF THE TREASURY Broadband Infrastructure The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in broadband infrastructure, which has been shown to be critical for work, education, healthcare, and civic participation during the public health emergency. The final rule broadens the set of eligible broadband infrastructure investments that recipients may undertake. Recipients may pursue investments in broadband infrastructure meeting technical standards detailed below, as well as an expanded set of cybersecurity investments. BROADBAND INFRASTRUCTURE INVESTMENTS Recipients should adhere to the following requirements when designing a broadband infrastructure project: 1. Identify an eligible area for investment. Recipients are encouraged to prioritize projects that are designed to serve locations without access to reliable wireline 100/20 Mbps broadband service (meaning service that reliably provides 100 Mbps download speed and 20 Mbps upload speed through a wireline connection), but are broadly able to invest in projects designed to provide service to locations with an identified need for additional broadband investment. Recipients have broad flexibility to define need in their community. Examples of need could include: ✓ Lack of access to a reliable high-speed ✓ Lack of affordable broadband broadband connection ✓ Lack of reliable service If recipients are considering deploying broadband to locations where there are existing and enforceable federal or state funding commitments for reliable service of at least 100/20 Mbps, recipients must ensure that SLFRF funds are designed to address an identified need for additional broadband investment that is not met by existing federal or state funding commitments. Recipients must also ensure that SLFRF funds will not be used for costs that will be reimbursed by the other federal or state funding streams. 2. Design project to meet high-speed technical standards. Recipients are required to design projects to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. In cases where it is not practicable, because of the excessive cost of the project or geography or topography of the area to be served by the project, eligible projects may be designed to reliably meet or exceed 100/20 Mbps and be scalable to a minimum of symmetrical 100 Mbps download and upload speeds. Treasury encourages recipients to prioritize investments in fiber-optic infrastructure wherever feasible and to focus on projects that will achieve last -mile connections. Further, Treasury encourages recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and co-operatives. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 39 U.S. DEPARTMENT OF THE TREASURY 3. Require enrollment in a low-income subsidy program. Recipients must require the service provider for a broadband project that provides service to households to either: ✓ Participate in the FCC's Affordable Connectivity Program (ACP) ✓ Provide access to a broad -based affordability program to low-income consumers that provides benefits commensurate to ACP Treasury encourages broadband services to also include at least one low-cost option offered without data usage caps at speeds sufficient for a household with multiple users to simultaneously telework and engage in remote learning. Recipients are also encouraged to consult with the community on affordability needs. CYBERSECURITY INVESTMENTS SLFRF may be used for modernization of cybersecurity for existing and new broadband infrastructure, regardless of their speed delivery standards. This includes modernization of hardware and software. APPLICABLE STANDARDS & REQUIREMENTS Treasury encourages recipients to adhere to strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 40 U.S. DEPARTMENT OF THE TREASURY Restrictions on Use While recipients have considerable flexibility to use Coronavirus State and Local Fiscal Recovery Funds to address the diverse needs of their communities, some restrictions on use of funds apply. OFFSET A REDUCTION IN NET TAX REVENUE • States and territories may not use this funding to directly or indirectly offset a reduction in net tax revenue resulting from a change in law, regulation, or administrative interpretation beginning on March 3, 2021, through the last day of the fiscal year in which the funds provided have been spent. If a state or territory cuts taxes during this period, it must demonstrate how it paid for the tax cuts from sources other than SLFRF, such as by enacting policies to raise other sources of revenue, by cutting spending, or through higher revenue due to economic growth. If the funds provided have been used to offset tax cuts, the amount used for this purpose must be repaid to the Treasury. DEPOSITS INTO PENSION FUNDS No recipients except Tribal governments may use this funding to make a deposit to a pension fund. Treasury defines a "deposit" as an extraordinary contribution to a pension fund for the purpose of reducing an accrued, unfunded liability. While pension deposits are prohibited, recipients may use funds for routine payroll contributions connected to an eligible use of funds (e.g., for public health and safety staff). Examples of extraordinary payments include ones that: Reduce a liability incurred prior to the x start of the COVID-19 public health emergency and occur outside the recipient's regular timing for making the payment ADDITIONAL RESTRICTIONS AND REQUIREMENTS Occur at the regular time for pension contributions but is larger than a regular payment would have been Additional restrictions and requirements that apply across all eligible use categories include: No debt service or replenishing financial reserves. Since SLFRF funds are intended to be used prospectively, recipients may not use SLFRF funds for debt service or replenishing financial reserves (e.g., rainy day funds). No satisfaction of settlements and judgments. Satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or regulatory proceeding is itself not an eligible use. However, if a settlement requires the recipient to provide services or incur other costs that are an eligible use of SLFRF funds, SLFRF may be used for those costs. Additional general restrictions. SLFRF funds may not be used for a project that conflicts with or contravenes the purpose of the American Rescue Plan Act statute (e.g., uses of funds that Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 41 0 U.S. DEPARTMENT OF THE TREASURY undermine COVID-19 mitigation practices in line with CDC guidance and recommendations) and may not be used in violation of the Award Terms and Conditions or conflict of interest requirements under the Uniform Guidance. Other applicable laws and regulations, outside of SLFRF program requirements, may also apply (e.g., laws around procurement, contracting, conflicts -of -interest, environmental standards, or civil rights). Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 42 U.S. DEPARTMENT OF THE TREASURY 1_­1 Program Administration The Coronavirus State and Local Fiscal Recovery Funds final rule details a number of administrative processes and requirements, including on distribution of funds, timeline for use of funds, transfer of funds, treatment of loans, use of funds to meet non-federal match or cost -share requirements, administrative expenses, reporting on use of funds, and remediation and recoupment of funds used for ineligible. purposes. This section provides a summary for the most frequently asked questions. TIMELINE FOR USE OF FUNDS Under the SLFRF, funds must be used for costs incurred on or after March 3, 2021. Further, costs must be obligated by December 31, 2024, and expended by December 31, 2026. TRANSFERS Recipients may undertake projects on their own or through subrecipients, which carry out eligible uses on behalf of a recipient, including pooling funds with other recipients or blending and braiding SLFRF funds with other sources of funds. Localities may also transfer their funds to the state through section 603(c)(4), which will decrease the locality's award and increase the state award amounts. LOANS Recipients may generally use SLFRF funds to provide loans for uses that are otherwise eligible, although �-� there are special rules about how recipients should track program income depending on the length of the loan. Recipients should consult the final rule if they seek to utilize these provisions. NON-FEDERAL MATCH OR COST -SHARE REQUIREMENTS Funds available under the "revenue loss" eligible use category (sections 602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act) generally may be used to meet the non-federal cost -share or matching requirements of other federal programs. However, note that SLFRF funds may not be used as the non- federal share for purposes of a state's Medicaid and CHIP programs because the Office of Management and Budget has approved a waiver as requested by the Centers for Medicare & Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. SLFRF funds beyond those that are available under the revenue loss eligible use category may not be used to meet the non-federal match or cost -share requirements of other federal programs, other than as specifically provided for by statute. As an example, the Infrastructure Investment and Jobs Act provides that SLFRF funds may be used to meet the non-federal match requirements of authorized Bureau of Reclamation projects and certain broadband deployment projects. Recipients should consult the final rule for further details if they seek to utilize SLFRF funds as a match for these projects. ADMINISTRATIVE EXPENSES SLFRF funds may be used for direct and indirect administrative expenses involved in administering the program. For details on permissible direct and indirect administrative costs, recipients should refer to Treasury's Compliance and Reporting Guidance. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 43 U.S. DEPARTMENT OF THE TREASURY REPORTING, COMPLIANCE & RECOUPMENT Recipients are required to comply with Treasury's Compliance and Reporting Guidance, which includes submitting mandatory periodic reports to Treasury. Funds used in violation of the final rule are subject to remediation and recoupment. As outlined in the final rule, Treasury may identify funds used in violation through reporting or other sources. Recipients will be provided with an initial written notice of recoupment with an opportunity to submit a request for reconsideration before Treasury provides a final notice of recoupment. If the recipient receives an initial notice of recoupment and does not submit a request for reconsideration, the initial notice will be deemed the final notice. Treasury may pursue other forms of remediation and monitoring in conjunction with, or as an alternative to, recoupment. Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury 44 CSMFO.N Washington Information You Should Know Emily Swenson Brock Federal Policy Director February 16, 2022 o Part 11: ARPA and Final Rule Updates o Part 2,: Compliance and Reporting o Part 3,: Bipartisan Infrastructure Law Mo ARPA GFOA Guiding Principles o Temporary Nature of ARPA Funds ■ Care should be taken to avoid creating new programs or add-ons to existing programs that require an ongoing financial commitment. ■ Use of ARPA funds to cover operating deficits caused by COVI D-19 should be considered temporary and additional budget restraint may be necessary to achieve/maintain structural balance in future budgets. ■ Investment in critical infrastructure is particularly well suited use of ARPA funds because it is a non -recurring expenditure that can be targeted to strategically important long- term assets that provide benefits over many years. However, care should be taken to assess any on -going operating costs that may be associated with the project. 4 o ARPA Scanning and Partnering Efforts ■ Local jurisdictions should be cognizant of state -level ARPA efforts, especially regarding infrastructure, potential enhancements of state funding resources, and existing or new state law requirements. ■ Consider regional initiatives, including partnering with other ARPA recipients. It is possible there are many beneficiaries of ARPA funding within your community, such as schools, transportation agencies and local economic development authorities. Be sure to understand what they are planning and augment their efforts or create cooperative spending plans to enhance the structural financial condition of your community. o Take Time and Careful Consideration ■ Use other dedicated grants and programs first whenever possible and save ARPA funds for priorities not eligible for other federal and state assistance programs. ■ Whenever possible, expenditures related to the ARPA funding should be spread over the qualifying period (through December 31, 2024) to enhance budgetary and financial stability. ■ Adequate time should be taken to carefully consider all alternatives for the prudent use of ARPA funding prior to committing the resources to ensure the best use of the temporary funding. 1.1 C MIR. Part 1: ARPA Final Rule Updates A.COVID-19 or a negative economic impact B.Premium pay for eligible workers C.For government services to the extent of the loss of revenue D.Investments in water, sewer and broadband infrastructure o Final rule issued January 7, 2022 oThe final rule takes effect on April 1, 2022 • If a use of funds complies with the final rule, Treasury will not take action to enforce the interim final rule, regardless of when the funds were used (e.g., if the FIR would not permit that use of funds); recipients can take advantage of the expanded flexibilities in the final rule now • Until April 1, the interim final rule remains in effect; funds used consistently with the FIR while it is in effect are in compliance with the SLFRF program 9 1.1 COVID-19 Vaccination ^ 1.2 COVID-19 Testing ^ 1.3 COVID-19 Contact Tracing 1.4 Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools. etc.)' 1.5 Personal Protective Equipment 1.6 Medical Expenses (including Alternative Care Facilities) a 1.7 y rages to Public Facilities that respond to the ' Capital Investments or Physical Ptant Changes COVID-19 public health emergency 1.8 Other COVID-19 Public Health Expenses (including Communications, Enforcement, Isol-ation /Ouarantine) 1.9 Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to COVID-19 1.10 Mental Health Services' 1.11 Substance Use Services" 1.12 Other Public Health Services 2: Negative Economic Impacts 2.1 Household Assistance: Food Programs' ^ 2.2 Household Assistance: Rent, Mortgage, and Utility Aid' ^ 2.3 Household Assistance: Cash Transfers` ^ 2.4 Household Assistance: Intemet Access Programs' ^ 2.5 Household Assistance: Eviction Prevention' ^ 2.6 Unemployment Benefits or Cash Assistance to Unemployed Workers' 2.7 Job Training Assistance (e.g., Sectoral job -training. Subsidized Employment, Employment Supports or Incentives)' ^ -- 2.8 Contributions to UI Trust Funds 2-9-small-Business Economic Assistance (General)' ^ 2.10 Aid to Nonprofit Organizations' 2.11 Aid to Tourism, Travel, or Hospitality -_. 