ACTION REQUESTED:
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Communication from the City Manager and Finance Director with a Request to RECEIVE & FILE a REPORT on the CORONAVIRUS STATE and LOCAL FISCAL RECOVERY FUNDS.
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BACKGROUND: On June 1, 2021, the City Council held a policy session pertaining to the Coronavirus State and Local Fiscal Recovery Funds. Council asked several questions that they wanted to see as report backs. They include:
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What stormwater backlog projects or combined sewer projects could be addressed with Fiscal Recovery Funds? How would this mitigate future borrowing? |
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What is the public engagement strategy? |
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How can the Fiscal Recovery Funds be used for housing rehabilitation and neighborhood stability? How can the funds be targeted in neighborhoods hit hardest by Covid-19? |
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How can the Fiscal Recovery Funds be used for business support? |
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How can the Fiscal Recovery Funds be used for restoring cuts to public safety services - police, fire, and code enforcement? |
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How can the Fiscal Recovery Funds be used to address the needs of the homeless and mentally ill? |
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How many properties need to be demolished and at what cost? |
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What capital projects were suspended due to Covid-19 in 2020? |
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How can the Fiscal Recovery Funds be used to address inadequate alley lighting that is leading to illegal dumping in the south side? |
The attached file answers the Council’s questions.
Congress recently passed the $1.9 Trillion American Rescue Plan, which included $350 Billion for state and local governments through the Coronavirus State and Local Fiscal Recovery Funds (FRF). Over the next two years, the City of Peoria will receive $47,089,976 in FRF. Last week, the City received the first $23,544,988. The City Council voted in June to use $10,301,585 of the FRF to eliminate the need to issue working cash bonds in 2021, and to curtail furloughs for affected non-union employees. $36,788,391 remains to be obligated.
Congress outlined specific funding objectives:
• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
• Replace lost public sector revenue to strengthen support for vital public services and help retain jobs
• Support immediate economic stabilization for households and businesses
• Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic
Within these objectives, Congress and the Treasury Department outlined several areas of allowable expenditures:
• Support Public Health Response
• Address Negative Economic Impacts
• Replace Public Sector Revenue Loss
• Premium Pay for Essential Workers
• Water and Sewer Infrastructure
• Broadband Infrastructure
Since the pandemic has disproportionately impacted low-income families and communities of color, the FRF provides for additional flexibility for equity-focused services:
• Additional flexibility for the hardest-hit communities and families to address health disparities, invest in housing, address educational disparities, and promote healthy childhood environments
• Broadly applicable to Qualified Census Tracts, other disproportionately impacted areas, and when provided by Tribal governments
There are specific prohibited uses of the funds:
• Changes that reduce net tax revenue must not be offset with American Rescue Plan Funds
• Extraordinary payments into a pension fund are a prohibited use of this funding. Under Treasury’s interpretation, a “deposit” is distinct from a “payroll contribution,” which occurs when employers make payments into pension funds on regular intervals for employees whose wages are an eligible use
• Rainy day funds or financial reserve deposits
• Funding debt service payments, legal settlements, or judgements
The Federal government has granted significant flexibility to state and local governments to spend the funds in the allowable areas. Quarterly reporting of spending is mandatory, and the funds will be treated as a federal grant for auditing purposes. All funds need to be obligated by December 31, 2024, with all funds being spent by December 31, 2026.
The second attachment is the current FAQ developed by the US Treasury Department.
Staff has begun to assemble potential uses of the funds that comply with the Federal spending guidelines. The identified funding requests far exceed the funds available. In general terms, staff have identified 5 large funding categories:
• Business Support ($2.7 million) - tied to addressing the Negative Economic Impacts of Covid-19
• Infrastructure ($44.8 million) - projects that Support the Public Health Response, Replace Public Sector Revenue Loss, and are Water and Sewer Infrastructure
• Neighborhood Revitalization ($15.65 million) - programs that would Support the Public Health Response and address the Negative Economic Impacts
• Equity-Focused Services (included in the above totals) - programs tied to the hardest hit qualified census tracts or address vulnerable populations
• Operations ($4.6 million) - funds that would Replace Public Sector Revenue Loss and restore certain operational funding.
Many of the programs identified by staff are scalable and can be refined. Most of the infrastructure projects would be one-time expenditures, consistent with the one-time nature of the funding.
Since Council has requested that City Staff engage the public to ascertain how the City should spend the funding. Staff would recommend following the attached engagement plan, then return to Council on August 24 to finalize direction for spending recommendations. In addition, the revenue situation for the City is improving. Operational adjustments can be discussed as part of the overall biennial budget process for 2022-2023.
FINANCIAL IMPACT: The City is in receipt of the first distribution of FRF in the amount of $23,544,988. The City has the flexibility to use the funds within the eligible uses and to restore lost revenue to the City, as well as providing economic stabilization to our residents and businesses.
NEIGHBORHOOD CONCERNS: Addressing the negative impacts of Covid-19 within our neighborhoods, particularly those hardest hit by the pandemic, is a centerpiece of this funding.
IMPACT IF APPROVED: No approval at this time, only additional questions and guidance from Council.
IMPACT IF DENIED: N/A
ALTERNATIVES: N/A
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City
2. Grow Peoria
3. Safe Peoria
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Invest in our infrastructure and transportation.
2. Reinvest in neighborhoods.
3. Grow employers and jobs.
DEPARTMENT: City Manager's Office