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1.13.22 ARPA Status Update Date: January 12, 2022 To: City Council From: Rachel Kilburg, Assistant City Manager Re: American Rescue Plan Act Update The U.S. Treasury has allocated $18.3 million to the City of Iowa City in local fiscal recovery funds through the American Rescue Plan Act (ARPA). The City has received its first tranche of entitled funds (approximately $9 million) and has not yet made any encumbrances or expenditures. On January 6, 2022, the U.S. Treasury released the Final Rule with updated eligibility guidance. Most notably, updates to the Final Rule expanded and clarified eligible uses and added a major simplification allowing cities to take advantage of a standard allowance of up to $10 million in revenue loss. However, a more in-depth review and analysis of the updated guidance is underway and City staff will keep Council apprised of notable changes that are relevant to the City’s ARPA expenditure priorities. Following extensive public input, at the September 7, 2021 Work Session City staff presented initial expenditure recommendations and the City Council signaled their support for the following expenditure priorities, categorized by emergent needs and strategic investments. A column has been added to indicate the project status, with details on the following page(s). Program Est. Funding Range Status Emergent Needs: Direct Payments to Eligible Adults $1 - $1.5 million In Development Eviction Prevention $1 - $2 million In Development Housing Repair / Relocation $500k - $1.5 million In Development Emergency Non-Profit Assistance $500k - $1 million Not Started Strategic Investments: BIPOC Business Support Framework / Infrastructure $4 - $6 million In Development Social Service Needs Assessment and Capital Planning + Seed Funding $3 - $6 million Not Started Affordable Housing Initiatives $2.5 - $6 million In Development Mental Health Services $1.5 - $3 million In Development Workforce Development $1.5 - $3 million Not Started Climate Resiliency and Hazard Assessment Planning $500k - $3 million Not Started Small Business, Arts, Culture, and Tourism Investments $1 - $2 million Not Started Government Services and City Revenue Replacement $1 - $3 million Not Started January 14, 2022 Page 2 Program Status Update: Emergent Priorities Direct Payments to Eligible Adults Status: In Development The pandemic had a disproportionate financial impact on low- to moderate-income individuals, many of whom were left out of federal stimulus payments intended to provide household relief. In November, the Johnson County Board of Supervisors allocated $2 million in ARPA funding to a direct payment program. Following a joint City-County work session, Council agreed to let Johnson County lead development of a direct assistance program. Over a continuing series of work sessions, Johnson County has developed a Direct Assistance Program which provides one-time $1,400 payment to Johnson County residents who faced negative economic impacts as a result of the COVID-19 pandemic. A draft of the Direct Assistance Program from Johnson County’s December 21, 2021 Work Session agenda is attached to this memo. Per the program draft, eligible applicants must have lived in Johnson County since March 1, 2020, be a legal adult, and meet the U.S. Treasury’s definition of low- to moderate-income. After a set application period, applicants will be chosen through random selection. Next Steps: Johnson County staff intends to refine their proposal in accordance with the recently released Final Rule and continues work on developing the program webpage, communications plan, and application with the intention of opening the application period in March 2022. County staff is preparing an ARPA update for the Board of Supervisors at their January 19 Work Session. City Council will discuss direct assistance at their January 18, 2022 Work Session and staff will communicate any feedback from the Council to the County, as directed. Staff recommend Council’s January 18th Work Session discussion includes a decision on financially contributing to or supplementing the County’s Direct Assistance Program. Eviction Prevention Status: In Development The pandemic created and exacerbated housing instability for many populations. Iowa City, Johnson County, and Shelter House have initiated discussion regarding an ARPA-funded community eviction prevention program. This would extend and enhance previously allocated federal, state, and local dollars that created new pandemic-related eviction prevention programs in the community. That previously allocated funding has not yet been exhausted. Additionally, it is anticipated the State may use a portion of their federal pandemic relief funding to develop a new statewide housing initiative. Next Steps: Conversations have temporarily paused until details on any new State housing programs are announced. Housing Repair/Relocation Status: In Development City Council has communicated that relocation of the remaining Forest View Mobile Home residents is a top priority within this expenditure use, as the pandemic has exacerbated housing stability for this population. City staff have remained engaged with the mobile home community tenants and the Center for Worker Justice (CWJ), who has submitted a proposal January 14, 2022 Page 3 outlining tenant priorities for relocation assistance. City