2.12 Aid to Other Impacted Industries 2.13 Other Economic Support' ^ 2.14 Rehiring Public Sector Staff 3: Services 3.1 to Disproportionatety Impacted Communities Education Assistance: Early Learning' ^ 3.2 Education Assistance: Aid to High -Po y Districts_" 3.3 Education Assistance: Academic Services` A 3.4 Education Assistance: Social Emotional, and Mental Health Services' A - ----------------------------------------- 3.5 Education Assistance: Other* ^ - -- - - - 3.6 _ Healthy Childhood Environments: Child Care' " 3.7 Healthy Childhood Environments: home Visiting' ^ 3.8 Healthy Childhood Environments: Services to Foster Youth or Families Involved in . Child Welfare System`_" 3 10 C Reduction in tax revenue SLFRF may not be used to directly or indirectly offset a reduction in net tax revenue resulting from a change in state or territory law, as required by the American Rescue Plan Deposits into Pension • SLFRF may not be used for deposits into pension funds, as required by ARPA Funds • A "deposit" is defined as an extraordinary contribution to a pension fund for the purpose of reducing an accrued, unfunded liability • Recipients may use funds for routine payroll contributions to pensions of employees whose wages and salaries are an eligible use Other Restrictions on Use • Funds may not be used for debt service, replenishing rainy day funds/financial reserves, or satisfaction of a settlement or judgment • May not undermine mitigation practices in line with CDC guidance and recommendations • Uses of funds may not violate Uniform Guidance conflict -of -interest or other applicable laws Revenue Loss Generally, funds available under the "revenue loss" eligible use category can be used to meet the non-federal cost -share or matching requirements of other federal programs Except that funds may not be used as the non-federal share for a state's Medicaid and CHIP programs, even under the "revenue loss" eligible use category Except when a federal statute specifically and/or expressly permits FRF to be used as match (e.g., IIJA permits FRF as match on certain broadband deployment projects) 11 ►1J A. Public Health & Negative Economic Impacts • Public Health Public Health & Negative Economic Impacts Negative Economic Impacts Services to Disproportionately Impacted Communities COVID-19 Vaccination Household Assistance: Food Programs Education Assistance: Early Learning COVID-19 Testing Household Assistance: Rent, Mortgage, and Utility Aid Education Assistance: Aid to High -Poverty Districts COVID-19 Contact Tracing Household Assistance: Cash Transfers Education Assistance: Academic Services Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools, etc.) Household Assistance: Internet Access Programs Education Assistance: Social, Emotional, and Mental Health Services Personal Protective Equipment Household Assistance: Eviction Prevention Education Assistance: Other Medical Expenses (including Alternative Care Facilities) Unemployment Benefits or Cash Assistance to Unemployed Workers Healthy Childhood Environments: Child Care Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emergency Job Training Assistance (e.g., Sectoral job - training, Subsidized Employment, Employment Supports or Incentives) Healthy Childhood Environments: Home Visiting Other COVID-19 Public Health Expenses (including Communications, Enforcement, Isolation/Quarantine) Contributions to UI Trust Funds Healthy Childhood Environments: Services to Foster Youth or Families Involved in Child Welfare System Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to COVID-19 Small Business Economic Assistance (General) Healthy Childhood Environments: Other Mental Health Services Aid to Nonprofit Organizations Housing Support: Affordable Housing Substance Use Services Aid to Tourism, Travel, or Hospitality Housing Support: Services for Unhoused Persons Other Public Health Services Aid to Other Impacted Industries Housing Support: Other Housing Assistance Other Economic Support Rehiring Public Sector Staff 13 Expanded and clarified eligible uses, including: • Making affordable housing, childcare, early learning services, and services to address learning loss eligible to all impacted households • Clarifying eligible uses in disproportionately impacted communities, including certain community development and neighborhood revitalization activities • Clarifying eligible uses for disproportionately impacted small businesses, including rehabilitation of commercial properties and start-up or expansion assistance • Presumed Populations: • Defines low- and moderate -income households and communities presumed impacted by the pandemic • Presumes low-income households and communities disproportionately impacted, in addition to Qualified Census Tracts and others • Presumes small businesses and non- profits operating in Qualified Census Tracts disproportionately impacted, among others 14 o In general, to identify eligible uses of funds in this category, recipients should ■ (1) identify a COVID-19 public health or economic impact on an individual or class (i.e., a group) and ■ (2) design a program that responds to that impact. Step 1. Identify COVID-19 public health or economic impact 2. Design a response that addresses or responds to the impact Analysis . Can identify impact to a specific • Types of responses can include a household, business or nonprofit