Pandemic Recovery Plan

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SUMMARY

On January 10, 2022, the City Council approved a spending plan for the $11.7 million of one-time Coronavirus State and Local Fiscal Recovery Funds the City will receive as part of the American Rescue Plan Act (ARPA). The plan utilizes the full allocation (to the extent eligible) to replace lost revenues and pay for general services as allowed by U.S. Treasury guidelines.

The ARPA spending plan creates additional one-time resources which can be invest he in the community. Programs and projects consistent with the City's strategic plan and ARPA's intent, with a cost of nearly $14 million, were identified at the January meeting. $2.4 million is recommended to be invested in accordance with the City's fiscal strategies, with the balance of the $14 million of programs and projects considered as part of future annual budgets or considered individually by the City Council.

OVERVIEW

The American Rescue Plan Act (ARPA), a $1.9 trillion emergency stimulus spending bill developed in response to the COVID-19 pandemic, became law in March 2021. The ARPA includes $350 billion of Coronavirus State and Local Fiscal Recovery Funds of pandemic-related financial assistance for state and local governments, with $130 billion dedicated exclusively to local governments. ARPA funds are less restrictive than previous pandemic monies made available to local governments and are allocated to cities based on population.

The City of Cypress will receive a total of $11,723,277 paid in two equal installments in 2021 and 2022.

ARPA amounts must be expended or committed (through the award of a contract) after March 3, 2021 but before December 31, 2024. Any committed amounts which remain unexpended at the end of 2024 are required to be fully expended by December 31, 2026. Recipients must expend the funds in accordance with U.S. Department of Treasury guidelines and eligible expenditures must fall within one of the following categories:

Replace lost revenues (if recipient meets eligibility criteria)
Supporting public health expenditures by responding to/mitigating the COVID-19 emergency
Providing premium pay to essential workers
Address negative economic impacts caused by the pandemic by supporting the community, including local businesses and non-profits
Investment in specific types of infrastructure (water, sewer, broadband)

Spending Plan for Cypress

The spending category which allows ARPA monies to replace lost revenues and use for general services is the least restrictive option and yields the greatest flexibility in providing resources directly to the community. Determining if an agency has revenue losses involves a formula which establishes pre-pandemic base year general revenues and extrapolates a revenue growth factor out to future periods. Aside from the specific exclusion of a handful of revenue sources identified in the guidelines, general revenues comprise all annual revenues of the City. If eligible losses are computed using the formula contained in the U.S. Treasury guidelines, there is no requirement to demonstrate the losses are a direct result of the pandemic. Cypress was determined to have eligible losses of $3.6 million for FY 2019-20 and $8.1 million for FY 2020-21.

Additional annual losses are projected for FY 2021-22 through December 2024 which, in total, are expected to far exceed Cypress' $11.7 million ARPA allocation. Therefore, Cypress' full ARPA allocation will be used to replace lost revenues and spent on general, eligible government services. Advantages of this recommended ARPA spending plan include:

Proceeds can pay for general government services, which includes regular operations.
Frees up unrestricted/discretionary resources for other purposes/opportunities.
Least administratively burdensome spending option.
The City Council has greater local control in determining how to use additional resources that are freed up, including project selection and establishing timelines.
The City Council determines program guidelines and tracking requirements, rather than the federal government, associated with the additional discretionary spending which can occur due to the availability of additional resources.

Use of One-Time Resources Resulting from Recommended ARPA Spending Plan

The significance of being able to use revenue losses to pay for general government services, and free up discretionary resources for other purposes, cannot be understated. The City Council has the unique opportunity to invest in programs and projects using resources that otherwise would be unavailable due to paying for general services, resulting in the ability to create several programs/projects that would normally not be possible due to a lack of funding.

Approximately $14 million of investment and expenditures have been identified. These uses are consistent with the City's strategic plan goals and are designed to be consistent with the intent of ARPA, which prioritizes assisting the local government's recovery from the effects of the pandemic.

Recover General Fund Pandemic Spending

Funds Allocated: $2,400,000

Approximately $2.4 million of General Fund monies were expended on unreimbursed pandemic-related response, which consisted of small business recovery grants, non-profit support, community meals programs, advocacy and other operating costs. These costs were funded with available General Fund unassigned fund balance reserves which would typically be invested in accordance with the City's fiscal strategies. These strategies provide that available reserves be evenly split between future infrastructure and facility improvements and investment in the City's pension trust. it is recommended $1.2 million be directed to each of these purposes.

Reclaimed Water Service to Arnold Cypress Park

Private Arterial Wall Rehabilitation

Electric Vehicle Charging Stations at City Facilities

Maintenance Yard Privacy Screening

Bicycle Master Plan

Myra Avenue Pump Station No. 1 Assessment

Additional Non-Profit Support

One-Time Employee Premium Pay

Funds Allocated: $300,000

The City Council approved premium pay (ranging from $5,000 to $6,000 per employee) for non-represented employees and employee groups that negotiated new collective bargaining agreements in 2021. There is one group of employees that have not received any premium pay and that group's contract will expire in June 2022. It is recommended a similar amount per employee be earmarked and made available during the upcoming negotiations.

Information Technology Upgrades

Subsidy to Eligible Households to Offset Solid Waste Contract Cost Increases

Additional Business Recovery and Support

Funds Allocated: $1,000,000

In 2021, the City Council approved $1.25 million to assist local business impacted by the pandemic. The programs consisted of small business and home occupation resiliency grants, as well as building fee waivers for businesses. The response to these programs has been positive and funding remains available. However, it is recommended an additional $1 million be set-aside to fund additional business recovery efforts once the initial $1.25 million is expended.

Economic Development Program Staffing (Five Years)

Funds Allocated: $1,000,000

The full-time position committed to Cypress economic development activities was eliminated over the decade ago in response to the financial challenges associated with the Great Recession and the dissolution of redevelopment agencies. Since that time, economic development efforts have largely been handled by the City Manager and through consultants. In order to enhance consistency and continuity, it is recommended the full-time position dedicated to economic development be restored. This funding would provide for the position for approximately five years.

Drought Response Incentive Program

Business Parks Specific Plans Modernization

Funds Allocated: $200,000

The FY 2021-22 Budget includes $200,000 of ARPA funding to update and modernize the various business park specific plans which were adopted over 30 years ago. The revised plans will support efforts to attract and retain business and jobs, while also responding to market and land use pattern changes including those brought on by pandemic. It is recommended the funding source be classified from ARPA to discretionary General Fund monies.

Welcome Back Special Event for Business Parks

Funds Allocated: $25,000

The last two years have challenged the entire community and those that work for Cypress businesses. Once the pandemic is over, it is important to acknowledge and thank Cypress businesses for their efforts in continuing to serve the community during this period of uncertainty. This welcome back event would be organized by the Recreation and Park District, held in one of the business parks, and feature food trucks, live entertainment and other activities.

Emergency Vehicle Traffic Signal Preemption

Update City Community Plan

Funds Allocated: $50,000

The Cypress Police department, working with a federally-funded consultant, oversaw the creation of the City's Continuity Plan in 2012. The Continuity Plan is a comprehensive planning document meant to ensure City-wide operations continue during, and after, an emergency or disaster. The document is due for an update and needs to coordinate with the newly created information Systems Disaster Recovery Plan.