That the City Council: 
A.  Approve a budget appropriation plan for $1,309,023 received from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) funding; and

B.  Approve and authorize the City Manager to increase/decrease spending allocations of the grant funds within approved spending categories, as necessary.

On March 16, 2020, the City of La Habra declared a State of Emergency due to the Coronavirus pandemic (COVID-19).  Since then, the City's priority has been to reduce health risks to our residents, visitors, business community, and employees.  A significant amount of City effort and resources have been dedicated to this goal and it continues to be a priority for both Council and staff.

On March 27, 2020, Congress enacted the federal Coronavirus Aid, Relief and Economic Security (CARES) Act which included funding for state and local government to address public health needs of the community created as a result of the pandemic.  Unlike states, counties, and larger cities across the nation, smaller cities like La Habra did not receive a direct federal funding allocation.  However, both the State of California and the County of Orange elected to allocate a portion of their CARES funding to municipalities within their respective jurisdictions.  As a result, the City of La Habra received $526,573 from the County of Orange, and an additional $782,450 from the State, resulting in a combined allocation of CARES Act funding to La Habra of $1,309,023.

CARES Act funding from the County of Orange was received in a single allocation that was received on July 2, 2020.  CARES Act allocations from the State will be dispersed in 6 equal monthly allocations of $130,408.  The first allocation was received on July 30, 2020, the second allocation was received on August 24, 2020, and the third allocation was received on September 17, 2020, for combined allocation from the State of $391,224 received thus far.  Consistent with federal guidelines, CARES Act funds may only be used for certain expenditures incurred due to the public health emergency caused by COVID-19, and which have been incurred during the period that began on March 1, 2020, and ends on December 30, 2020.

This report provides an overview of the City’s use of CARE Act funds to date, as well as staff recommendations on how to program funds received, but not yet spent, and funds that have not yet been received.
 
CITY COVID-19 EXPENDITURES TO DATE
Between March 16, 2020, and June 30, 2020, the City incurred COVID-19-related costs of $246,769. These costs include, but are not limited to, the following: 

1. Expenditures related to staffing and operation of the City's Emergency Operations Center (EOC);
2. Regular sanitization of City facilities, vehicles, and equipment;
3. Staff assistance to the Community Food Giving Program administered by the Community Resource Care Center (CRCC), as well as the Meals on Wheels Orange County (MOW-OC)/Meals on Wheels La Habra (MOW-LH) programs;
4. Public outreach intended to educate the community how to slow the spread of the coronavirus;
5. Child care for children of emergency responders; and
6. Other actions and activities related to public health and safety.

Between July 1, 2020 and August 31, 2020, the City incurred an additional $85,993 in costs, for a combined total of $332,762, to continue programs and services intended to mitigate the effects of the COVID-19 pandemic. 

Due to the uncertain and dynamic nature of the pandemic, it is difficult to estimate when the City might be able to cease any of these ongoing activities.  However, consistent with the Proclamation of Local Emergency that was issued on March 16, 2020, and which has been ratified and reaffirmed by the City Council on multiple occasions since then, the City will take all actions necessary to protect public health and safety.  

Pursuant to federal guidelines, CARES Act funding may only be used to pay for costs of programs and activities that reduce the impact of the pandemic on our residents, businesses, and the City's essential employees.  Specific examples include, but are not limited to, the following:

1. Personnel costs for Public Safety, Public Works and Community Services Department staff whose duties are substantially dedicated to the pandemic response effort;
2. Expenses necessary to improve telework capabilities for public employees and to help gain compliance with public health social distancing precautions; and
3. Expenses for sanitization and enhanced cleaning of City facilities.