staff are reviewing the tenants’ and CWJ’s proposal within the context of the updated Treasury guidance. Next Steps: Staff will develop a relocation program for City Council consideration at a February meeting with a goal of offering relocation payments by early summer 2022. Emergency Non-Profit Assistance Status: Not Started Many local non-profits continue to experience financial pressures, increased demand for services, and a shortage of staff and volunteers. Earlier in the pandemic, the City contributed federal, state, and local funds to provide emergency assistance for local non-profits. Thus, a framework for administering emergency non-profit assistance exists. Next Steps: Staff will develop a program proposal based on similar previous efforts. That proposal will be forwarded to Council for consideration in the coming months. Program Status Update: Strategic Investments BIPOC Business Support Framework & Infrastructure Status: In Development In November 2021, the Iowa City Area Development Group (ICAD) funded an economic inclusion study led by Astig Planning and supported by the RE | Connect Collective. The study aims to identify gaps in resources and opportunities for local BLIPOC businesses and entrepreneurs. Staff anticipate this study will help inform decisions by Council and other elected bodies on how to most effectively, strategically, and equitably invest ARPA funds to support BLIPOC business. Additionally, staff have been engaged in conversations with several local BIPOC business owners and entrepreneurs regarding projects and programs related to this effort, such as a BIPOC business venture fund and a fashion design skill- and community-building program for youth. Next Steps: Completion of the Economic Inclusion Study is expected in June 2022. Following completion of the study, staff will prepare recommendations for investing in a comprehensive BIPOC business support framework and seek Council approval to solicit proposals. Social Service Needs Assessment and Capital Planning Status: Not Started Iowa City has held preliminary conceptual conversations with local social service agencies regarding a comprehensive social services needs assessment. Johnson County has signaled interest in collaboration. Next Steps: Develop a steering committee and hold initial stakeholder meetings with local social service agencies and other entities in spring 2022 and prepare an Request for Qualifications (RFQ) for professional assistance in completing the needs assessment. Affordable Housing Initiatives Status: Not Started ARPA-funded affordable housing investments will take a multi-pronged approach, including: January 14, 2022 Page 4 • Housing Trust Fund of Johnson County: The City has initiated discussion with the Housing Trust Fund on their interest in administering an ARPA-funded Affordable Rental Housing Initiative targeting projects that will secure permanent affordability. • Other Projects: The Johnson County Board of Supervisors allocated $4 million in ARPA funding to develop the County-owned property at 821 S. Clinton Street for affordable housing redevelopment. Staff will continue to work with the County to identify opportunities for collaboration. Next Steps: Staff will present a proposed Affordable Rental Housing partnership with the Housing Trust Fund for Council consideration in late winter or early spring of 2022. Mental Health Services Status: In Development A cover memo from the City Manager and a proposal from CommUnity Crisis Services & Foodbank on expansion of Mobile Crisis Outreach in response to the COVID-19 pandemic is included in the January 13, 2022 Information Packet. No other initiatives are planned within this category. Next Steps: Staff will draft a formal agreement with CommUnity in compliance with updated federal guidance for Council consideration at a formal meeting in February or March of 2022. Workforce Development Status: Not Started Staff will explore partnership opportunities to invest in childcare services and workforce development training, such as pre-apprenticeship programs. Previous conversations with the University of Iowa Labor Center have provided an initial framework for pre-apprenticeship programs that will target underserved populations. Climate Resilience and Hazard Assessment Planning Status: Not Started Final Rule guidance on resilience projects has been updated and is under review. Small Business, Arts & Culture, and Tourism Investments Status: Not Started Final Rule guidance on such investments has been updated and is under review. A framework for small business assistance exists. Staff will evaluate the efficacy of this use in the context of competing priorities and as directed by City Council. Government Services and Revenue Replacement Status: N/A At the September 7, 2021 Work Session, Council indicated a hesitancy to pursue revenue replacement as allowed under the ARPA statue. The Final Rule simplified the revenue replacement process, allowing a standard revenue replacement allowance of up to $10 million. This change was intended to simplify the revenue replacement option for local governments and to expand eligible uses to government services that are not enumerated or otherwise eligible in U.S. Treasury eligible use guidance. Staff encourages Council to maintain revenue replacement as a viable option as it may provide additional flexibility to meet community needs.