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APPROVE BY MOTION A RECOMMENDED USE OF AMERICAN RESCUE PLAN ACT (ARPA) CONTINGENCY FUNDS
recommended action
RECOMMENDATION
It is recommended that City Council, by motion:
1. Authorize the appropriation of $2.5 million in ARPA contingency funds:
a) $1.5 million to support the Uplift Downtown Initiative to support improvements at the Stockton Arena;
b) $500,000 to support continued traffic and safety improvement projects within the Miracle Mile District; and,
c) $500,000 to support unfunded, State-mandated, COVID-related sick leave.
2. Authorize the City Manager to execute documents and contracts related to this recommendation in compliance with the City’s emergency procurement policies; and,
3. Authorize the City Manager to take appropriate and necessary action to carry out the purpose and intent of this action.
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Summary
Following the February 16, 2022, ARPA City Council Study Session, it is recommended that $2.5 million of the ARPA contingency funds be used to support Uplift Downtown Initiative’s Arena Improvement Project, provide continued support of traffic and safety measures within the Miracle Mile District, and support the most recent round of State-mandated, unfunded, COVID sick leave.
DISCUSSION
Background
The American Rescue Plan Act (the Act) established the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Fund (CLFRF), which provides a combined $350 billion in assistance to eligible state, local, territorial, and Tribal governments to support COVID-19 economic recovery efforts. Of the $350 billion, $19.53 billion was allocated to non-entitlement units of local government, ultimately allocating $78,052,072 to the City of Stockton based on the City's 2019 Census data. The Treasury's intended goal is to provide substantial flexibility for each government to meet local needs - including support for households, small businesses, impacted industries such as tourism, essential workers, and the communities hit hardest by the COVID-19 public health crisis. These funds can also be used to make necessary investments in water, sewer, and infrastructure.
Funding objectives include relief to:
• Support urgent COVID-19 response efforts to continue to decrease the spread of the virus and bring the pandemic under control;
• Replace lost revenue for eligible governments to strengthen support for vital public services and help retain jobs;
• Support immediate economic stabilization for households and businesses; and
• Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic.
Half of the funding, or $39,026,036, was received by the City on June 1, 2021. The remaining funds are tentatively scheduled to be distributed to the City in July 2022. Funds must be obligated by December 31, 2024. The period for performance ends December 31, 2026.
On September 14, 2021, with motion 2021-09-14-1501, the City Council voted to set aside 10% of the total ARPA award, or $7,805,208, as a contingency fund to be available for use as needed.
On December 14, 2021, with resolution 2021-12-14-1503, the City Council approved the use of up to $2 million in ARPA contingency funds to support a joint application for Project Homekey with Visionary Homebuilders. Resolution 2021-12-14-1504, at the same meeting, also reprogrammed ARPA Coordinated Entry and First Time Homebuyer Down Payment Assistance Funds to support another joint Homekey application with the Housing Authority of San Joaquin. If the State of California Department of Housing and Community Development (HCD) does not accept the Visionary application, the use of contingency funds will not be necessary; however, the available contingency was effectively reduced to $5,805,208.
Under authority provided with motion 2021-09-14-1501 and unrelated to the contingency balance, the City Manager has also reprogrammed the ERP COVID Related Cost Over-Runs / Offset funds of $406,865 to establish a new Recovery of City Government, General Administration fund that is supporting staff augmentation related to procurement and reporting efforts and reallocated the remaining balance from the Coordinated Entry Fund to Safe Camping and Parking.
Present Situation
On February 16, 2022, during the ARPA Study Session, staff presented several options for potential use of the ARPA contingency funds based on operational and community need. Council provided additional guidance and feedback during the Annual Council Planning Workshop, held on February 28, 2022. Although the Council did not provide detailed direction to staff and based on Council feedback, staff is recommending that Council use this one-time funding in support of the Uplift Downtown Initiative Arena Improvement Project, Miracle Mile Improvement District Support, and supporting the unfunded State-mandated COVID sick leave balances.
Upon further review and consideration of other available funding sources, staff is recommending $2.5 million in ARPA contingency funds for appropriation to support the following efforts:
Uplift Downtown Initiative’s Arena Improvement Project
An appropriation of $1.5 million would assist with bringing current the video technology capability to support the recruitment of events and drive economic development. This project will support the purchase and installation of upgraded video boards, necessary infrastructure, including but not limited to video control room equipment and audio reinforcement, and new ribbon boards at the Stockton Arena. Current technology in the Arena is beyond its useful life and very near critical failure. This ARPA funding will be combined with other sources to complete the upgrade, estimated to be $2.5 million.
This project is aligned with the initiative’s goal to enhance and promote greater economic activity in the downtown core. Investments into the Arena supports not only the Uplift Downtown Initiative but the goals of the adopted Economic Development Strategic Action Plan as well. This investment will create additional experiences for the community, drive tourism, and increase sponsorship opportunities through recruitment of additional events. Current technology is required to recruit sports tournaments, provide expected fan experience, increase sponsor assets, and will avoid the anticipated increased cost should critical failure occur.
Traffic and Safety Measures within the Miracle Mile District
An appropriation of $500,000 to support Public Works, Economic Development, and Miracle Mile Improvement District’s (MMID) efforts to improve the traffic and safety hazards within the Miracle Mile District. Miracle Mile Improvement District funding would supplement already in progress investment in the ongoing improvement of traffic, safety hazards, parking and lighting improvements.
State Mandated COVID Related Sick Leave
On February 9, 2022, with Assembly Bill 84 (AB84), the State of California mandated an additional eighty (80) hours of COVID-related sick leave to employees of employers with more than 26 employees. This bill was retroactive to January 1, 2022, through September 30, 2022.
During the previous mandated sick leave period--January 1, 2021, to September 30, 2021--the City spent nearly $1.1 million on sick leave alone, not inclusive of additional COVID-related workers compensation claims. With updated guidelines and unpredictable infection rates, it is unclear what the City may reasonably anticipate in expenses related to the current mandate. The original ARPA spending plan included $900,000 for COVID-related employee sick leave. The additional allocation of $500,000 will fully fund the sick leave costs through September 2021 and a portion of the costs stemming from AB84.
FINANCIAL SUMMARY
With the City Council approval, the City Manager is authorized to appropriate $2.5 million in ARPA contingency funds to support the above-mentioned efforts. There are no other financial impacts to the City at this time.