Huntington Beach has joined a list of other Orange County cities including San Clemente and Santa Ana who have created spending plans for their portion of pandemic bailout money from the American Rescue Plan Act.
City council members Tuesday voted unanimously to approve a spending plan on where their share of the American Rescue Plan Act money will go.
“We looked at all of the different gaps that we had in our community and we wanted to use the money thoughtfully and put it in a place that would provide the most benefit for the community,” said Mayor Kim Carr in a Wednesday interview.
Like other cities, Huntington Beach has already received half of their $29.6 million share and is slated to receive the other half next year.
At Tuesday’s meeting, City Manager Oliver Chi said that the spending plan was not set in stone and the city is required to submit a draft spending plan to the federal officials.
“As the process unfolds over the next couple of years, we’ll also have to provide periodic updates related to how we’re using the funding moving ahead,” Chi said.
The money must be appropriated by Dec. 31, 2024.
The act, signed into law earlier this year by President Joe Biden, is set to send $1.9 trillion in relief money to families, businesses, schools and governments impacted by the coronavirus pandemic — with $350 billion going to state, local, territorial and tribal governments.
The U.S. Treasury Department has put out interim guidelines on how the federal bailout money can be spent.
Under the guidelines, the money can be used to offer premium pay for frontline workers, back paying lost tax revenue, as well as upgrades to water, sewer and broadband infrastructure.
It can also be used to fund COVID-19 mitigation efforts as well as to address economic impacts caused by the pandemic on small businesses, workers, families and impacted industries.
How The Money Is Going to Be Potentially Spent?
Chi said because the city is receiving less than the amount of tax revenue projected to be lost from January 2020 to December 2023, the council has wide discretion on how to use the money as long as it falls in the determined eligible uses.
“There’s been a tool that’s been developed to estimate how much money Huntington Beach has lost because of COVID-19. For us, the tool indicates we’ve lost roughly 42 and a half million dollars during the reporting period,” Chi said at the meeting.
However Carolyn Cavecche, president of the OC Taxpayers Association, said in a Wednesday phone call that the use of the funds is pretty restrictive.
“Huntington Beach is saying it looks like we’re going to lose $42 million over these years. And they’re going to have to prove that going forward — it’s an estimate now. So these are all projects we would have done before and I don’t know how accurate that would be,” She said.
The money is being directed to capital related expenditures to address the city’s current needs as well as projects that plan for the future.
“There’s a lot of new projects that they’re putting in here. Most of them are planning for the future projects,” Cavecche said.“I don’t know, personally, whether if I was on Huntington Beach Council, I would say that it qualifies under lost revenue, because that’s what they’re putting it under.”
Seven projects are meant to address current needs while 11 projects are meant to address future needs.
Carr said all the potential projects in the spending plan were fully vetted before presented to the council to make sure they did qualify for the funds.
Around $9.7 million is planned to go to current needs, like the $3 million allocated to upgrade the Huntington Beach Police Department’s computer aided dispatch and records management system.
Of that, $2 million is slated to purchase an urban search and rescue truck, a lifeguard rescue vessel and a dive team vehicle for the fire department and $1.75 million is allocated to revitalize the downtown area.
Around $20 million is being allocated for “planning for the future projects” with $3.2 million going to preliminary planning for upgrades to the civic center, police department and Lake Fire Station.
Some of that money is expected to go towards addressing the homelessness, with $2.5 million slated to build more permanent supportive housing and another $2.5 million is going towards the a healing center facility for the homeless.
Some of the money has been set aside for businesses, like $2 million in loans for existing mid-sized businesses and $1 million in loans for smaller businesses and start-ups.
Another $1 million is set aside for a beautification project of the city’s arterial street corridors and another million is going towards broadband infrastructure improvements throughout the city.
Around $750,000 has been allocated for a skatepark with hopes of bringing action from the 2028 Olympic games in Los Angeles to the city.
“You could say that it was part of replace lost revenue due to COVID, because of all of the tourism that we did lose,” Carr said about the skatepark. “There was a huge economic impact to our city due to COVID and we now have the ability to do projects that we weren’t able to do before because of revenue that we were counting on and we didn’t get.”
To learn more about how Huntington Beach city officials are planning to spend their ARPA money click here.
None of the money is going to fund projects that incur ongoing financial commitments, which Cavecche said was a responsible use of the money.
“Our fear is that cities are going to use this as a windfall to fund projects that are going to need ongoing funding,” Cavecche said. “The feds, I don’t think are going to be funding past this.”
Chi said in a phone interview on Wednesday the city is looking to invest their share of the money in the lost revenue category.
“Because the amount we’re getting is less than the revenue loss, it can all be back filled into the revenue loss category for the funding cycle,” he said.
Chi said while the city is in good shape financially they are still nearly $9 million below pre-Covid-19 general fund revenues.
Cavecche said there are a lot of cities using their money in the lost revenue category and that a lot of the projects Huntington Beach is proposing do meet ARPA fund requirements — with the broadband improvements as one of the examples she cited.
She questioned if some of the other projects did meet those requirements.
“I think what the intent was on this is to avoid cuts to government services so they’re looking at that broad category of loss of general funds money for cities to use these dollars to avoid cuts to government services, not to build new city halls or skate parks,” Cavecche said.
However, Cavecche applauded the city for their transparency on how they plan to use the money.
“I hope other cities follow Huntington Beach’s lead on that because I think it’s important for their taxpayers to understand how they’re spending their money, and it is just getting lost in the budget process.”
Hosam Elattar is a Voice of OC Reporting Fellow. Contact him at firstname.lastname@example.org or on Twitter @ElattarHosam.