ARPA Funding Public Discussions and Actions Taken

July 8, 2021 – Hermitage Community and Economic Development Commission (HCEDC) Public Meeting

The City of Hermitage initiated the public discussion on the ARPA with the Hermitage Community and Economic Development Commission (HCEDC) at their regularly scheduled meeting on Thursday, July 8, 2021.

The minutes of the July 8, 2021 include the following comments related to the ARPA public discussion – 

Gary Hinkson explained that in reaction to the COVID-19 pandemic a declaration of disaster was issued and that the city ceased capital spending.

Gary Gulla updated the board on the American Rescue Plan Act (signed into law on March 11, 2021)

The Coronavirus Local Fiscal Recovery Fund = $130.2 Billion

Mercer County = $21,254,329.

      Sharon = $14,382,307.

Hermitage = $1,619,337.38.

            Four (4) eligible uses:

1. Respond to Public Health emergency with respect to COVID-18 or its negative economic impacts.
2. Premium pay to eligible workers performing essential work during the COVID-19 Public Health Emergency.
3. For the provision of Government Services to the extent of the reduction of Revenue due to the COVID-19 Public Health Emergency.
4. Investments in infrastructure, water, sewer, broadband infrastructure.

Congress recognized the critical role that clean drinking water and services for the      collection and treatment of wastewater and stormwater play in protecting public health.

Revenue loss calculation under ARPA:

• ARPA Funds may be used for Government Services to the extent of Reduction of Revenue due to COVID-19.
• Specific definition of General Revenues from all revenue streams.
• Calculation of the loss by computing the extent of the reduction in revenue by comparing actual revenue received to a counter factual trend representing what could have been expected absent the pandemic.
• ARPA allows a growth adjustment of 4.1% which represents the average annual growth across all the state and local government in the most recent 3 years.
• Base year = 2019; estimated growth adjustment 4.1%; compared to actual revenue = 2020
• City of Hermitage Revenue loss calculation = $753,884.

The HCEDC discussed the potential uses of the ARPA and the need to address storm water issues and the 2020 deferred capital projects and expenditures.

A motion was made by Angela Palumbo to make a recommendation to do stormwater improvements and under General Government any capital facilities, paving & infrastructure with the ARPA Funds. Seconded by Robert Cucitrone, motion passed. 

July 15, 2021 – Hermitage Board of Commissioners Public Work Session

The city staff presented the ARPA overview to the Hermitage Board of Commissioners at a public work session on July 15, 2021.  

As part of the American Rescue Plan Act (ARPA), every county will receive money from the federal government related to the impact of COVID. Gary Gulla and Vikki Gruitza have done a considerable amount of work sifting through all the paperwork and the City has already received some funds.

Mr. Gulla summarized details of the act and what has been done so far. The Hermitage Community and Economic Development Commission (HCEDC) was presented an outline on the Act at their July 8, 2021 meeting. This meeting was the initial point of public engagement.

The Coronavirus Local Fiscal Recovery Fund totals $130.2 billion. The City of Hermitage will receive $1,619,337.38. To obtain the money we have to apply through the DCED Single Application formula. Jeremy Coxe submitted that application on June 11, 2021. The funds are distributed in two tranches: $809,668.69 was received on July 7, 2021 and an additional $809,668.69 will be received approximately 12 months after the first payment. The first payment was deposited in an account with Mercer County State Bank on July 9, 2021. The ARPA program permits recipients to generate and retain earnings on the funds received. Funds can be used to cover eligible expenditures by December 31, 2024.

The Department of Treasury issued their interim final rule on May 10, 2021. The implementation of the Fiscal Recovery Funds reflects the important of public input, transparency, and accountability. The Treasury urges local governments to use their constituents and communities in development plans to use these payments, however, the final approval will rest with the Board of Commissioners on how these funds are used.

