Title
Recommendation to Provide Further Direction to Staff Regarding the Allocation of $28.68 Million of Funding from the Federal Government Through the American Rescue Plan Act of 2021 to Assist with Recovery from the Impacts of the COVID-19 Pandemic. (City Manager 10021030/Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda (City) will receive a total of approximately $28.68 million in American Rescue Plan Act of 2021 (ARPA) funding. On June 17, 2021 the City received the first $14.34 million tranche of funding. The second tranche of $14.34 million is expected in 2022.
This report presents a potential spending plan within the City’s ARPA funding allocation based on the direction provided by the City Council at the May 20, 2021 and July 20, 2021 City Council meetings. Based on that direction, the ARPA spending plan is now focused on primarily on housing with some support for technology to assist with the City’s COVID-19 recovery efforts. These priorities are consistent with the spending principles discussed at prior meetings, including an emphasis on support for those in our community who were (and continue to be) disproportionately impacted by the pandemic.
BACKGROUND
According to the allocations published by United States Department of the Treasury (Treasury) in May 2021, the City is eligible to receive $28,679,908 in ARPA funding over two years. The City received the first tranche of $14.34 million on June 17, 2021, and the second tranche is expected in 2022. Eligible costs must be incurred or obligated to infrastructure projects by December 31, 2024, and the period of performance for obligated funds will run until December 31, 2026. A summary of the Treasury guidance on eligible uses of ARPA funding is provided in Exhibit 1.
Staff initially sought direction from City Council on May 20, 2021 (File 2021-0824) on a framework for considering the allocation of the funding. The proposed guiding principles included:
1. Prioritize “one-time” expenditures over ongoing activities
2. Invest in critical infrastructure
3. Seek and explore state and regional partnerships
4. Focus on City Council Priority Areas
5. Apply an equity lens
6. Identify projects that support/unburden the General Fund
7. Take the necessary time to invest strategically
8. Carefully track and report regularly to the City Council and Community
Using these principles, staff recommended the following categories for focusing the ARPA spending plan.
1. Supplementing revenue loss
2. Addressing housing, homelessness, and behavioral/mental health
3. Investing and building broadband infrastructure
4. Providing household and local small business assistance
At the City Council meeting on July 20, 2021, the City Council made a motion directing staff to return to City Council with a revised spending plan that has a housing focus, with flexibility to use the ARPA revenue loss funding for housing purposes, and includes funding for the Wi-Fi hotspots.
DISCUSSION
As directed by the City Council, the spending plan detailed below and also included in Exhibit 2 are focused on housing and access to Wi-Fi.
I. Supportive Transitional Housing Program
Community Development - $2,000,000 one time; $600,000 annually
Provide temporary, transitional housing allowing for stays of up to six months (extended on a case-by-case basis) for chronically homeless and unhoused individuals who need physical and psychosocial support. Provide wrap-around services, including on-site housing navigators, case managers, peer support, security and other services to assist individuals in ending their homelessness and build skills towards self-sufficiency. Includes one-time costs of $2,000,000 for purchase, delivery, and installation of cabins/structures for 20 residents, 2 offices, a communal space; furniture, fixtures, and equipment, as well as other onsite amenities that may be in order. Ongoing operational costs for program administration and support services, onsite showers and laundry, drinking water, sanitation, estimated at $600,000 annually at this time.
II. Hotel Acquisition OR Ground-Up Build of the Bottle Parcel for Permanent Supportive Housing
Community Development - $15,000,000 one time; $1,500,000 annually
The City’s contribution towards acquisition and renovation of the Marina Village Inn, or ground-up build of the Bottle Parcel located at 2350 5th Street, is estimated at approximately $15,000,000. Since the July 20, 2021 meeting, staff has refined the spending plan to reflect the City’s expected financial contribution for hotel acquisition or a ground-up build of the Bottle Parcel. A central assumption change is the potential availability of other funding sources, such as Alameda County’s Project Homekey, to contribute funding for the acquisition, rehabilitation, and operations of a permanent supportive housing facility.
The amount of the City’s contribution is still a preliminary estimate given that an appraisal of the property has not been undertaken, the purchase price of the Marina Village Inn has not been negotiated, and the amount of a potential award of Project Homekey funding is not yet known. Staff expects that the next round of applications for Project Homekey funding will open this fall with awards announced toward the end of the calendar year.
Providing permanent supportive housing with on-going wrap-around psychosocial support, such as on-site operational services, security, case management, navigation services, job placement, and financial counseling are estimated to cost $1,500,000 annually at this time.