or program, service, or capital to a class of households, businesses, expenditure or nonprofits (i.e., group) • Response should be related and • Can also identify disproportionate reasonably proportional to the harm impacts, or more severe impacts, to • Response should also be reasonably a specific beneficiary or to a class designed to benefit impacted individual or class Simplifying Final Rule presumes certain • Final Rule provides non -exhaustive Presumptions populations and classes are impacted list of enumerated eligible uses that and disproportionately impacted respond to pandemic impacts and disproportionate impacts 15 Public safety, public health, and human services staff Payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government through the period of performance Limited to the portion of the employee's time spent responding to COVID-19, though public health and safety staff primarily dedicated to COVID-19 response may be fully covered; recipients can use reasonable estimates to determine share of employee time Government employment & rehiring public sector staff ✓ Restoring employment by hiring up to 7.5% above pre -pandemic baseline ✓ Funding for employees who experienced pay reductions or were furloughed Effective service delivery ✓ Supporting use of evidence, program evaluation, data, and outreach ✓ Providing administrative expenses for administration of programs that respond to COVID-19 ✓ Maintaining current compensation levels to prevent layoffs ✓ Worker retention incentives, including reasonable increases in compensation ✓ Address administrative needs caused or exacerbated by the pandemic (e.g., backlogs from pandemic shutdowns, adapting government operations to the pandemic) it- Overall eligibility requirements Capital expenditures subject to same "related and reasonably proportional" standard as other uses Recipients other than Tribal governments must complete Written Justification (WJ) for capital expenditures at or over $1 million WJ requires recipients to explain why a capital expenditure is appropriate and why the proposed capital expenditure is superior to alternatives » Depending on project size, recipients may be required to submit WJ with reporting; no pre -approval Presumptions for capital expenditures Projects presumed eligible, provided the above requirements are met: ✓ Testing labs and equipment ✓ Emergency operations center & equipment ✓ Affordable housing ✓ Childcare facilities ✓ Schools (for Disproportionately Impacted communities) ✓ Primary care health clinics and hospitals (for Disproportionately Impacted communities) Projects generally presumed to be ineligible: x Construction of new correctional facilities as a response to an increase in rate of crime x Construction of new congregate facilities to decrease spread of COVID-19 in facility x Construction of convention centers, stadiums or other large capital projects for general economic development or aid to impacted industries 17 ■ On November 17, the IRS updated guidance regarding requirements for SLFRF payments to individuals. Click here to see the IRS Guidance. ■ This key guidance includes: ■ Payments to individuals from SLFRF for utilities (or arrearages of utilities) is NOT considered income and therefore a Form 1099-MISC is not required. ■ Other cash transfers to individuals is not income, and therefore no Form 1099-MISC or other information return is required to be filed with the IRS or furnished to the recipient. 18 Mi. B. Premium Pay Premium Pay: An amount up to $13 per hour in addition to wages or remuneration the worker otherwise receives and in an aggregate amount not to exceed $25,000 per eligible worker. Can be provided directly, or through grants to private employers to public health/safety staff and essential workers outside the public sector: Eligible Worker: Needed to maintain continuity of operations of essential critical infrastructure sectors, including.... any work performed by an employee of a State, local, or Tribal government.... Essential Work: ` Work that is not performed while teleworking from a residence and, Involves regular in -person interactions with patients, the public, or coworkers of the individual that is performing the work or; Regular physical handling of items that were handled by, or are to be handled by patients, the public, or coworkers of the individual that is performing the work. Public Sector: Public health and safety staff Staff at nursing homes, hospitals, home care settings Childcare workers, educators, and other school staff Social service and human services staff Private Sector (grants to other employers): Workers at farms, food production facilities, grocery stores, and restaurants Janitors and sanitation workers Truck drivers, transit staff, and warehouse workers NOTE: The chief executive officer can designate any other sectors determined as critical to protect the health and well-being of the residents. 