There are four eligible uses: 1.) respond to Public Health emergency with respect to COVID-19 or its negative economic impacts (identify a need or negative impact and identify how the program, service or other intervention addresses the identified need or impact); 2.) premium pay to eligible workers performing essential work during the pandemic; 3.) for the provision of Government Services to the extent of the reduction of revenue due to the COVID-19 Public Health Emergency; and 4.) investments in infrastructure - limited to water, sewer and broadband infrastructure.

There is a specific definition of revenue loss. You are comparing the actual revenue received in 2020 to what you could have received. There is a growth adjustment of 4.1%. Looking at the base year of 2019, compared to actual revenue in 2020, the loss calculation is $753,884. Funds cannot be used for pension plans or debt service.

The HCEDC discussed the potential uses and passed a motion unanimously to recommend the Board use these funds for stormwater improvements and to address capital facilities, paving and infrastructure under General Government Services. The Act provides broad latitude to use the funds.

Mr. Hinkson added that they will go back to the Board with specifics in the future, but the funds could be used for paving, stormwater projects or to make capital purchases not made because of the pandemic. The City is under no immediate pressure, but the money needs to be committed and obligated by 2024. If not committed, it will need to be returned. The city will not move forward with any capital projects until early 2022.

November 19, 2021 – Hermitage Board of Commissioners at a Public Budget Work Session

The City Manager and Assistant City Manager reviewed the past ARPA discussions with the Hermitage Community and Economic Development Commission (HCEDC) and the Board of Commissioners. Detailed discussion ensued regarding the ARPA “Eligible Uses”, the provision of Government Services to the extent of the Reduction of Revenue due to the COVID-19 Public Health Emergency, the City of Hermitage Revenue Loss calculation and investments in infrastructure - limited to water, sewer and broadband infrastructure.

A draft ARPA plan was discussed allocating $85,000 for Infrastructure – Stormwater (Baker Run Stream Restoration project), $510,000 for Revenue Replacement – Provision of Government Services – Roads, and $8,000 for Administration Expenses.

January 13, 2022 – Hermitage Community and Economic Development Commission (HCEDC) Public Meeting

The Assistant City Manager reviewed the minutes of the Public Discussion at the HCEDC July 8, 2021, meeting related to the ARPA, including the following key points:

• Hermitage submitted their application, as a PA NEU on 06/11/2021 and that the funds are distributed in 2 tranches. The City received $809,668.69 received on 07/07/2021.
• U.S. Department of Treasury issued the interim final rule on May 10, 2021.
• Funds can be used to cover eligible expenditures obligated by December 31, 2024.
• Discussion on the Four (4) eligible uses of ARPA funding with an extensive discussion on the use of funds for the provision of Government Services to the extent of the reduction of revenue due to the COVID-19 Public Health Emergency.
• The HCEDC recommendation to the Board of Commissioners to give priority to stormwater improvements and under General Government any capital facilities, paving & infrastructure with the ARPA Funds.

The HCEDC was provided a draft 2022 ARPA budget from the Hermitage Board of Commissioners Public Discussion at the November 18, 2021 Budget Work Session.

The Assistant City Manager explained that the U.S. Department of The Treasury issued the Coronavirus State and Local Fiscal Recovery Funds “Final Rule” last week and explained that the final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in the comment process. 

Replacing Lost Public Sector Revenue Discussion 

The final rule offers a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount – in many cases their full award – for government services, with streamlined reporting requirements.

Under this option, the final rule Treasury presumes that up to $10 million in revenue has been lost due to the public health emergency and recipients are permitted to use that amount to fund “government services.” The standard allowance provides an estimate of revenue loss that is based on an extensive analysis of average revenue loss across states and localities, and offers a simple, convenient way to determine revenue loss. 

All recipients may elect to use this standard allowance instead of calculating lost revenue using the prescribed formula, including those with total allocations of $10 million or less. 

Recipients must make a one-time irrevocable election to utilize either the revenue loss formula or the standard allowance.

Government services generally include any service traditionally provided by a government, including construction of roads and other infrastructure. Government services is the most flexible eligible use category and funds are subject to streamlined reporting and compliance requirements.