III. Wireless Hotspot Lending Program
Library - $50,000 one time; $3,600 annually
To help bridge the digital divide for families, the Library proposes offering approximately 30 wireless hotspots for lending to community members at no cost to borrowers. The hotspot provides internet access to families and library patrons who do not have a connection at home. The lending program will allow students, parents, teachers and families working and studying remotely, access to a free and reliable internet connection. The portable hotspots connect Wi-Fi enabled devices such as laptops, tablets or smartphones to the internet. The hotspots can connect up to 10 devices at one time and work almost anywhere in the continental U.S.
Patrons must have a library card in good standing in order to check out a hotspot. The lending period is 21 days, and they are available for renewal if there is no waitlist. The hotspot kits would come with a case, instructions and charging cord. This request would launch and fund this project for about three years as a continuing funding source is sought during that period.
Alameda Housing Authority
Since the publication of the last report, staff was able to meet with staff from the Alameda Housing Authority (AHA). AHA staff provided a prioritized list of projects, which AHA staff believes could be initiated in the next 9 to 18 months:
1. Eviction Prevention and Rapid Rehousing Fund for Alameda Residents. AHA suggests that a funds (e.g. $2M) be managed by a local nonprofit to assist households impacted by COVID, eviction or other housing issues in finding new housing or preventing displacement. Eligible costs could be security deposits, rent, furniture etc. Funds would be made available only after the client’s efforts to access other federal, state and local funds have been exhausted. This is pressing due to the impending end of the rent freeze, the eviction moratorium and due barriers to accessing other sources (for example, prior use of funds, prior evictions etc.). Proof of Alameda residency would be required (the police or fire department or local nonprofit could attest for those who are currently homeless.) (Building Futures has run similar programs in the past.)
2. Jumpstart construction on 90 units of Permanent Supportive Housing - AHA could use $8 million to expedite the first two phases of federal funding applications (tax credit financing) for the AHA’s North Housing Development (586 units). These units are a mix of supportive housing for the homeless (90 units) and senior housing (65 units). With additional funds, AHA could break ground on this site in December 2022.
3. Purchase or lease-to-own of existing multifamily/suites - AHA could buy existing multifamily or high-quality motel suites and restrict them at least 80% of area median income for seniors, or if services dollars and vouchers can be identified - for supportive housing. The price per unit of these opportunities is approximately $370,000 per unit for move-in ready units in a modern facility with room for service provider staff. The City of Alameda could require a city live work/preference as part of the funding agreement.
4. Expedite affordable housing development - Every $10,000,000 can generate nearly 30 units of deeply rent restricted apartments. If the rental restrictions were not as deep (some units above 80% AMI, for instance), these funds could work to create even more units.
Feed Alameda
The Feed Alameda program provides funding to local restaurants, who in turn provide hot meals to unhoused individuals and others who are food insecure. Staff report 2021-1234 provides details on the request for $23,625 to fund this program over the coming weeks.
ALTERNATIVES
Option 1 - Provide direction to staff to proceed with the supportive transitional housing, hotel or ground up build, and Wi-Fi projects discussed at prior meetings.
Option 2 - Consider the requests from the Alameda Housing Authority.
Option 3 - Provide direction to initiate work on one or two of these projects now, and report back on progress and available funds at a future date.
Option 4 - Consider setting aside some funding for requests for additional funding assistance to small businesses or not-for-profits
FINANCIAL IMPACT
If the City Council authorizes staff to proceed, staff will ensure that the necessary budget appropriations are put forward for City Council consideration and approval.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This action is not subject to environmental review as the activity is not a "project" for purposes of the California Environmental Quality Act (CEQA) because it is an organizational or administrative activity of the City that will not result in direct or indirect physical changes in the environment, in accordance with CEQA guidelines, section 15378(b)(5).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Provide further direction to staff regarding the allocation of $28.68 million of funding from the federal government through the American Rescue Plan Act (ARPA) of 2021 to assist with recovery from the impacts of the COVID-19 pandemic.
CITY MANAGER RECOMMENDATION
The recommended primary funding for the first year of funding could be targeted to the priority of housing and supportive transitional housing assistance. In addition, the Council could add other options for some of the funding such as the technology assistance and the use of revenue loss to assist with the eligible infrastructure costs at Alameda Point. The estimated cost for necessary infrastructure for RESHAP is approximately $10 million. Only a portion would be eligible.
Respectfully submitted,
Eric Levitt, City Manager
Financial Impact section reviewed,
Annie To, Finance Director
Exhibits:
1. Treasury’s Guidance on Eligible Uses
2. Proposed Spending Plan