Nearly four months after being awarded $386 million in federal American Rescue Plan Act funds, the City and County of Honolulu is still fine-tuning plans to distribute the money.
Honolulu received $193 million of the Covid-19 relief funds in June and will get the other half next year. The city has until 2024 to obligate the funds and until 2026 to spend them to allow officials to try to address longer-term needs as opposed to CARES Act money that was for more immediate use and had to be spent in nine months.
The City Council and Mayor Rick Blangiardi’s administration largely agree on priorities when it comes to the need for spending on public health, economic recovery, infrastructure and revenue replacement. But the nine-member council is pushing to allocate more of the funds for affordable housing on the island, which saw the median home price surpass $1 million last month.
Anton Krucky, director of the Office of Housing, said he doesn’t know if the city will use ARPA money to build affordable housing, but they’re working on other strategies to develop a plan.
“We’re looking at many different strategies for affordable housing,” Krucky said. “From using our lands, our city lands, acquisitions, motivated development, even programs that take people that are in affordable housing and move them on in their lives so it creates other affordable housing. But we’ll be continuing to expand that plan.”
So far, the city administration plans to allocate $110 million to provide support and address economic impacts, $156 million for economic recovery, $70 million to city operations and $50 million to invest in infrastructure.
Out of the $193 million, $10 million of the ARPA dollars already were spent on Covid-19 testing, according to city spokesman Tim Sakahara, who said the “testing supplies were necessary when the delta variant was spiking.”
“The city is working with city departments, the community and council regarding the distribution of ARPA funding,” Sakarahara said in an email. “ARPA federal guidelines are more detailed and prescriptive than the CARES Act funding. We want the public to know the city’s priority will be to allocate funds to the highest and greatest needs.”
The main difference between CARES and ARPA is the timeframe to spend the money and what it would be spent on. CARES was strictly emergency money to help businesses stay afloat and provide a safety net for people who lost their jobs.
President Joe Biden signed ARPA into law in March to help combat the public health crisis and boost the economy, which was devastated by the pandemic last year.
ARPA dollars may be used to support public health, address economic impacts, provide services to disproportionately impacted communities, replace lost revenue, provide premium pay for essential workers, cover administrative costs, and invest in water, sewer and broadband infrastructure.
They may not be used for deposits to a pension fund, funding debt service, payment of legal settlements or judgments and deposits into rainy day funds or financial services.
City Council Chair Tommy Waters asked about the use of the funds to support affordable housing during a joint committee meeting on Tuesday.
But Waters noted the city would have to pay the debt service on the capital improvement budget.
“When it comes to ARPA, it’s cash. We don’t have to pay the debt service,” he said during Tuesday’s meeting. “It would save money in the long run, especially if we’re building rental units for folks where you don’t have to incorporate the debt service into the amount that we’re spending if we use ARPA.”
“I’m just throwing that out there,” he continued. “I think it’s a good idea and hopefully you folks look at using ARPA monies to deal with our housing crisis.”
The council’s budget committee compiled a list of 13 areas in which ARPA funds could be used for affordable housing, such as funding the Homeless Outreach and Navigation For Unsheltered Persons program, developing affordable housing infrastructure and the expansion of existing affordable housing programs.
With more time to spend the funds, Blangiardi’s administration and the City Council are collaborating in a bid to use the federal dollars for areas most in need. While the mayor can spend the first half of ARPA funds without the council’s approval, the next ARPA payment will be approved in the budgeting process through the council.
“We remain hopeful that the administration is trying to get these monies out efficiently and equitably and will have the maximum flexibility to do that,” the city’s managing director, Michael Formby, said at the meeting.
The city’s budget director, Andrew Kawano, said the website should be viewable by the end of next week.
The city administration also is creating a group of staff members that would be in charge of ARPA procurements, dubbed the Tiger Team.
“The Tiger Team will work closely with city departments and offices to execute the city’s recovery plan projects to ensure expedited and compliant procurements that will safeguard federal reimbursement,” Sakahara said. “The team will consist of dedicated participants from purchasing, departments and the Office of the Managing Director.”
Honolulu is not the only city that’s taking its time to spend the money.
A Sept. 7 report by the Brookings Institution, a Washington, D.C.-based think tank, found that eight of 20 large mainland cities surveyed had not yet spent their ARPA dollars.
“This is not necessarily surprising nor worrisome,” the report said, noting that cities had received only half of the fiscal relief funds, with the second half scheduled to arrive in May.
“Moreover, Treasury counseled cities to not commit all of their dollars immediately, so that they could respond to changing health and economic circumstances over the coming months.”
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