Staff recommends that City Council approve applying for ARPA Minimum Allocation Grants and authorize the Mayor to sign a financial commitment letter for each submitted project.

The American Rescue Plan Act (ARPA) of 2021 provides state and local aid to make necessary investments in water and sewer infrastructure.  The Montana State Legislature passed HB 632 which directed the federal funds available under ARPA for use in Montana.  One of the grants established in HB 632 is the Minimum Allocation Grant (MAG) Program. The City of Billings was allocated $15,607,145.20 in MAG funds that must be spent on eligible water, wastewater, or stormwater projects. In order to receive the MAG allocation, the City must submit grant applications to the State for eligible projects by November 1, 2022. MAG funds must be obligated by December 31, 2024 and expended by December 31, 2026. A match is required that is equal to the lesser of 50% of the project cost or 25% of the City's Local Fiscal Recovery Funds which is $3,985,079. 

Public Works has significant water infrastructure needs and accordingly, staff is recommending that all MAG funds be spent on water projects identified in the 5-year Capital Improvement Program. Specifically, the projects the staff is recommending the City allocate its MAG funding are:
 

Project	MAG Funding
2021 Water Main Replacements	$1,600,000
2022 Water Main Replacements	$2,160,000
2023 Water Main Replacements	$2,100,000
2024 Water Main Replacements	$4,447,145.20
West End Distribution	$2,000,000
Zone 4 Pump Station	$3,300,000

These projects meet the eligibility criteria of the ARPA MAG grants. Letters designating the commitment of the City's ability to fund the local share match are required to be included with the grant applications.  

City Council may:

• Approve applying for ARPA Minimum Allocation Grants and authorize the Mayor to sign financial commitment letters; or,
• Not approve applying for the grants. If not approved, the City will not apply for ARPA Minimum Allocation Grants.

The grants provide $15,607,145.20 of funding for the water fund. The required match is $15,145,079 of which $11,495,079 will utilize water revenues and $3,650,000 will utilize ARPA Competitive Grant funds.