Staff recommends the City Council hold a public hearing and approve the adjusted prioritized list, allowing the City to submit a revised grant application for a third infrastructure project to the Montana Department of Commerce.

The Montana Legislature passed HB 355 "The State-Local Infrastructure Partnership Act of 2023", appropriating $20 million from the state general fund to distribute as grants to incorporated cities and towns for eligible local government infrastructure projects that fully comply with HB 355. The published guidelines listed 10 areas for which cities could use funds for "maintenance or repair" of existing infrastructure. However, the guidelines also noted that of highest priority are drinking water systems, wastewater treatment systems, and fire suppression systems "if independent of drinking water systems". Cities are asked to provide clear reasoning for not funding one of those three areas if they submit a project from one of the other seven categories. The City must also be able to demonstrate that they will be able to make a 25% local match of the total project cost in its application(s). The law required cities to solicit projects from their departments, prioritize the resulting lists, and present those lists at a public hearing. Once the public hearing is completed, the City may finalize its priority list and make its application(s) to the DEC for funds. A city must submit a separate application for each project they wish to have funded under the bill - and each project must have a 25% non-federal local cash match identified and committed. Finally, each submitted project must be included in the current CIP as adopted by the City Council.

The City of Billings will receive slightly more than $1.4 million in funding under the formula set forth in the bill. The project(s) total cost must be at least $1.87 million - which we will easily exceed. In examining projects submitted by City departments, the administration submitted to Council on January 22, 2024, the Public Works water mains replacement program, which was approved after a public hearing. After that date, administration submitted three water mains project applications. We learned on Feb. 26, 2024 that two of the projects, Broadwater Avenue and Cedar Park had been approved. However, the third project was not approved because we could not guarantee that the contractor would be under contract prior to Dec. 31, 2024, another requirement of the grant.

Administration again solicited projects from Public Works in late February. Three were identified that could be brought under contract prior to the Dec. 31, 2024 date - those include a sewer replacement project, a water main replacement and extension (Grand Avenue and 48th Street West), and a Bitterroot storm drain project. DEC confirmed that storm drains are allowable projects under the bill. Staff were preparing the third application at the time this memo was submitted - with the deadline to submit on March 29, 2024. The project submitted depends on how easy it is to provide documentation for the grant application. Each project will take place regardless of grant funds being available.

City Council may:

• Approve; or,
• Not Approve

The City of Billings will receive slightly more than $1.4 million in funding under a formula set in HB 355. Two of the water main projects have already received preliminary approval, and will generate $939,000 in reimbursements. The final project will generate another $469,509 in reimbursements from the State once approved.