Because CARE Act funds allocated by the State must be expended or returned by December 30, 2020, the State has imposed deadlines of September 1, 2020, to obligate the funds and October 30, 2020, to either spend the funds or demonstrate how they will be spent by the end of the calendar year.  The City has complied with the September 1 obligation deadline by reporting to the State all expenditures made thus far, as well as by providing a preliminary statement of how the City's proposed expenditures will occur for the remainder of the calendar year.  Staff requests the City Council consider and approve that proposed plan (Attachment A).

CARES Act funds may also be used to fund "second order'' effects of the pandemic, such as providing economic support to individuals suffering from unemployment or businesses experiencing prolonged business interruption directly related to the pandemic.  For example, the City is currently working on a residential rent relief program to assist residents who may have experienced or are currently experiencing difficulty paying their rent.  This program, known as the La Habra Rental Assistance Program, was initiated using Community Development Block Grant (CDBG) funds and can be supplemented with CARES Act funds.

While CARES Act funding will help defray costs incurred by the City as part of its coronavirus response, it is important to note that CARES Act funding specifically cannot be used to offset government revenue shortfalls or be used to cover cost of City employees not substantially dedicated to COVID-19 relief efforts.

COVID-19 SPENDING PLAN
Staff have identified three key goals in consideration of how CARES Act funds could be programmed.  These goals are:

• Ensure a continuity of government services that address the critical needs of residents and the business community;
• Provide a safe work environment for employees who are performing essential services, as well as for community members who utilize those essential services; and
• Provide for an effective and updated stream of information to educate and inform the public on matters related to COVID-19.

The proposed spending plan identifies activities and functions eligible for CARES Act funds, based on the most current available guidance. Staff's recommendations have been organized under the following categories:

• City costs in response to the pandemic, including health and safety services;
• Community and resident support; and,
• Business and economic resiliency support.

The proposed spending plan includes funding for the following major programs:   

• Personnel costs associated with programs for:
  • Community Food Giving program for senior citizens and the home bound at-risk
  • Sanitizing city facilities
  • Child care for essential workers
  • COVID-19 hotline dedicated to answering questions and providing resource referrals
  • Staffing to ensure continuity of service
• Contractual services
  • Legal review and guidance on changing federal, state, and county public health policies
  • Janitorial services and sanitization of City facilities, vehicles, and equipment, as well as entry "check-in" for City Hall visitors
  • Security to ensure compliance with all applicable regulations at parks, playgrounds, and recreational facilities and amenities
• Communication and outreach services with the public
  • Community newsletters to all mailing addresses
  • Video messaging and social media outreach
  • Public services announcements
  • Targeted messaging to the Spanish-speaking community
• Supplies
  • Cleaning and sanitizing supplies
  • Personal Protective Equipment (such as masks and gloves)
  • Facility enhancements, such as counter guards and plexiglass shields
• Other
  • Distance learning assistance
  • Unemployment and Worker’s Compensation expenses
  • COVID-19 testing for essential workers

To allocate funding to each program, staff made a preliminary assessment regarding program needs and the potential interest the public may have to participate in certain programs; however, it is unclear at this time how much public need or interest may develop or if other needs become apparent. Due to the CARES Act's very tight spending timeframe, which ends on December 30, 2020, staff recommends the City Council grant authorization to the City Manager to allocate appropriated funds between programs, as necessary, to adjust for actual utilization. This will assist staff to implement these programs efficiently with the goal of expending all of the allocated CARES Act funds on eligible uses by or before the spending deadline. These proposed programs will be further refined as they are implemented, as will the ongoing COVID-19 response programs that are already in place.

Staff will work to ensure compliance with the federal CARES Act regulations and ensure the necessary nexus to second-order effects of the COVID-19 emergency.  The programs will be adjusted, as necessary, to ensure compliance and, if necessary, funding will be recommended to be reallocated between other eligible programs.

The State and County have provided the City with $1,309,023 in CARES Act funds, which are federal grants administered under Department of Treasury guidelines.  The appropriation of these funds will help offset certain expenses from the City's General Fund. 

ED 9 Fiscal Strength-Stability