Workshop Item - Joe Huss, Finance Director/Asst. City Manager
Title
Title
American Rescue Plan (ARP) Spending Plan
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Background
Council has had several workshop discussions regarding ARP funding and uses, the most recent being at the Council Workshop on May 16, 2022. Staff and Council reviewed the potential use of ARP funds for: utilities infrastructure; National Sports Center (NSC) assistance; business assistance grants; and allocation to Highway 65 improvements. Council provided feedback and direction regarding the allocation of ARP funds to these categories. It was noted that total potential expenditures for the identified projects and programs for which ARP could be used exceeded the amount of ARP funding allocated to the city. As such, the discussion focused on prioritizing funding allocations for specific projects.
A quick review of the ARP program:
• Total ARP funds appropriated to and received by Blaine is $6,793,793
• ARP funds must be committed by December 31, 2024, and fully expended by December 31, 2026
• Initially, ARP proceeds were allowed for specific uses including replacement of lost revenue; business assistance; and the investment in water, sewer, and broadband infrastructure
• Federal legislation was amended, allowing up to $10 million in ARP funds to be considered replacement of lost revenue and eligible to be spent for any governmental purpose
• The proposed projects included in the proposed spending plan conform to the original parameters of ARP
Discussion at the May 16 workshop included the following topics:
- Water and sanitary sewer infrastructure. Both systems require significant reinvestment in infrastructure. There are not sufficient reserves on hand to fund these infrastructure needs, thus issuance of utility revenue bonds is required to finance improvements. Repayment of revenue bonds requires adjusting of utility rates. Absent the availability of ARP funds, additional borrowing would be required to finance improvements, placing greater stress on utility rates. Use of ARP would assist in keeping rates affordable. Specific utility projects identified for use of ARP funds include sanitary sewer system improvements rehabilitating a lift station and force main and water system improvements rehabilitating water treatment plants 1 and 2. Council consensus was favorable for use of ARP funds for utility improvements.
- NSC assistance. Council expressed support for the use of ARP to aid the NSC with the installation of turf fields. Council was supportive of the assistance with the understanding that, in return the city would gain NSC property that is key to stimulating the strategic initiative of redevelopment of the 105th Avenue corridor. Council consensus was supportive of the use of ARP for NSC assistance. Thus, on October 3, the EDA approved the expenditure of $2,500,000 of ARP for NSC assistance. Payment was made to the NSC on November 3.
- Highway 65. Although there was interest in use of ARP as a potential to leverage more state and federal funding for Highway 65, it is likely that, given the timeline for Highway 65 improvements, funds would not be expended in time to qualify for use of ARP.
- Small business assistance. Staff thoroughly researched this potential use of ARP and reached out to local businesses to determine their needs and interest in participating in this program. With limited ability to provide direct assistance and virtually no interest from local businesses, this use is no longer included in the plan.
- North Metro TV (NMTV) assistance. This is a late addition to the plan, as NMTV has recently contacted members regarding the possibility of providing assistance through ARP funds. It was determined that NMTV was required to provide closed captioning services to be in compliance with federal law. The NMTV staff conducted research for a cost-effective solution, which was recently implemented. The start-up costs were approximately $70,000; ongoing costs of a much lower amount have been built into the annual operating budgets.
- Administrative costs. Costs incurred for assistance in establishing ARP accounts, vetting of plans to ensure adherence to ARP regulations, and plan monitoring and reporting are eligible expenditures of ARP funds.
Based on discussion at the workshop and subsequent discussions regarding the use of ARP for NSC assistance, staff developed an ARP spending plan (attached) for Council review. Components of the plan include $3 million in sanitary sewer improvements; $1.26 million in water system improvements; $2.5 million in NSC assistance; $10,000 in NMTV assistance; and $20,000 for administrative costs.
Staff Recommendation
Staff is seeking council review and direction on the proposed ARP Spending Plan. Based on direction, Council will be asked to formally adopt an ARP Spending Plan at the December 5 Council meeting.
Attachment List
Proposed ARP Spending Plan.