DATE: November 5, 2024
TO: Board of Supervisors
SUBMITTED BY: Steven E. White, Director
Department of Public Works and Planning
SUBJECT: State and Local Fiscal Recovery Funds - Subrecipient Agreement with Fresno Irrigation District
RECOMMENDED ACTION(S):
TITLE
1. Approve and authorize the Chairman to execute Subrecipient Agreement for American Rescue Plan Act - State Local Fiscal Recovery Funds (ARPA-SLFRF) with the Fresno Irrigation District (Subrecipient) in the amount up to $1,925,500, to fund the construction of a turnout on the Friant-Kern Canal at Big Dry Creek to permit the diversion of Friant-Kern Canal water into the Big Dry Creek channel, an investment in groundwater recharge that supports impacted communities; and
2. Authorize the Director of the Department of Public Works and Planning, or his or her designee, to approve and execute written changes to line 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 the Subrecipient.
REPORT
Approval of the first recommended action will approve an agreement and allocate $1,925,500 to the Subrecipient to fund the construction and associated permitting and mitigation fees for the Friant-Kern Canal (FKC) at Big Dry Creek turnout (Turnout). The proposed Turnout will be used to recharge groundwater through diversion of FKC surface water into the Big Dry Creek channel to replenish the aquifer, and thereby increase accessibility and reliability to clean drinking water for members of the North Kings Groundwater Sustainability Agency (NKGSA) and residents of the County. Approval of the second recommended action will delegate authority to the Director of the Department of Public Works and Planning, or his or her designee, in the modification clause of the agreement to consider and approve written requests for budget revisions within 10% of the maximum compensation. This item pertains to a location in District 5.
ALTERNATIVE ACTION(S):
Should your Board not approve the recommended actions, ARPA-SLFRF would not become available to the Subrecipient to help fund the construction of the Turnout and the project will be delayed until another funding source is identified by the Subrecipient. Your Board could also determine not to delegate authority to the Director of the Department of Public Works and Planning, or his or her designee, to modify line items in the project budget, in which event any necessary changes would have to come back to your Board through an amendment to the agreement.
FISCAL IMPACT:
There is no Net County Cost associated with the recommended actions. Sufficient appropriations are included in FY 2024-25 Adopted Budget for the Department’s Capital Projects, Org. 8870. Costs for the recommended actions will be reimbursed through Auditor-Controller/Treasurer-Tax Collector’s Org. 1033 - Disaster Claiming, Fund 0026, Subclass 91021, Account 7910. Any unbudgeted costs associated with the implementation of this recommended Subrecipient Agreement will be assessed by the Department and accounted for in the Department’s future budgets and/or negotiated with the Subrecipient.
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 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 SLFRF program under ARPA 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.
On December 13, 2022, your Board approved $2.5 million in ARPA-SLFRF to fund the design, engineering, and construction of the Turnout, which at completion will help divert flood releases and surface water supply into the Big Dry Creek, allowing for beneficial uses of surface water. Since your Board’s funding approval, the Department decided to partner with the Subrecipient and draw on their long history in surface water management, and their extensive knowledge in operating canals, pipelines, water conveyance networks, access to the FKC, and water delivery facilities that serve and benefit individuals in the Subrecipient’s service area, members of the NKGSA, and the residents of Fresno County.
The recommended Subrecipient Agreement will provide up to $1,925,500 in SLFRF funding for the construction and associated permitting and mitigation fees, which includes but is not limited to construction management and necessary expenses for the Turnout project. Should construction costs exceed the budgeted amount, the Subrecipient represents that it will provide additional funding support to help complete the Turnout project.
The Turnout, at completion, will serve as a diversion point of surface water to be used to recharge the groundwater aquifer, and increase access and reliability to clean drinking water for members of the NKGSA and residents of the County. Recharging the groundwater aquifer would help to stabilize declining groundwater levels that will lead to a more reliable source of groundwater and decreased energy use from users not having to pump groundwater from deeper in the aquifer. Subrecipient is a member agency of the NKGSA, a seven-member joint powers authority formed under State law that is responsible to develop and implement plans to comply with the State’s Sustainable Groundwater Management Act of 2014. The goal of the County and the NKGSA is to ensure that by 2040, the Kings Subbasin of the San Joaquin Valley Basin (ID 5-022.08) is managed in a sustainable manner to maintain reliable water supply for current and future uses.
Water may be diverted during flood releases from Millerton Lake, allowing beneficial use of surface water that would otherwise be lost to areas outside Fresno County. Diversion of this water during flood releases will also provide relief for downstream communities, including the City of Firebaugh and the City of Mendota, which have both experienced flooding events because of such releases.
The recommended agreement deviates, in part, from the County’s standard contract language in that it omits a clause allowing the County to terminate the agreement without cause. However, the Department believes that the benefits provided by the recommended agreement outweigh any potential risks and recommends approval of the recommended agreement as a prudent business decision. The Non-Allocation of Funds and the Breach of Contract termination clauses are unmodified from the County’s standard language. The recommended agreement also contains a mutual hold harmless clause which has the effect of making each party responsible for losses arising from their own negligent or wrongful performance, or failure to perform. The mutual hold harmless clause has been reviewed by Department staff and deemed to be acceptable for this recommended agreement, given the construction of the Turnout will assist the County in complying with the Sustainable Groundwater Management Act of 2014, and given the County’s strong partnership with Subrecipient. Your Board’s approval of action item two will also allow for language in the recommended agreement’s modification clause that will allow the Director of the Department of Public Works and Planning 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 #66, December 13, 2022
BAI #3, February 1, 2022
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Subrecipient Agreement with Fresno Irrigation District
CAO ANALYST:
George Uc