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HomeMy WebLinkAboutFIN 2021-09-13 Item 1B - Funding - Phase II Prioritization for American Rescue Plan Act (ARPA) Fundsof Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance and Governance Committee FROM: Vicky Carlsen, Finance Director CC: Mayor Ekberg DATE: June 14, 2021 SUBJECT: Phase 2 Funding Prioritization - Identify and prioritize projects utilizing American Rescue Plan Act (ARPA) funds Updated for August 23, 2021, Committee Meeting ISSUE Staff is seeking Committee input to identify and prioritize projects that could be paid for using ARPA funds. BACKGROUND On March 22, 2021, staff began a discussion with the Finance & Governance committee to seek input into a process for how to prioritize service level restoration if and when ongoing revenues exceed revenues adopted in the 2021-2022 biennial budget as well as restored revenues from sales tax mitigation payments. Included in the info memo was a section discussing federal funding through the American Rescue Plan Act. There was agreement to approach these funding discussions in three phases. Phase 1 — Council Consensus on May 10, 2021 — utilized sales tax mitigation payments expected to be received July 1, 2021, and was targeted to those items that would: 1. Provide the most direct impact to improving the quality of life for our community — Streets and Parks Maintenance to keep parks clean and respond to concerns about garbage, litter, and graffiti. 2. Revenue backed services — The Consolidated Permit Center is handling an increased demand for permits which are supported by fees. 3. Services which have been contractually required Including agreements with the Teamsters and IAFF Local #2088 for Fire Overtime. 4. Critical services which should be restored — This includes restoring some necessary services, such as cybersecurity contracts in Technology Information Services. Phase 2 is targeted to utilize the American Rescue Plan Act funds. This discussion is planned to begin on June 14 with additional information in this memo and continue through July with the full Council which will provide time to receive more details from the Federal Government. 9 INFORMATIONAL MEMO Page 2 Phase 3 is targeted to use possible additional revenues as they return to pre -pandemic levels. This phase is expected to begin in August 2021 after we see begin to see the impacts of vaccinations on revenue sources. Phase 2 Funding - Using American Rescue Plan Act (ARPA) Funds The earlier memo included a partial list of possible projects that could be funded with ARPA money including: • Upgrading equipment in the Council chambers to allow for both in-person as well as virtual participation in city Council meetings and workshops. • Adding internet access to neighborhoods underserved by existing internet options. • Funding additional human services and/or small business programs and outreach. • Funding to design and possibly purchase property for a youth/senior center. • Economic Development Plan • Other one-time services such as studies, plans or designs. Federal Funding - American Rescue Plan Act On March 10, 2021, a $1.9 trillion relief package, known as the American Rescue Plan Act, was approved and provides funding in several areas including state and local aid, education, rental assistance, and transit. Preliminary estimates show that the City of Tukwila could receive as much as $4.43 million in one-time funds. Staff will confirm the final amount once we receive official notification from the State, which is not expected until at least July. Funds must be obligated by December 31, 2024. Final notification has been received and the City of Tukwila will receive $5.78 million, which is $1.35 million more than originally expected. From what we know today, the funds can be used in the following ways: - To respond to the public health emergency with respect to COVID-19 or its negative economic impacts, including assistance to households, small businesses, and non -profits, or to aid impacted industries such as tourism, travel, and hospitality. - Provide premium pay to eligible workers that are preforming essential work. - Provision of government services to the extent of the reduction in revenue due to the pandemic relative to revenues collected in the most recent full fiscal year. - Make necessary investments in water, sewer, or broadband infrastructure. The funds cannot be used to directly or indirectly offset tax reductions or delay a tax/tax increase. Nor can funds be deposited into any pension fund. Final guidance on approved uses of the funds is expected to be received in July of 2021. New information regarding uses and restrictions for ARPA funds Additional information has been released that provides better guidance on appropriate use of ARPA funds. The biggest change is in the Provision of Government Services to the Extent of Reduction in Revenue category. Updated guidance indicates that funds used under this category may only be used to restore services or projects that were reduced or eliminated due to revenue reduction caused by COVID-19. ARPA funds may 10 INFORMATIONAL MEMO Page 3 not be used for new capital projects (except for broadband, water, and sewer improvements, projects within very specific parameters) or programs or expansion of existing programs beyond the COVID-19 related reductions. A nexus to the effects of COVID needs to exist in order to apply ARPA funds to the service or project. Projects previously suggested for inclusion for ARPA funds that do not qualify are noted below in the appropriate section of this info memo. New information also shows that use of ARPA funds may be used to cover costs incurred beginning March 3, 2021. Ongoing vs One-time Revenues As a reminder, the Council's adopted financial policies state that one-time revenue will be used for one-time expenditures and ongoing revenue will be used for ongoing