DATE: November 5, 2024
TO: Board of Supervisors
SUBMITTED BY: David Luchini, RN, PHN, Director, Department of Public Health
Steven E. White, Director, Department of Public Works and Planning
Edward Hill, Interim Director, Internal Services Department/Chief Information Officer
SUBJECT: Interdepartmental Agreement, American Rescue Plan Act - State Local Fiscal Recovery Funds, Obligation of Funds
RECOMMENDED ACTION(S):
TITLE
Approve and authorize the Chairman to execute retroactive Interdepartmental Agreement between County Departments of Public Health, Public Works and Planning, and Internal Services Obligating $3 million in American Rescue Plan Act State Local Fiscal Recovery Funds and $7.4 million in Public Health Realignment funds and other resources to fund reconstruction improvements to the Brix-Mercer Complex Basement to be carried out by the Department of Public Health in coordination with Public Works and Planning and Internal Services ($10,400,000).
REPORT
Approval of the recommended action will authorize the Chairman to execute the Interdepartmental Agreement (Agreement) between the County departments of Public Health (DPH), Public Works and Planning (PWP), and Internal Services (ISD) to complete the Improvements to the Brix-Mercer Complex Basement (Program). The recommended Agreement will establish provisions for the departments’ use of American Rescue Plan Act - State Local Fiscal Recovery Funds (ARPA-SLFRF) and Public Health Realignment Funds, set forth a scope of work and deliverables, and will memorialize each department’s responsibility to complete the Program. Approval of the Agreement will obligate $3 million in ARPA-SLFRF in support of the Program through an Interagency Agreement, as permitted under the United States Department of the Treasury’s (Treasury) Obligation Interim Final Rule (Obligation IFR). DPH will use an additional $7.4 million from Public Health Realignment and other resources to fully fund the Program. This item pertains to a location in District Three.
ALTERNATIVE ACTION(S):
Your Board may choose not to accept the recommended action, in which case the $3 million in ARPA-SLFRF allocated to the Program will not meet Treasury’s definition of an obligation; DPH would not be able to complete the procurement process and award the project to a contractor before the Treasury’s obligation deadline of December 31, 2024. In that event, most likely, the ARPA-SLFRF funds committed for this project will be required to be returned to the U.S. Treasury.
RETROACTIVE AGREEMENT:
The proposed Interdepartmental Agreement is retroactive to August 9, 2022 to correspond with the Board’s initial approval of the project. The Department has been working with the County’s Insurance company in negotiating a reasonable settlement due to the flooding that destroyed the basement at the Brix-Mercer Complex. Methodology and costs are being finalized and thus the opportunity for another source of funding to support the full buildout of the Brix-Mercer Complex Basement.
FISCAL IMPACT:
Approval of the recommended action will result in no increase in Net County Cost. The Program is included in the FY 2024-25 Approved Budget for Auditor-Controller/Treasurer-Tax Collector Org. 1033 - Disaster Claiming, Fund 0026, Subclass 91021, Account 7910; and DPH’s Org. 56201500, Fund 0001, Subclass 10000 Account 8150.
DISCUSSION:
The Treasury’s ARPA-SLFRF performance period for the use of SLFRF began March 3, 2021, and ends on December 31, 2026. The 2022 Final Rule states that 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. The Treasury’s Title 31, Code of Federal Regulations, Part 35 Coronavirus SLFRF establishes the framework for determining the types of programs and services that are eligible under the ARPA-SLFRF program.
On November 20, 2023, the Treasury published the Obligation IFR, which amended the definition of “obligations” with respect to the ARPA-SLFRF program. Treasury clarified that the obligation deadline applies to the recipients of ARPA, and a cost is considered to have been incurred once a recipient enters into a subaward, contract, or similar transaction that requires payment.
On March 29, 2024, Treasury published additional guidance in Section 17 of the ARPA-SLFRF frequently asked questions (FAQs) which clarified that recipients could meet the obligation requirement through interagency agreements. The Treasury’s FAQ 17.6 provides six conditions, of which an interagency agreement must satisfy a minimum four conditions, to qualify as an obligation. As long as the interagency agreement satisfies a minimum of four conditions, it constitutes a “transaction requiring payment” similar to a contract or subaward and is therefore an obligation for purposes of the SLFRF rule. To meet the obligation definition, the interagency agreement must satisfy one of the following conditions:
A. 1. It imposes conditions on the use of funds by the agency, department, or part of government receiving funds to carry out the program;
A. 2. It governs the provision of funds from one agency, department, or part of government to another to carry out an eligible use of SLFRF funds; or
A. 3. It governs the procurement of goods or services by one agency, department, or part of government from another.
And the interagency agreement must also satisfy each of the following conditions:
B. 1. It sets forth specific requirements, such as a scope of work and project deliverables;
B. 2. It is signed by the parties to the agreement, or otherwise evidences that each party has assented to the agreement; and
B. 3. It does not disclaim any binding effect or state that it does not create rights or obligations.
The recommended Agreement satisfies four conditions described in FAQ 17.6, which are summarized in the following section of this report.