20 o Eligible workers are those in critical infrastructure sectors o Essential work involves regular in -person interactions or physical handling of items handled by others o Pay must respond to worker needs: o Serves workers who: o Earn at or below 150 percent of their state or county's average annual wage, or o Are not exempt from Fair Labor Standards Act overtime rules o Or recipient provides written justification of how it meets needs 04 1. Identify an eligible worker who are "needed to maintain continuity of operations of essential critical infrastructure sectors. 2. Verify that the eligible worker has maintained essential 'work in -person 3. Confirm that the premium pay "responds to" workers performing essential work during the covid-19 public health emergency 1. Is not exempt from the Fair Labor Standards Act overtime provisions 2. Is earning at or below 150 percent of their residing state or county's annual wage 3. If does not meet above criteria, then submit written justification 22 o State of Oregon Annual Average wage for all occupations = $55,349 o Washington Countv Annual Average wage for all occupations = $73,226 $73,226 x 150% _ $109,839 • In the case of King City there are only 2 employees that would exceed that figure with the addition of the Premium Pay. o Brief Narrative: As a small City with a limited tax base we are limited on what we can pay in salary. Most of our salaries are 1-2 thousand dollars a month lower that our neighboring City's. We lack the ability to offer higher wages due to budgetary constraints and restrictions on tax adjustments. The City spends significant resources constantly hiring and retraining employees who leave for higher paying jobs that require less of the time and dedication. Retention is a significant problem for a small city. Regardless of the employee's pay or position within our organization, every employee has worked the front line throughout this pandemic. o Staff is proposing to limit the Premium Pay from $13 p/hr worked to $10 p/hr worked either directly or in support of the City's Covid related response from April 1, 2020 when the emergency was first declared through the end of September 2021 in the following sectors: o public service, public health, public safety, public welfare, public infrastructure, parks, maintenance, positions that support the continuity of the City's essential operations. 23 ■ On November 17, the IRS updated guidance regarding requirements for SLFRF payments to individuals. Click here to see the IRS Guidance. ■ This key guidance includes: ■ Premium pay amounts paid to employees are considered wages. Employers generally must withhold federal income tax as well as social security tax and Medicare tax from employees' wages. (Employers also may have to pay federal unemployment tax on the wages.) ■ Any payment from SLFRF that is in the nature of compensation for services, even a one-time payment (such as a hiring "bonus"), is considered wages. 24 C. Revenue Loss o Recipients may determine their revenue loss by choosing between two options: ■ A standard allowance of up to $10 million in aggregate, not to exceed your award amount, during the program ■ Calculating your jurisdiction's specific revenue loss each year using Treasury's formula, which compares actual revenue to a counterfactual trend. 26 o What is OUT of the revenue calculation: ■ Federal transfers (even those flowing through the State) (IFR) ■ Intergovernmental transfers from your entity to your entity (Census ■ Refunds and other correcting transactions (IFR) ■ Proceeds from the issuance of debt (IFR) ■ Must adjust actual revenue totals for the effect of tax cuts and tax increases that are adopted after January 6, 2022 o What is IN? ■ Governments may elect to include revenues from utilities (water supply, electric power, gas supply, and public mass transit systems) Census ■ Everything not listed above • taxes, fees and other revenues to support public services ■ Including Fees generated by the underlying economy • Component units and enterprise funds • civic center, zoo, parking, ports, sports stadiums etc. etc. etc. 27 140 0 Base year revenue Extent of reduction in revenue 130 Actual revenue (last twelve months) 120 110 100 a -O ---- +-- - Counterfactual revenue NO , © o 0 28 o Look at the past 2019 base year revenue o Recipients average annual growth of the past three fiscal years ■ Apply 5.2% growth rate or greater to annual revenues collected o Multiplier applies to the revenue collected in each calendar or each fiscal yea r ■ Choice is up to the issuer ■ Must be consistent throughout the period of perfomance o Compare projected growth revenue to actuals collected ■ If actual exceeds projected, collection is zero for that year 29 Provision of Government Services (can include, but are not limited to): Maintenance or pay -go funded building of infrastructure/roads Modernization of cybersecurity, including hardware, software, and protection of critical infrastructure. Health services Environmental remediation School/educational services Provision of police, fire, and other public safety services Restrictions: Paying interest or principal on outstanding debt Replenishing rainy day or other reserve funds Paying settlements or judgments would not be considered provision of a government