DATE: November 5, 2024
TO: Board of Supervisors
SUBMITTED BY: Paul Nerland, County Administrative Officer
SUBJECT: Amendment to State and Local Fiscal Recovery Funds Subrecipient
Agreement with Self-Help Enterprises on behalf of Lanare Community Services District
RECOMMENDED ACTION(S):
TITLE
1. Approve and authorize the Chairman to execute a First Amendment to Subrecipient Agreement No. 23-493 with Self-Help Enterprises (SHE) on behalf of, and benefit of Lanare Community Services District (Lanare CSD) for provision of American Rescue Plan Act - State and Local Fiscal Recovery Funds (ARPA-SLFRF), which will revise the expenditure plan and the modification clause, with no increase to the maximum compensation ($1,600,000); 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 in the County’s agreement with SHE. The recommended amendment will update language to the modification clause, 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. Recommended action two 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 a location in District 4.
ALTERNATIVE ACTION(S):
If the recommended actions are not approved, the maximum allocation of ARPA-SLFRF would not become available to the Subrecipient to fully expend the award under the current expenditure plan for the program. Alternatively, your Board may determine to approve the amendment without delegating authority to the CAO to make changes to the budget; in this event, if budget shifts are needed, staff will need to bring another amendment to your Board for review and approval.
FISCAL IMPACT:
There is no increase to Net County Cost associated with the recommended actions. The program is fully funded with ARPA-SLFRF. Sufficient appropriations are included in the FY 2024-25 Adopted Budget for the Auditor-Controller/Treasurer-Tax Collector Org. 1033 - Disaster Claiming, Fund 0026, Subclass 91021, Account 7845.
DISCUSSION:
In May 2021, the U.S. Department of Treasury (Treasury) published Title 31, Code of Federal Regulations Part 35 Coronavirus State and Local Fiscal Recovery Funds 2021 Interim Final Rule (“Interim Final Rule”) (for expenditures before April 1, 2022) and the 2022 Final Rule (“Final Rule”), which establish a framework for determining the types of programs and services that are eligible to receive the SLFRF under ARPA. The Final Rule became effective on April 1, 2022.
On December 23, 2022, with Congress’ approval of the Consolidated Appropriations Act 2023 the ARPA-SLFRF legislation was revised to include new flexibilities to use funding to provide relief from natural disasters or address the negative economic impacts of natural disasters, to fund certain surface transportation projects, and fund Title I projects under the Housing and Community Development Act of 1974. On September 20, 2023, Treasury published the 2023 Interim Final Rule (IFR) for the new eligible uses in the SLFRF program which became effective upon publication. On November 20, 2023, Treasury published the Obligation IFR which amended the definition of “Obligations” and included additional flexibility for recipients with respect to the ARPA-SLFRF program. The implementation of the ARPA-SLFRF program is regulated by the following: 2021 IFR, 2022 Final Rule, 2023 IFR, and the Obligation IFR.
SLFRF may be used for eligible activities under seven 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;
D. Make necessary investments in infrastructure such as water, sewer, and broadband;
E. Emergency Relief from Natural Disasters;
F. Surface Transportation Projects; and
G. Title I Projects.
Treasury’s guidance permits SLFRF to be used to cover costs for eligible activities within those seven general categories for the period that begins March 3, 2021, and ends on December 31, 2024. Recipients, such as the County, 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. For Surface Transportation and Title I Projects, Treasury requires that SLFRF under these two categories must be expended by September 30, 2026. Under Section 602(c)(3) of the ARPA, the County may transfer SLFRF to non-profits for eligible uses for the purpose of meeting ARPA’s goals. The Subrecipient is a private, nonprofit 501(c)(3) organization.
On September 19, 2023, your Board approved Subrecipient Agreement No. 23-493 (Agreement) with SHE for the benefit of Lanare CSD. Since then, SHE represents that the planned improvements to the Lanare Community Center were put out for bid, and the lowest bid was accepted. SHE further represents that since the Agreement was executed, line-items related to construction cost have increased significantly from the initial engineering estimates due to construction and labor costs related to prevailing wage. SHE represents that substantial savings were also realized in the Architecture, Engineering, and Inspections line-item of the expenditure plan.
On September 13, 2024, the SHE informed County staff of their desire to modify the program’s budget which would reassign available funds to instead be used to address the increased construction and labor costs. SHE’s modification request, as proposed, exceeds the department’s ability to administratively process the modification, as permitted in Section 15 of the Agreement. SHE represents that there is no other funding available at this time and that the needed revision will allow the project to move forward. SHE represents that there is sufficient funding provided in the Agreement.
SHE represents that the Revised Expenditure Plan on Table 1-1 of Revised Exhibit B redistributes available funding in accordance with the accepted low bid and will allow SHE to cover actual costs presented by the low bidder, which are eligible for reimbursement by the SLFRF Program. Your Board’s approval will also update language in the 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. This change will provide SHE with some flexibility within the line items in the program budget, and will help SHE expeditiously complete the program.
REFERENCE MATERIAL:
BAI #38, September 19, 2023
BAI #3, February 1, 2022
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Amendment No. 1 to Agreement 23-493 with SHE for Lanare CSD
CAO ANALYST:
John Toepfer