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

      

  1. $65.1 billion to all counties received direct from Treasury;

Mercer County = $21,254,329.

  1. $45.57 billion to Metropolitan Cities received direct from Treasury;

      Sharon = $14,382,307.

  1. $19.53 billion to non-entitlement units (NEU) distributed by the State;

Hermitage = $1,619,337.38.

            

  • PA NEUs request funds thru DCED Single Application. Hermitage submitted their application on 06/11/2021.

 

  • The funds are distributed in 2 tranches, $809,668.69 received on 07/07/2021 with an additional $809,668.69 to be received approximately 12 months after 1st payment.

 

  • Funds can be used to cover eligible expenditures obligated by December 31, 2024.

 

  • U.S. Department of Treasury issued the interim final rule on May 10, 2021.

 

  • Implementation of the Fiscal Recovery Funds reflect the importance of public input, transparency and accountability.

 

  • Treasury urges local governments “to engage their constituents and communities in developing plans to use these payments.”

 

  • Role of the HCEDC “Reviews economic development and projects and other projects having significant community impact and advises the Hermitage Board of Commissioners regarding said developments and projects.”

 

            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. 


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 U.S. Department of The Treasury issued the Coronavirus State and Local Fiscal Recovery Funds “Final Rule” two (2) weeks ago and the final rule delivers broader flexibility and greater simplicity in the program, based on feedback in the comment process. 



 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 19th 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.