service, since these uses of funds do not entail direct provision of services to citizens 30 o Be careful of any of the recaptured revenue placed in the General Fund ■ Still SLFRP funding ■ Still subject to Uniform Guidance ■ Still subject to the bounds of the law o SEFA reporting is required when the expenditure occurs 31 m D. Water/Sewer & Broadband Infrastructure • Necessary investments in projects that: • Improve access to clean drinking water. • Improve wastewater and stormwater infrastructure systems. • Provide access to high -quality broadband service. • Necessary Investment: • Designed to provide an adequate minimum level of service and are unlikely to be made using private sources of funds. • Give priority to those most in need o Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater and stormwater infrastructure, and to expand affordable access to broadband internet. ■ Recipients may fund a broad range of water and sewer projects, including those eligible under the EPNs Clean Water State Revolving Fund, EPKs Drinking Water State Revolving Fund, and certain additional projects: — Broader set of lead remediation projects, including faucets, fixtures, and internal plumbing in schools and childcare facilities — Additional types of stormwater infrastructure, such as culverts — Residential wells — Certain dam and reservoir rehabilitation 34 .=.EPA; ..; , "iiiiiiiiiiiiiiiiiiiillillim CWSRF List of State Contacts DWSRF List of State Contacts Broadband: "Last Mile" projects Broadband: Other projects • Build broadband infrastructure with modern technologies in mind, specifically projects that deliver services offering: • Reliable 100 Mbps download and 100 Mbps upload speeds, unless impracticable due to topography, geography, or financial cost. • Assisting underserved households and businesses: • Meet household/business needs, such as: • Ability to work from home, receive education online, use health applications online etc. • Treasury interprets "businesses" in the context of Broadband Infrastructure broadly to include: • Non-residential users of broadband, including private businesses and institutions that serve the public, such as schools, libraries, healthcare facilities, and public safety organizations. 36 o Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater and stormwater infrastructure, and to expand affordable access to broadband internet. ■ Recipients may fund high-speed broadband infrastructure in areas of need that the recipient identifies, such as areas without access to adequate speeds, affordable options, or where connections are inconsistent or unreliable: —Under the IFR, recipients were required to invest in households and businesses without reliable wireline 25/3 Mbps —Final rule broadens flexibility by encouraging recipients to invest in locations without reliable wireline 100/20 Mbps but enables recipients to identify additional need for investment (e.g., affordability) —Final rule also adds an affordability requirement 37 o Recipients do not need approval from Treasury to determine whether an investment in a water, sewer, or broadband project is eligible under the SLFRF. ' Each recipient should review the IFR in order to make its own assessment of whether its intended project meets the eligibility criteria in the IFR. O Major procurement considerations include • Davis Bacon Requirements (and/or project labor agreements) ■ Employees and contractors working on the project ■ Technology minimum standards 38 MO Part 2: Compliance & Reporting State and Local Fiscal Recovery Funds States, U.S. territories, metropolitan cities and counties with a 1 |population that exceeds | 250.000 residents 2 --- Metropolitan cities and counties with a population below 250,000 residents which received more than $10 million in SLFRF funding Tribal Governments 3 which received more than $30 million in Tribal Governments 4 which received less than $30 million in SLFRF ju Metropolitan cities and counties with a 5 population below 250,000 residents which received less than $10 -million in SLFRF funding NEUs By August 31, 8yJanuary 31. By August 31, 2021or60 2022.and then 3O 2021 or 60 days days after days after the end after receiving naoa|vinQ ofeach quarter funding, and funding if UhonauMer9 annually funding was thereafter by received by y31,n October 15, Not required with expenditures by category Not required ByApril 3U 2022, and then annually thereafter' 1 40 � Y NO Key Responsibilities Treasury Resources • Treasury's Main SLFRF Page • NEU Homepage • Interim Final Rule • FAQs (Main) • FAQs (on Distribution of Funds to NEUs) • Non -entitlement Unit of Local Government Checklist for Requesting Initial Pam • Award Terms and Conditions for Non - entitlement Units of Local Government • Assurances of Compliance with Title VI of the Civil Riahts Act of 1964 • Status of Payments to States for Distribution to Non -entitlement Units of Local Government • Compliance and Reporting • Coronavirus Response Resource Center • Analysis of the American Rescue Plan • ARPA Revenue Replacement Calculator • GFOA Guiding Principles 42 • Properly