Staff Report.ARPA Update
PREPARED BY: Arn Andrews
Assistant Town Manager
Reviewed by: Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 02/15/2022 ITEM NO: 12
DATE: February 8, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive American Rescue Plan Act Update
RECOMMENDATION:
Receive American Rescue Plan Act update.
BACKGROUND:
On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law by President
Biden. The $1.9 trillion package (the Act) provides financial aid to families, governments,
businesses, schools, non-profits and others impacted by the COVID-19 public health crisis. On
May 10, 2021, the Secretary of the Treasury (Treasury) published an Interim Final Rule to
outline the initial implementation of the Coronavirus State Fiscal Recovery Fund and the
Coronavirus Local Fiscal Recovery Fund (CLFRF) established under the American Rescue Plan
Act. Based on ARPA distribution guidelines provided to the States, the Town is slated to receive
$7,229,744 of which the first tranche payment of $3,614,872 was received on July 13, 2021.
DISCUSSION:
On January 6, 2022, the United States Department of the Treasury adopted the final rule for
implementing the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program under the
American Rescue Plan Act (ARPA). The final rule takes effect on April 1, 2022, and provides
state and local governments with even broader flexibility to pursue a wider range of uses to
respond to local public health and economic needs. In addition, the final rule provides greater
simplicity so recipients can focus on responding to the needs in their communities and
maximizing the impact of their funds. An overview of the final rule can be found in Attachment
1.
PAGE 2 OF 4 SUBJECT: ARPA Update DATE: February 8, 2022
DISCUSSION (continued):
Prior to April 1, 2022, recipients may take actions and use funds in a manner consistent with the
final rule, and Treasury will not take action to enforce the Interim final rule if a use of funds is
consistent with the terms of the final rule, regardless of when the SLFRF funds were used.
Of note, the final rule offers a standard allowance for revenue loss of up to $10 million,
allowing recipients to select between a standard amount of revenue loss or continue to
complete the prior revenue loss calculation. Recipients that select the standard allowance may
use that amount for government services, with streamlined reporting requirements.
The rule provides that government services generally include any service traditionally provided
by a government. Following are some examples provided by Treasury:
• Construction of schools and hospitals
• Road building and maintenance, and other infrastructure
• Health services
• General government administration, staff, and administrative facilities
• Environmental remediation
• Provision of police, fire, and other public safety services (including purchase of fire
trucks and police vehicles)
In addition to the clarity that the final rule brings to the guidance for use of ARPA funds, there
have been additional Town Council allocations and changes to previous allocations. The table
on the next page provides an overview of ARPA commitments/allocations to date. While staff
tracks Council allocations and commitments for accounting purposes, ARPA funding does not
need to be expended until December 31, 2024 and can remain fluid until that time. As an
example, the FY 2020/21 Budget projected utilizing $1.3 million in ARPA funding to replace lost
revenue yet at the close of the year, the funding was no longer required. Currently the
adopted FY 2021/22 Budget anticipated $1.9 million in ARPA funding for lost revenue, yet the
mid-year budget projections also indicate a slight decrease ($468, 515) in ARPA reliance.
PAGE 3 OF 4 SUBJECT: ARPA Update DATE: February 8, 2022
DISCUSSION (continued):
Original
Allocations
Current
Allocations/
Commitments
Estimated ARPA Funds $7,229,744 $7,229,744
Replace Lost Revenue FY 20/21 - $1,362,910
FY 21/22 - $1,912,536
$0.0
$1,444,021
Economic Development
• Parklets
• CUP Fee waiver
• ADA Fee Waiver
• Destination Marketing
• K-Rail
• Promenades
Totals
$930,000
$50,000
$25,000
$55,000
$25,000
$80,000
$1,165,000
$930,000
$50,000
$25,000
$55,000
$25,000
$80,000
$1,165,000 Nonprofit/Community Assistance
• Rent Waiver
• Direct Grants
• Enhanced Senior Services
Totals
$341,452
$110,000
$500,000
$951,452
$341,452
$110,000
$500,000
$951,452
Total Allocations $5,391,898 $3,560,473
Total ARPA Funds Unallocated $1,837,846 $3,669,271
As the table illustrates, ARPA funding for lost revenue replacement was originally 61% of the
total ARPA allocation and has since reduced to 40% of the total ARPA allocation to date. These
shifts have resulted in an increase in unallocated funds for future use. Allocations to economic
recovery efforts comprise about 33% of total allocations to date of which 90% of the economic
vitality investments directly benefit downtown Los Gatos.
PAGE 4 OF 4 SUBJECT: ARPA Update DATE: February 8, 2022
DISCUSSION (continued):
Nonprofit and community assistance comprised almost 27% of total allocations to date.
CONCLUSION:
Staff will continue to monitor Treasury ARPA compliance guidance and report any subsequent
impacts. In addition, as development of the Proposed Operating Budget proceeds, staff will
return to Council with any potential changes affecting previously allocated ARPA funding for
revenue loss. Through the budget process, Council may wish to maintain flexibility as there is
no urgency to spend these funds and the Town may face budgetary challenges going into FY
2022/23.
COORDINATION:
This staff report was coordinated with the Town Manager, Town Attorney, and Finance
Director.
FISCAL IMPACT:
None
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Final Rule Overview