expenditures. The projects outlined below are one-time in nature as ARPA funds are a one-time funding source. Because ARPA funds may not be used for new projects or services so are more restrictive in nature, Council may need to make an exception to this policy and allow the use of ARPA funds for adding back service levels ongoing service levels until regular revenue sources return to pre -pandemic levels. DISCUSSION Information has been provided on each of the projects identified in the March 16, 2021, info memo and includes additional projects for consideration. Based on the major federal funding categories, the following are possible prioritization areas: Phase 2 Funding Priorities 1. Assistance to households, businesses and respond to impacts due to COVID-19 a. Assistance to households i. Increasing human service funding by increasing cap per household ii. Assistance for utility payments in arrears b. Assistance to businesses i. Increasing grants and support for small businesses ii. Create Economic Development Plan with a specific lens of mitigating impacts due to COVID-19 c. Impacts due to COVID-19 i. Improve community access to Council meetings by updating Chambers 2. Provision of Government Services impacted by reduction in revenues a. Capital Investments delayed or deferred i. Traffic Calming Program ii. Other Capital needs — unless a capital project was eliminated due to COVID-19 related revenue reductions, ARPA funds may not be used on new capital projects with the exception of broadband, water, and sewer projects. b. Other Service and Staffing needs 3. Investments in infrastructure a. Broadband infrastructure investment — reduce the digital divide with a focus on students and low-income residents 11 INFORMATIONAL MEMO Page 4 4. One -Time Investments for long-term financial health — (City will need more information to clarify eligibility and some might fit under other priorities) a. Teen and Senior Center Investment — planning, design, and/or land purchase — based on updated information, this project would not qualify for ARPA funding. b. Digitizing Permit Records to better respond to public records requests — based on updated information, this project would not qualify for ARPA funding. c. Facility planning to address significant unmet needs in City facilities Detailed Discussion 1. Assistance to households, businesses and respond to impacts due to COVID-19 a. Assistance to households i. Increasing human service funding by increasing cap per household 1. Additional funding for rental and utility assistance is a potential candidate for ARPA funding. Tukwila Human Services staff continue to see a high need for rental and utility assistance. While staff is working to leverage other funding sources where applicable, staff believes that if additional funding were to be made available for rental and utility assistance, such funding should go to raise the $2,400 cap currently placed on families to assist them in wiping out extensive utility and rent arrearages. Human Services staff have worked with many families with rent arrearages in the thousands of dollars and is now experiencing many calls from families who have already hit the lifetime cap, which was raised from $700 to $2,400 to address the pandemic. ii. Assistance for utility payments in arrears 1. Staff has reached out to utility providers in Tukwila to better understand the utility arrearages in the community. Current estimates are between $1 and $2 million for all utility providers in Tukwila. Human Services and Communications staff are pushing out information on Seattle City Light and PSE's discount programs, as well as regularly referring qualified families to the LIHEAP program in order to reduce utility arrearages. The City of Seattle recently voted to continue its utility no late fees/no shut offs through the end of this calendar year, and all of the utilities staff talked with are committed to working with customers to develop payment plans moving forward. Payments would have to be made for utility customers that were impacted by COVID. b. Assistance to businesses i. Increasing grants and support for small businesses ($200,000) 1. Staff recommends setting aside $200 thousand for possible use for small business outreach, technical assistance, loans, and grants. Staff would return with a specific proposal later this year as opportunities to partner with other organizations arise. c. Create Economic Development Plan with a specific lens of mitigating impacts due to COVID-19 ($50,000 to $150,000) i. Basic Plan: This work includes hiring a consultant to conduct research, analysis, writing, graphic design, and producing a document. It would also include standard community outreach such as an online survey, a limited phone survey, and some public meetings. Estimated cost $50,000. ii. Expanded Outreach: This work includes hiring multiple community-based organizations or firms to assist with outreach to various groups based on culture, 12 INFORMATIONAL MEMO Page 5 language, age, etc. It would include tailoring those contracts to work with those groups using relevant outreach methods, which could include surveys, conversations, interviews, focus groups, or others. As appropriate, methods would include interpretation, translation, childcare, and participation incentives toward a goal of meaningful, not transactional, engagement. Estimated cost $50,000. iii. Improved Business Contacts Database: This purpose of this component is to improve our business contacts database which would help with outreach on the Plan as well as ongoing business outreach. This would include a combination of purchasing a software tool and contacting our businesses to update and/or collect their contact information. In the private sector the software tool would be called a customer relationship management system (CRM) and would track a company's interactions with their customers. In addition to purchasing software, staff would hire a firm to fill in the gaps and expand upon our current business license database by contacting businesses directly. Estimated start-up cost $50,000. There would be an ongoing maintenance cost but that has not yet been estimated. d. Impacts due to COVID-19 i. Improve community access to Council meetings by updating Chambers 1. Upgrading Council Chambers to Accommodate In -Person and Virtual Participation in Meetings — cost estimates ranging from $10,000- $208,000._Detailed information on this project is included in a separate info memo presented to the Finance and Governance Committee on June 14, 2021. 