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Receive a presentation providing a progress update on projects funded with Solano County American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Funds (SLFRF); Consider approving a re-allocation of funding from the category of Revenue Recovery of $1,500,000 to NorthBay Health for a total allocation of $6,000,000 to cover unreimbursed costs during the COVID-19 pandemic; and Consider providing further direction and take possible action on the re-allocation of $2,809,879 in American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Funds (SLFRF)
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Published Notice Required? Yes_______ No___X___
Public Hearing Required? Yes_______ No ___X___
DEPARTMENTAL RECOMMENDATION:
The County Administrator’s Office (CAO) recommends the Board of Supervisors:
1. Receive a presentation providing a progress update on projects funded with Solano County American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Funds (SLFRF);
2. Consider approving a re-allocation of funding from the category of Revenue Recovery of $1,500,000 for a total allocation of $6,000,000 to NorthBay Health to cover unreimbursed costs during the COVID-19 pandemic; and
3. Consider providing further direction and take possible action on the re-allocation of $2,809,879 in American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Funds (SLFRF).
SUMMARY:
Solano County received a direct federal funding allocation under the ARPA SLFRF program of $86,949,405. These funds are intended to provide support to the County in responding to the economic and public health impacts of COVID-19 and impacts on our communities, residents, and businesses. The Board of Supervisors has had multiple discussions on ARPA guidelines, received significant public input, and in March 2023 the Board of Supervisors completed its initial allocation of funding for the full amount.
During the allocation process, the Board requested staff bring back regular updates on ARPA projects. Attachment A provides an update on all ARPA approved projects.
Some projects have completed under budget and a few other projects have been determined as not feasible to move forward with ARPA funding. On November 7, 2023, the Board discussed considerations for reallocate those funds and other funds as they may become available. At that time, the Board provided direction to allocate $1,500,000 in additional funding to NorthBay Health to cover unreimbursed costs during the COVID-19 pandemic consistent with previous Board discussion. In addition, the Board provided direction to come back with options for re-allocation which provide the most flexibility as well provide services and economic opportunities for at-risk residents.
FINANCIAL IMPACT:
Solano County received a direct federal funding allocation of $86,949,405 under the ARPA SLFRF program which was initially fully allocated by the Board of Supervisors in March 2023. This item provides an opportunity to for the Board to reallocate funds which have been identified as unspent in the original allocation. There is no impact to the County General Fund.
DISCUSSION:
Over the course of two years, based on community input, subject matter expert workgroup recommendations, and Board discussion, the Board allocated $86,949,405 ARPA SLFRF funds to a variety of projects, including public health, behavioral health, workforce and small business support, emergency food, water infrastructure, broadband infrastructure, nonprofit support, affordable housing, homeless services, and more.
Based on Treasury reporting criteria, Solano County has a total of 58 projects within the 7 Treasury Expenditure Categories. Some projects as reported to the Treasury contain multiple contracts or approved projects which were similar in nature to streamline reporting.
A full status update on the Board approved ARPA projects is included as Attachment A.
Obligation Interim Final Rule
In November 2023, the Treasury published the Obligation Interim Final Rule (IFR). This new rule to address recipients’ questions and comments regarding the definition of obligation. The Obligation IFR does not change the obligation or expenditure deadlines: ARPA funds must be obligated by December 31, 2024 and expended by December 31, 2026. However, the Obligation IFR does provide the following additional guidance:
1. Definition of Obligation: The Obligation IFR defines “Obligation” as one of the following:
a. “An order placed for property and services and entry into contracts, subawards, and similar transactions that require payment.”
b. Obligation to fulfill a requirement under federal law or regulation to which the recipient becomes subject as a result of receiving SLFRF funds, such as:
i. Reporting and compliance requirements
ii. Single Audit
iii. Property and environmental compliance
2. Subrecipients: The Obligation IFR clarifies that subrecipients are not subject to the December 31, 2024 obligation deadline.
3. Re-obligation: The Obligation IFR clarifies that, in general, recipients cannot re-obligate funds after the deadlines. However, recipients are able to replace a contract or subaward under the following circumstances:
a. A contract terminates due to default or inability to perform.
b. A contract terminates due to mutual agreement.
c. A contract terminates due to improper award.
The Obligation IFR overview is provided in Attachment B.
Considerations for Reallocation
The County’s approved ARPA projects include a wide range of programs, services and capital projects, many of which were in the early stages of development or implementation at the time of Board approval and allocation of funding. Management continues to work with project teams to ensure projects remain on target to expend the funds within the ARPA guidelines, including project completion within the specific performance periods required in the ARPA Final Rule. In the event an approved ARPA project is identified which may not fully expended the funding allocation as originally approved by the Board, a recommendation will be made for the Board to reallocate those funds to an alternate project to ensure the County fully expends its ARPA funding allocation.
