DATE: March 5, 2024
TO: Board of Supervisors
SUBMITTED BY: Paul Nerland, County Administrative Officer
SUBJECT: Amendment to State Local Fiscal Recovery Funds Subrecipient Agreement with Tranquillity Irrigation District
RECOMMENDED ACTION(S):
TITLE
1. Approve and authorize the Chairman to execute First Amendment to Subrecipient Agreement No. 22-171 with Tranquillity Irrigation District (Subrecipient) for the provision of American Rescue Plan Act - State Local Fiscal Recovery Funds (ARPA-SLFRF), which will revise the expenditure plan and update the modification clause; and
2. Authorize the County Administrative Officer or designee to approve and execute written changes to the items in the project budget, which, when added together during the term of the Agreement, do not exceed ten percent (10%) of the total maximum compensation payable to Subrecipient, and which do not result in any change to the maximum compensation amount payable to Subrecipient.
REPORT
There is no Net County Cost associated with the recommended actions, which will revise the expenditure plan and update the modification clause of agreement 22-171. The recommended amendment will add language to the modification clause of the agreement, which will allow the County’s Administrative Officer or designee to consider and approve written requests for budget revisions that do not exceed a maximum 10% of the maximum compensation under the agreement as amended. The second recommended action will delegate limited signature authority to the County Administrative Officer or designee to make the previously described revisions to the agreement’s budget, if requested. This item pertains to an area in District 1.
ALTERNATIVE ACTION(S):
If the recommended actions are not approved, funding allocated for the program through ARPA-SLFRF will not cover necessary costs, which have been incurred by the program due to changing market conditions and engineering reviews and are otherwise reimbursable to the Subrecipient to fund the engineering, design and drilling of a new well for drinking water within the unincorporated community of Tranquillity.
FISCAL IMPACT:
There is no increase to Net County Cost associated with the recommended actions. The program is funded with ARPA-SLFRF. Sufficient appropriations are included in the FY 2023-24 Adopted Budget for the Auditor/Controller-Treasurer/Tax Collector Org. 1033 - Disaster Claiming, Fund 0026, Subclass 91021, Account 7845. The Subrecipient represents that they will be responsible for any costs incurred for the project that may exceed the ARPA-SLFRF grant.
DISCUSSION:
The United States Department of the Treasury’s (Treasury) Title 31, Code of Federal Regulations, Part 35 Coronavirus SLFRF Interim Final Rule (“Interim Final Rule”) and Final Rule (“Final Rule”) establish a framework for determining the types of programs and services that are eligible under the ARPA-SLFRF and may be used for eligible activities under the following general categories:
A. Respond to the COVID-19 public health emergency or its negative economic impacts;
B. Provide premium pay for essential workers;
C. Replace public sector revenue loss, subject to certain limitations; and
D. Make necessary investments in infrastructure such as in water, sewer, and broadband.
The Final Rule permits SLFRF to be used to cover costs for eligible activities within the four general categories for the period that begins March 3, 2021, and ends on December 31, 2024. Recipients and their subrecipients must return any funds to the Treasury which are not obligated by December 31, 2024, and any funds not expended to cover such obligations by December 31, 2026.
On May 3, 2022, the County and Subrecipient entered into County agreement number 22-171 (“Agreement”), to assist the Subrecipient to fund the design and engineering, construction review, and management for the construction of a new underground well that will replace inactive Well #6, which is a contaminated source that is an existing threat to public health, is necessary to maintain adequate service levels, and improve drinking water capacity in the disadvantaged community of Tranquillity.
Since the execution of Agreement, the Subrecipient represents that construction costs and lead times for materials has increased. Updated engineering estimates of probable costs indicate that the cost to drill and equip a new groundwater well will exceed funding availability provided for the Program. The Subrecipient represents that recent bid results for the construction of another well (Well No. 8), which will not be funded through this Agreement, indicate that costs for drilling Well No. 9, which is being funded by ARPA-SLFRF, would likely exceed one million dollars ($1,000,000). Additionally, the Subrecipient represents that costs for design and engineering have exceeded the approved budget amounts provided in the Agreement. Approval of the recommended amendment would reconcile unused funds and increase funding availability to help Subrecipient recover costs incurred and anticipated to be incurred for engineering and construction review of the new well (Well No. 9). This will shift funds from the construction category and will increase funds to the design and engineering and the construction review categories. The Subrecipient further represents that it will be responsible for all costs incurred for the project that may exceed ARPA-SLFRF provided in the grant. Given the disadvantaged nature of the Subrecipient’s current water supply sources, Subrecipient intends to continue searching for other funding opportunities in the event they may be needed.
Approval of the recommended actions will modify the expenditure plan by allocating funding resources in accordance with the Subrecipient’s expected engineering expenditures and will update the Agreement’s modification clause to allow 10% of the allocated funds to be moved between the expenditure plan’s line items without increasing the maximum total funding originally approved. This change will provide the subrecipient with needed flexibility within the program budget. Your Board’s approval will also add language to the Subrecipient agreement’s modification clause that will allow the County’s Administrative Officer or designee to consider and approve future written requests for budget revisions up to 10% of the maximum compensation, with no change to the maximum compensation.
REFERENCE MATERIAL:
BAI #29, May 3, 2022
BAI #3, February 1, 2022
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Amendment No. 1 to Agreement 22-171 Tranquillity Irrigation District
CAO ANALYST:
John Toepfer