The final rule takes effect on April 1, 2022. Until that time, the interim final rule remains in effect; funds used consistently with the IFR while it is in effect are in compliance with the SLFRF program. However, recipients can choose to take advantage of the final rule’s flexibilities and simplifications now, even ahead of the effective date.

Based on the discussion the consensus was that the city should elect to use the standard allowance and continue a focus on utilizing ARPA funding on impactful, general government capital expenditures.

January 20, 2022 – Hermitage Board of Commissioners Public Work Session

The Assistant City Manager reviewed the American Rescue Plan Act (ARPA) background and prior public meeting discussions, including the following key points:

• The City submitted our ARPA application, as a PA Non-Entitlement Unit (NEU) on 06/11/2021. The ARPA funds are distributed in 2 tranches. The City received $809,668.69 received on 07/07/2021.
• Up until recently we’ve been working under the provisions of the U.S. Department of Treasury interim final rule issued on May 10, 2021.
• The City Board of Commissioners and the HCEDC have held discussions on ARPA at public meetings as follows:

• July 8, 2021 - HCEDC
• July 15, 2021 - Board of Commissioner work session
• November 19, 2021 - Board of Commissioners budget work session
• January 13, 2022 - HCEDC

• Discussion on the Four (4) eligible uses of ARPA funding with an extensive discussion on the use of funds for the provision of Government Services to the extent of the reduction of revenue due to the COVID-19 Public Health Emergency.

The “Final Rule” - Replacing Lost Public Sector Revenue 

 The final rule now offers an option of a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount – in the case of the City of Hermitage and many cases the full award may be used for government services, with streamlined reporting requirements.

Under this option, the final rule Treasury presumes that up to $10 million in revenue has been lost due to the public health emergency and recipients are permitted to use that amount to fund “government services.” The standard allowance provides an estimate of revenue loss that is based on an extensive analysis of average revenue loss across all states and localities, and offers a simple, convenient way to determine revenue loss. 

Recipients may elect to use this standard allowance instead of calculating lost revenue using the formula below, including those with total allocations of $10 million or less. 

If this option is chosen, the City must make a one-time irrevocable election to utilize the standard allowance.

Government services generally include any service traditionally provided by a government, including construction of roads and other infrastructure. Government services is the most flexible eligible use category and funds are subject to streamlined reporting and compliance requirements.

The final rule takes effect on April 1, 2022. Until that time, the interim final rule remains in effect; funds used consistently with the IFR while it is in effect are in compliance with the SLFRF program. However, recipients can choose to take advantage of the final rule’s flexibilities and simplifications now, even ahead of the effective date.

Based on the reading of the Final Rule and the discussion with the HCEDC last week it would be logical for the City to elect to use the standard allowance and continue a focus on utilizing ARPA funding on impactful, general government capital expenditures.

At the November 19^th budget work session, the recommendation under consideration was to allocate $603,000 as follows – 

            Stormwater (Baker Run)                                 $   85,000

            Infrastructure Roads                                       $ 510,000

            Administrative Expenses                                 $     8,000

            (Administrative = auditor consultation and services)

There would be approximately $1,017,400 available for future projects

January 26, 2022 – Hermitage Board of Commissioners Meeting

The Board of Commissioners took action to introduce an ordinance that states the City’s intention to make a one-time, irrevocable election to utilize the standard allowance, as defined by the Final Rule of the American Rescue Plan Act and use the funds for the provision of government services and appropriate the following amounts from the first installment of funding for the specific general government purposes:

• Infrastructure Stormwater           $  85,000
• Infrastructure Roads                     $510,000
• Administrative Expenses               $    8,000

A public Hearing and Final vote on the Ordinance was scheduled for February 23, 2022.

February 9, 2022 – Hermitage Parks and Recreation Board Public Meeting

The Assistant City Manager explained that the purpose of attendance at the meeting was to update the P&R Board on the American Rescue Plan Act (ARPA) and to receive input on the utilization of ARPA funding.