2. Provision of Government Services impacted by reduction in revenues a. Capital Investments delayed or deferred. i. Traffic Calming Program ($400,000 annually) 1. Prior to the onset of the COVID-19 health emergency, funding of $400 thousand had been included in the budget each year for traffic calming. At the April 26, 2021, Transportation and Infrastructure Committee meeting, several projects were identified as priority projects. Public Works sees more value in funding several smaller projects throughout the community rather than a few large (costly) projects. Projects identified include: a. Purchase additional speed cushions and radar driver feedback signs for future deployments. ($130 thousand) b. Complete the widening of 53rd Ave S between S.137t" and 52nd Ave S to restore two-way traffic. ($250 thousand) c. Provide funding for additional traffic counting services and to the NTCP on-call design contract. ($100 thousand) b. Other service and staffing needs i. Each City department has unmet staffing and resource needs due to the reductions taken in the 2021-2022 Adopted Budget. These could be funded through ARPA funds. As mentioned in previous memos, these include specific areas such permit review, street and parks, fire, and police services. 13 INFORMATIONAL MEMO Page 6 3. Investments in infrastructure a. Broadband infrastructure investment - reduce the digital divide with a focus on students and low-income residents ($1 million implementation, $100,000 ongoing) i. The digital divide in the City of Tukwila was made even more apparent by the COVID-19 pandemic, which required both students and employees to go online full time, but often without the broadband needed. Tukwila is one of the most diverse cities in the nation, with over 80 languages and dialects spoken, and 41% of the population are foreign born, and 17% living in poverty. This is much higher than the Washington State poverty average of 10%. 1. The Tukwila School District is able to provide 20% of its families with mobile hotspots and 23% of families receive internet access through Comcast's Internet Essentials Program. Tukwila has been on the forefront by providing free internet access to students by developing a free City Wi-Fi program in multifamily neighborhoods, with the highest concentration of students that receive free and reduced lunch. But city leaders recognize these numbers do not add up to 100% of the families in their schools in need of access to high-speed internet, and they are committed to closing the gap. By utilizing ARPA funds, Tukwila has the opportunity to construct and deploy high speed internet to income -qualified families throughout the city. This proposed program has the opportunity to provide all families in Tukwila with the needed modern-day building blocks for our students and families to thrive. Suggested Plan for Utilizing ARPA Funds In order to maximize the use of ARPA funds, staff is recommending using these funds to restore service levels in Streets, Parks, and DCD as well as for a few one-time projects that directly benefit our communities. Much of the service levels for Streets, Parks, and DCD is for staffing and was already approved via streamlined sales tax mitigation (SST) funding. Moving these costs to ARPA, which must have a nexus to COVID reductions, will free up SST funding for other projects. In addition to staffing already authorized with SST funds, this plan would unfreeze one additional FTE in DCD, add a total of $500 thousand in funding for utility and rental assistance , restore traffic calming funds for residential streets, and restore after school programming. Parks & Rec Staff - See SST Memo Street Staff - See SST Memo SCORE Business Assistance Utility/Rental Assistance After School Program Traffic Calming Upgrade Council Chambers DCD Staff - See SST Memo Economic Development Plan Total 14 2021 128,000 162,000 150,000 200,000 500,000 84,000 400,000 200,000 187,000 150,000 2,161,000 2022 150,000 171,000 2023 2024 150,000 150,000 174,000 178,000 Total 578,000 685,000 150,000 200,000 500,000 170,000 170,000 170,000 594,000 400,000 400,000 400,000 1,600,000 200,000 240,000 240,000 240,000 907,000 150,000 1,131, 000 1,134, 000 1,138, 000 5,564,000 INFORMATIONAL MEMO Page 7 The proposed plan leaves a little over $200 thousand unallocated to services and projects that can be allocated to other Council priorities. It is important to note that while the use of these funds do restore some service levels, it does not restore all services to pre -pandemic levels. Frozen positions still remain in other departments, including Police and TIS. Departmental budgets, in general still remain extremely tight and do not have room to absorb unplanned, necessary expenditures. Staff is looking for direction from the Committee on which projects additional information is needed, if items should be removed from the above list, or added to it. At the August 9, 2021, Committee meeting, requests for additional information were made to staff. Some of the requests for more information included traffic calming projects, utility and rental assistance, assistance to businesses, community connectors, and the proposed economic development plan, among other items. RECOMMENDATION Information only at this time. 15