BACKGROUND:
DPH has been without a functioning basement since October 17, 2018, when a City of Fresno water main broke outside the Brix-Mercer Complex on the west side of the building that caused extensive water damage. The Brix-Mercer Complex is approximately 141,000 square feet, with between 300-400 DPH employees who perform office work, specialty clinic operations, as well as other duties that promote the health and well-being of the community. The Brix-Mercer Complex basement was flooded by approximately 7-10 feet of water, which submerged the mechanical, public health laboratory equipment, and backup EMS systems in the building, rendering them inoperable.
In June 2019, the DPH was able to reoccupy the first through sixth floors, however the basement is still unusable. DPH began the process of relocation and reconstruction of a Public Health Laboratory, now located at 4525 E. Hamilton Ave. This relocation and reconstruction was a high priority, as the County and the DPH entered the COVID-19 pandemic and testing capabilities were needed.
DPH was able to prepare an architectural rendering of the Brix-Mercer Complex basement reconstruction in December 2021 as the COVID-19 pandemic was winding down and completion of their operations in the 2020 Creek Fire response. DPH, in conjunction with County Risk Management, entered negotiations for an insurance settlement to satisfy the reconstruction costs for the basement. These negotiations have been ongoing and continue currently.
DPH has decided to move forward with the reconstruction while negotiating continues and has agreed to utilize Public Health Realignment funds in conjunction with the SLFRF funding to commence construction. Any funds received from the insurance settlement will be used to offset Realignment funds allocated for the project.
A.2. Governs provision of funds from one agency, department, to carry out the Program.
DPH, in coordination with PWP and ISD-Facilities seeks to improve the Brix-Mercer Complex basement to reinstate functionality and operations. The recommended Agreement will memorialize each department’s responsibilities for the completion of the Program.
DPH is responsible for securing funding, including ARPA-SLFRF, accounting for expenses, and managing the completion of the Program, in cooperation with the PWP and ISD-Facilities departments. DPH shall make the Brix-Mercer Complex basement available to PWP and ISD-Facilities throughout the term of the recommended Agreement.
PWP will help DPH by working with the Program architect and engineer to finalize the design and plans for the Program. PWP will provide construction management, and ensure all changes made to design and as-builts are approved by ISD and DPH prior to implementation. In exchange for PWP services, DPH will reimburse PWP for expenditures consisting of, but not limited to personnel, contractor, materials, and related expenditures that help improve the Brix-Mercer Complex basement.
ISD-Facilities has assisted DPH with the initial phase to demolish the basement area. Demolition of the basement area commenced on May 28, 2024, and reached substantial completion on August 26, 2024. ISD-Facilities will assist DPH to retain job order contractors, oversee contractor assignments, structural permitting, assess facility conditions and improvements, and assist with reporting contracted jobs via electronic Gordian software for prevailing wage. In exchange for ISD-Facilities services, DPH will reimburse ISD-Facilities for expenditures consisting of, but not limited to personnel, contractor, materials, and related expenditures that help improve the Brix-Mercer Complex basement.
B.1. Sets forth a scope of work and project deliverables.
The recommended Agreement will assign DPH responsible to use ARPA-SLFRF funding to fund improvements to the DPH’s main base of operations basement area, which will support the development of the County workforce in all service areas of the DPH with training space, conference rooms, and additional storage for DPH programs, while still having the capacity for storing large assets, or larger inventory to respond accordingly during an epidemic or another pandemic.
Additionally, the basement improvements will be made available to and shared with other County departments, community-based organizations, and the community to conduct community meetings, health education forums, and health trainings.
The recommended Agreement contains a scope that is organized in the following tasks: :
Task 1: Finalize Project design - this includes approval by all Departments subject to this Interdepartmental Agreement, to comply with and finalize approvals with other outside agencies (i.e. Fire Department, etc.) to issue permits required for construction.
Task 2: Submit Project for Construction Bids - this includes the entirety of the procurement process from Request for Quotation, submittal of bids, bid review, bid selection, and Notice to Proceed. The Departments agree that the Notice to Proceed will be issued no later than first quarter of 2025 and commit to fully expend funding provided by American Rescue Plan Act - State and Local Fiscal Recovery Fund (ARPA-SLFRF) by no later than June 30, 2026.
Task 3: Management of Project and Project Alternatives - this includes management of the ongoing projects and alternatives outlined in the event of an increase or decrease of funding expenditure mentioned in the Interdepartmental Agreement.
Task 4: Project Completion - this includes working toward the completion of the project by no later than June 30, 2027.
B.2. The Agreement is signed by the parties.
The recommended Agreement has been signed by the Directors of the participating departments. Your Board’s approval will approve and ratify the departments’ responsibilities and commitment to complete the Program.
B.3. Does not disclaim binding effect or state that it does not create rights of obligations.
The recommended Agreement does not disclaim any department’s commitment to complete the Program. Further, if approved, the recommended Agreement will be approved by your Board at a regularly scheduled public meeting. This demonstrates that the recommended Agreement intends to constitute binding obligations for each of the participating departments.
REFERENCE MATERIAL:
BAI #47, August 9, 2022
BAI #3, February 1, 2022
BAI #38.1, November 6, 2018
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Interdepartmental Agreement
CAO ANALYST:
George Uc