To date, APRA funds in the following areas have been identified as available for reallocation to alternate projects:
• In reviewing the ARPA expenditures for completed projects, a total of $459,879 in unexpended funds have been identified as available for reallocation to an alternate project. (See attachment A)
• The following ARPA projects are no longer able to be completed as originally proposed and have resulted in a recommendation to release funding back to the Board for reallocation to an alternate project. These projects include:
1. $1,500,000 Revenue Replacement: Parks and Tourism Mankas Corner Parking Lot - This project is not able to be completed utilizing ARPA funds at this time. These funds are fully available for reallocation to another project.
2. $600,000 Negative Economic Impacts: Parkside Flats - The City of Fairfield is completing the Parkside Flats low-income housing project with the utilization of other funding sources and will not be utilizing the County ARPA funds. The City is requesting to transfer the use of these funds to the ARPA approved Tabor Commons low-income housing project (see below).
• Funding allocated to address the costs for ARPA Administration are now projected to be lower than original estimates (See attachment C), resulting in $1,750,000 in funding available for reallocation to an alternate project.
While there are additional projects which are not fully obligated as of this time, many have made steps toward planning for obligation, such as completing design or Requests for Proposals and will be in contract within the ARPA obligation timeline. If over the coming months any of these projects are identified as not being able to be fully obligated and expended within the ARPA timelines, staff will return to the Board with additional opportunities for re-allocation.
Lastly, the final Revenue Loss calculations are available from the Auditor Controller’s Office, allowing Solano County to claim up to $41,138,741 in the category of Revenue Replacement. Based on Board direction, the County as currently claimed $39,517,812 in Revenue Replacement. The County may claim up to an additional $1,620,929 in Revenue Replacement. The Board may consider claiming additional Revenue Replacement at this time, or may consider claiming it during future potential reallocations before the end of 2024.
Reallocation Options
In November 2023, the Board discussed options for potential reallocation as funds may become available. At that time, the Board provided direction to allocate $1,500,000 in additional funding to NorthBay Health to cover unreimbursed costs during the COVID-19 pandemic consistent with previous Board discussion. Based on that direction, this Board item contains a recommended action to reallocate $1,500,000 in the category of Revenue Replacement from the Mankas Corners project to NorthBay Health with no net effect on Revenue Replacement amount already claimed.
In addition, in November 2023, the Board provided direction to come back with options for re-allocation which can be completed within the ARPA obligation and expenditure timelines, provide flexibility, and provide services and economic opportunities for at-risk residents, such as housing and employment.
After the re-allocation of $1,500,000 to NorthBay Health, $2,809,879 is available from completed or projects released for re-allocation. Based on Board direction, staff explored options for reallocation and is presenting the following options for Board consideration:
1. Reallocate $600,000 in the category of Negative Economic Impacts from Parkside Flats to Tabor Commons for the purpose of expanding housing opportunities for low-income residents. The Board previously approved $4,500,000 toward a 67-unit low income housing complex. The developer is currently pursuing state housing credits. Additional local funds would increase the chances of the developer securing housing credits.
2. Reallocate $213,154 in the category of Revenue Replacement from the completed project of Employee Retention to Emergency Gap funding to fully fund the original request from SHELTER Solano of $350,000 to provide regional shelter beds at the Beck Avenue Navigation Center with no net effect on Revenue Replacement amount already claimed. SHELTER Solano was the last funded proposal out of the $2,000,000 Emergency Gap Funding and was only able to be funded at $136,846 of the requested $350,000 at the time of application. Additional regional shelter beds are a needed resource in Solano.
3. Reallocate up to $2,720,000 to the category of Negative Economic Impacts for the Vallejo Early Learning Center. The Board had previously approved an ARPA allocation of $1,870,000 toward the renovation of the Vallejo Early Learning Center which were obligated in January 2024 following the purchase of the property. To date, $13,080,000 has been raised for the Early Learning Center Renovation and Community Resource Building. An additional $2.72 million is needed to fully fund the completion of the Community Resource Building.
The Board could also consider reallocation to other previously approved projects either at this time or at a future meeting based on any additional funding coming back for reallocation.
ALTERNATIVES:
The Board could choose not to receive a status update and consider providing direction on the process for reallocating funds. This is not recommended as the Board has requested ARPA status updates. In addition, this is the opportunity for the Board to provide direction on reallocation prior to the obligation deadline of December 31, 2024.
OTHER AGENCY INVOLVEMENT:
The County Administrator’s Office and the Auditor Controller’s Office has been working together to ensure the County is meeting ARPA administrative reporting requirements and to identify administrative costs. Many departments are involved with implementation of projects.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION