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Home My WebLink About05(B) - Approve the Coronavirus Local Fiscal Recovery Fund Established under the American Rescue Plan Act – Standard Allowance for Revenue Loss Report City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372 CITY COUNCIL AGENDA REPORT ITEM: 1B MEETING DATE: March 21, 2022 PREPARED BY: Cathy Erickson, Finance Director PRESENTED BY: Cathy Erickson AGENDA ITEM: Approve the Standard Allowance for Revenue Loss for the Coronavirus Local Fiscal Recovery Fund Established under the American Rescue Plan Act GOAL AREA OBJECTIVE: High-Value City Services 1. Establish financial stability for all funds. RECOMMENDED ACTION: Adopt a resolution accepting the utilitzation of the standard allowance for revenue loss as defined in the U.S. Treasury Final Rule for the Coronavirus Local Fiscal Recovery Fund Established under the American Rescue Plan Act. BACKGROUND: The City has received federal funds under the American Rescue Plan Act (ARPA). Congress adopted the American Rescue Plan Act (ARPA) in March 2021, which established the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) to provide aid to local governments. Prior Lake’s estimated allocation is $2,977,000. The city expects to receive the second half in July of 2022. A summary of the total estimated award is shown below: The covered period for eligible costs begins March 3, 2021, and the deadline for spending is December 31, 2024. Based on the Minnesota Management and Budget (MMB) and the League of Minnesota Cities recommendations, the city adopted Resolution 21-116 accepting the American Rescue Plan Act funds on August 16, 2021. CURRENT CIRCUMSTANCES: On January 6, 2022, the Treasury Department issued the SLFRF Final Rule which supersedes the SLFRF Interim Final Rule released by the Treasury in May 2021. The Final Rule becomes effective on April 1, 2022. The final rule preserves the Interim Rule’s use of funds that focus on uses to promote a strong, equitable recovery as shown below: Use of the Funds: The purpose of the Coronavirus Local Fiscal Recovery Fund (CLFRF) is to: 1,441,281$ Initial 2021 Distribution 47,198 Add'l 2021 Distribution 1,488,479 Estimated 2022 Distribution 2,976,958$ Estimated Total Award Item 1B Page | 2 1. Support urgent COVID-19 response efforts to continue to decrease the spread of the virus and bring the pandemic under control. 2. Replace lost public sector revenue to strengthen support for vital public services and help retain jobs. 3. Support immediate economic stabilization for households and businesses. 4. Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic on certain populations. ARPA Final rule key provisions: The Final Rule generally maintains previously authorized eligible uses. However, it increases the flexibility with which the funds may be utilized and simplifies administration. For the replacement of lost public sector revenue, the Final Rule provides 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. The two options are as follows: 1. Perform the revenue loss calculation provided in the Final Rule (detailed/technical/update annual) or 2. Assume a standard allowance of up to the entire award or $10 million, whichever is less. 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. City staff has determined the Standard Allowance related to lost public sector revenue is the least restrictive use of these funds and allows City staff to utilize the funds for the provision of government services. 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: • Road building and maintenance, and other infrastructure • 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). Required Reporting: The quarterly non-entitlement unit (NEU) Project and Expenditure report is due to U.S Treasury on April 30, 2022, and will cover the period from March 3, 2021, to March 31, 2022. Staff will not be reporting any project expenditures for this reporting period. Proposed Use of ARPA Funds: With Resolution 21 -116, Council directed staff to make recommendations to council regarding specific use of the funds. This has been discussed at two previous work sessions and council has directed staff to move forward based on the recommendations proposed. See Attachment 1 for a Summary of the Proposed Use of ARPA Federal Funds which includes more information on the projects including a description, estimated costs, and justification. Use of the funds will be Item 1B Page | 3 brought back to council as part of the approval of the various projects. The proposed projects to be funded with ARPA funds are as follows: • Downtown South Street replacement project • CSAH 21/Revere Street improvement project • Critical public building infrastructure improvements at Fire Station 1 to support the building renovation to transition to full-time fire staffing while adapting the fire station to implement COVID-19 mitigation tactics. • Purchase of election equipment that follows state guidelines for hardware and software requirements that provide election cybersecurity. ALTERNATIVES: 1. Motion and second as a part of the consent agenda to adopt resolution Approving the Standard Allowance for Revenue Loss for the Coronavirus Local Fiscal Recovery Fund Established under the American Rescue Plan Act. 2. Motion and second to remove from the consent agenda for further discussion. ATTACHMENTS: 1. Resolution 2. Summary of the Proposed Use of ARPA Federal Funds 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 22- A RESOLUTION APPROVING THE STANDARD ALLOWANCE FOR REVENUE LOSS FOR THE CORONAVIRUS LOCAL FISCAL RECOVERY FUNDS ESTABLISHED UNDER THE AMERICAN RESCUE PLAN ACT Motion By: Second By: WHEREAS, WHEREAS, WHEREAS, WHEREAS, since the first case of coronavirus disease 2019 (COVID-19) was discovered in the United States in January 2020, the disease has infected over 32 million and killed over 575,000 Americans (“Pandemic”). The disease has impacted every part of life: as social distancing became a necessity, businesses closed, schools transitioned to remote education, travel was sharply reduced, and millions of Americans lost their jobs; and Congress adopted the American Rescue Plan Act in March 2021 (“ARPA”) which allocated $350 billion in pandemic-related aid to states, territories, tribes, and local government. This included $65 billion in recovery funds for cities across the country. ARPA funds are intended to provide support to state, local, and tribal governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 in their communities, residents, and businesses; and the Unites States Department of Treasury in the Final Rule issued January 6, 2022, allowed local government recipients to utilize an amount not to exceed $10,000,000 (Standard Allowance) of their awarded allocation for the replacement of lost public sector revenues due to the Pandemic; and the United States Department of Treasury has adopted guidance regarding the use of ARPA funds. The city, in response to the Pandemic, has had expenditures and anticipates future expenditures consistent with the Department of Treasury’s ARPA guidance. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. City staff, has determined the Standard Allowance related to lost public sector revenue is the least restrictive use of these funds and allow City staff to utilize the funds for the provision of government services, including wages, infrastructure improvements, maintenance, capital projects and other services as deemed necessary to continue the City’s response to the Pandemic . 3. City staff is authorized to amend the budget to comply with grant agreements and restricted donations. Passed and adopted by the Prior Lake City Council this 21st day of March 2022. C:\Users\aschroeder\AppData\Local\Temp\Resolution to Approve Standard Allowance for Revenue Loss for ARPA funds_647499\Resolution to Approve Standard Allowance for Revenue Loss for ARPA.docx 2 VOTE Briggs Thompson Burkart Braid Churchill Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ ______________________________ Jason Wedel, City Manager ARPA Provision Category Eligible Use Fund Description Estimated Amount Lost Revenue Government services Construction Fund DT South Street Reconstruction - Street Replacement Cost 1,750,000$ Lost Revenue Government services Facilities Management Fund Fire Station 1 renovations for FT firefighters 400,000 Lost Revenue Government services General Fund Election equipment poll pads and tabulators 55,000 Lost Revenue Government services Construction Fund CR21/Revere Improvements 772,000 Total 2,977,000$ Summary of Proposed Use of ARPA Federal Funds