documented policies • Understand key waiver thresholds including sole source and micro purchases, otherwise purchases must conform, including competitive requirements p • Treasury has NOT issued any uniform guidanrp waivers for expenditures in any category. • The Uniform Guidance requires non -Federal entities that expend $750,000 or more a year in Federal awards to have an audit conducted in accordance with the Uniform Guidance. • Talk with your auditor early about SEFA reporting requirements and how to report those expenditures • GFOA Advanced Accounting Academy I Recipients: Eligible entities identified in sections 602 and 603 that received a CSLFRF award: States and the District of Columbia, Territories, Tribal governments, Counties, Metropolitan cities, Non - entitlement units, or smaller local governments. • Sub -recipients: Entities that receive a sub -award from a recipient to carry out the purposes (program/project) of the award on behalf of the recipient. • Recipients are responsible for sub -recipient monitoring: • Clearly identify to the sub -recipient that the award is CSLFRF. • Identify all compliance requirements and any reporting requirements. • Initial and ongoing evaluation of each sub -recipients risk of noncompliance. • Develop written policies and procedures for sub -recipient monitoring and risk evaluation as well as sufficient document retention policies. • Subawards • Specific information required for each subaward (Contract, Grant, Loan, Transfer, or Direct Payment) greater than or equal to $50,000 Aggregate reporting is required for contracts, grants, transfers made to other government entities, loans, direct payments, and payments to individuals that are below $50,000. This information will be accounted for by expenditure category at the project level. C o EC must be used to categorize each project. o * symbol denotes areas where recipients must identify the amount of the total funds that are allocated to evidence -based interventions. o ^ symbol denotes areas where recipients must report on whether projects are primarily serving disadvantaged communities. o Project demographic distribution 1: Public 1.1 Health COVID-19 Vaccination ^ 1.2 COVID-19 Testing " 1.3 COVID-19 Contact Tracing 1.4 Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools, etc.)* 1.5 Personal Protective Equipment 1.6 Medical Expenses (including Alternative Care Facilities) 1 7 Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emergency 1.8 Other COVID-19 Public Health Expenses (including Communications, Enforcement, Isolation/Quarantine) 1.9 Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to COVID-19 1.10 - --- -- ----- Mental Health Services* 1.11 Substance Use Services' 1.12 Other Public Health Services Negative.: 2.1 Household Assistance: Food Programs" ^ -- - — 2.2 - R- — Household Assistance: ent,-Mortgage, and Utility Aid" 2.3 Household Assistance: Cash Transfers' ^ 2.4 Household Assistance: Internet Access Programs* ^ 2.5 Household Assistance: Eviction Prevention ^ 2.6 Unemployment Benefits or Cash Assistance to Unemployed Workers* 2.7 Job Training Assistance (e.g., Sectoral job -training, Subsidized Employment, Employment Supports or Incentives)* ^ 2.8 Contributions to UI Trust Funds 2.9 Small Business Economic Assistance (General)' " 2.10 Aid to Nonprofit Organizations* 2.11 Aid to Tourism, Travel, or Hospitality 2-12 Aid to Other Impacted Industries 2.13 Other Economic Support* ^ 2.14 Rehiring Public Sector Staff M Part 3: The Bipartisan Infrastructure Law 0 C $1.2 Trillion price tag $550 Billion in new money Most monies distributed over 5-year period ■ ♦ Broadband • Lawmakers craft policy with input from stakeholders • "Sausage making" • Months, years onto U • Appropriate departments begin pursuing legislative intent re program • Guidelines are issued; info sharing begins • 6-12 months 50 7 0 Eq u ity ❖Workforce expansion grants ❖Supply chain considerations ❖Bridge building/noninterstate highway considerations (FHA) Sustainability ❖"Build Back Better" ❖Grant programs and audits will include sustainability metrics ■ Partnering ❖With your state ❑Local and regional "significance" in the projects ❑Nonfederal match will still be a requirement. 10 on water, 20 on roads ❖ With private partners ❑Documenting P3 successes ❑VFM Analysis associated with large projects (is privatizing cheaper/faster/better?) 51 ■ Expanding domestic preference procurement policies applicable federal financial assistance programs for public works infrastructure. ■ Build America, Buy America to (aka BABA) Unless: ■ Increasing the domestic component content requirements of products and construction materials sold to the federal government under the Buy American Act. ■ Providing transparency into the government's domestic sourcing contracting decisions. ■ When there is inconsistency with the public's interest. ■ Where the necessary volume of iron, steel, and manufactured products is not produced in sufficient quantities or satisfactory quality. ■ Where enforcement of Buy America would increase the cost of the project by more than 25% 52 ►1J Thank you!