Key points discussed included:

• The ARPA was signed into law March 2021. Established the Coronavirus State and Local Fiscal Recovery Fund which included one time aid to states, counties, and municipalities.
• Hermitage submitted the application, as a PA NEU on 06/11/2021 and that the funds are distributed in 2 tranches. The City received $809,668.69 received on 07/07/2021.
• U.S. Department of Treasury issued the interim final rule on May 10, 2021.
• Four eligible uses – 

• respond to the public health emergency or its negative economic impacts
• providing premium pay to eligible workers performing essential services
• government services to the extent of reduction in revenue due to COVID
• limited infrastructure investments in water, sewer, or broadband infrastructure

It was explained that the U.S. Department of The Treasury issued the Coronavirus State and Local Fiscal Recovery Funds “Final Rule” at the beginning of January 2022 and explained that the final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in the comment process. 

The final rule offers a standard allowance for revenue loss of $10 million. Recipients that select the standard allowance may use that amount for government services.

The Board of Commissioners acted at the January 26, 2022 meeting to introduce an ordinance to elect to utilize the standard allowance, as defined by the Final Rule of the American Rescue Plan Act and use the funds for the provision of government services. 

 Including $85,000 Stormwater (Baker Run), $510,000 for Roads and $8,000 for Administrative Expenses.

In addition to the proposed spending plan more than $1,000,000 will be available for programming. It was suggested that recommendations or input on the ARPA program should be sent to Ed Chess or the City Manager.

February 23, 2022 – Hermitage Board of Commissioners Public Meeting

The Board of Commissioners adopted Ordinance No. 1-2022 declaring the City’s intent to use the standard allowance option for calculating Revenue Loss and statin the intention to use ARPA funds as under the General Government expenditure category as follows: $85,000 for infrastructure – stormwater, $510,00 infrastructure – roads and $8,000 for administrative expenses.

July 27, 2022 – Hermitage Board of Commissioners Public Meeting

The Board of Commissioners adopted a motion to award the ARPA 2022 capital paving program in the amount of $489,235.75.

October 6, 2022 – Hermitage Community and Economic Development Commission (HCEDC) Public Meeting

The discussion began with a summary review of the ARPA related discussions with the HCEDC and the status of the City of Hermitage ARPA program. At the July 8, 2021 HCEDC meeting the City of Hermitage initiated the public discussion on the ARPA. At that time, the U.S. Department of Treasury limited the use of ARPA funds to four (4) categories the following areas: to respond to the public health emergency, providing premium pay to eligible workers, for the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency and to make investments in water, sewer, or broadband projects. The HCEDC discussed the potential uses of the ARPA and the need to address the city’s capital project needs and storm water issues and a motion was adopted to make a recommendation to do stormwater improvements and under General Government any capital infrastructure. The staff reviewed the past ARPA discussions with the Board of Commissioners at the November 19, 2021 budget meeting. A draft ARPA plan was discussed allocating $85,000 for Infrastructure – Stormwater (Baker Run Stream Restoration project), $510,000 for Revenue Replacement – Roads.

At the January 13, 2022, meeting the HCEDC was provided a draft 2022 ARPA budget from the Hermitage Board of Commissioners Budget Work Session. There was a review of the U.S. Department of The Treasury “Final Rule” and an explanation that the final rule delivered broader flexibility and greater simplicity in the program.  The city elected to use the standard allowance for revenue loss of $10 and focus on utilizing ARPA funding on impactful, general government capital expenditures.

At the February 23, 2022, Board of Commissioners meeting they adopted an Ordinance indicating the City’s intent to use the standard allowance option for calculating Revenue Loss and stating the intention to use ARPA funds as under the General Government expenditure category as follows: $85,000 for infrastructure – stormwater, $510,000 infrastructure – roads and $8,000 for administrative expenses. The July 2022 Board of Commissioners meeting they awarded the ARPA 2022 capital paving program in the amount of $489,235 and at the September 2022 Commissioners meeting they awarded the ARPA Stormwater - Baker Run Streambank Stabilization Project in the amount of $175,000 funded by $85,000 ARPA funds.

For 2023 budgetary purposes after the completion of the aforementioned 2022 projects there remains approximately $1 million of ARPA funding available to address prioritized needs. The staff has identified two (2) major, priority road improvement projects that total $820,000 (Lori Lane - $430K & Timber Lane - $390K)

After the conclusion of the discussion a motion to utilize the ARPA financing to invest in the recommended road improvements and other capital infrastructure needs. Motion was made by Angela Palumbo, seconded by George Kraynak and supported by a unanimous vote.

November 18, 2022 – Hermitage Board of Commissioners Public Budget Work Session

The Assistant City Manager opened the discussion by reviewing the status of the ARPA activity. He stated that the City has used the Hermitage Community and Economic Development Commission (HCEDC), in their advisory capacity to the board, since July 2021 to discuss uses of the ARPA funding. The general HCEDC recommendation has been to focus on capital needs. He stated that after the completion of the 2022 capital project there remains over $1.1M of ARPA funding for programming. 

FOP members Jamie Brown and Phil Sciaretta attended the meeting. Officer Sciaretta, Vice President, FOP Lodge #82 spoke on behalf of the FOP stating that he was appearing to address the ARPA funds that the city received. He specifically noted that the city received $1.6M and that one of the purposes of APRA is premium pay for essential workers. Officer Sciaretta read a statement regarding the challenges during the pandemic, the fact that a payment was made to the City of Sharon Police Department from ARPA, and the professionalism of the HPD officers. The FOP ask for ARPA was $1,500 for each officer working during the pandemic. (a copy of the prepared statement was forwarded to the City Manager).

The City officials recognized the police department’s level of service. It was noted that the City’s use of ARPA has been focused on capital paving as recommended by the HCEDC and in fact 2 streets have been identified, Timber Lane and Lori Lane with an estimated cost of $820,000, for paving in 2023. It was also noted that the $278,408 referenced in the statement that was allocated by the City of Sharon was not an additional payment, but a historical accounting of the total ARPA funded payments to employees. The officers were thanked for their input and their request was so noted.

At the conclusion of the review of the Capital and Community Development budgets the available ARPA funding was revisited. The action by the Board of Commissioners, early this year, adopting an ordinance electing to utilize the standard allowance and use the funds for the provision of government services was reviewed. There was also discussion about the FOP representatives’ reference to the City of Sharon and the fact the as an Entitlement City, Sharon received nearly 10 times the ARPA funding than the City of Hermitage. Noting that the City of Sharon utilized approximately 2% of their ARPA funding and that a similar appropriation of Hermitage’s ARPA would be approximately $35,000. It was also discussed that the City of Sharon included all employees, not just police employees and that not only did the City of Hermitage receive a much smaller ARPA allocation as a state non-entitlement unit, the HCEDC’s recommendations to prioritize uses of ARPA funds in strategic, capital investments that provide benefits over many years have been philosophically different than the neighboring City of Sharon.

After a lengthy discussion about allocating funds for compensation to the city workforce it was the consensus that a payment to the entire city workforce, employed during the pandemic would receive equal payments of $350 totaling $35,000. 

After considering the Capital paving needs, community development initiatives and workforce impacts the Board intends to introduce an ARPA budget Ordinance to allocate funding for the specific general government purposes:

1. Infrastructure Roads                          $941,510
2. Community Development                 $160,000
3. Workforce Allowance                         $35,000

November 22, 2022 – Hermitage Board of Commissioners Public Meeting

The Board of Commissioners introduced an ordinance to appropriate the available American Rescue Plan Act funds for the provision of government services for Infrastructure – Roads ($941,510), Community Development ($160,000) and Workforce Allowance ($35,000).

December 14, 2022 – Hermitage Board of Commissioners Public Meeting

The Board of Commissioners adopted Ordinance No. 14-2022 appropriating the remaining, available American Rescue Plan Act funds for the provision of government services for Infrastructure – Roads ($941,510), Community Development ($160,000) and Workforce Allowance ($35,000).