Receive update on the American Rescue Plan Water/Wastewater Infrastructure and the Quarterly Report, and provide Board direction. (No general fund impact) (Pinedo/Sabatini/Bryan/York)

Receive update on the American Rescue Plan Water/Wastewater Infrastructure and the Quarterly Report, and provide Board direction.

ARP Water/Wastewater Infrastructure Background
On September 28, 2021, the Board of Supervisors (Board) approved the initial American Rescue Plan (ARP) Expenditure Plan, which included $1,000,000 for Water/Wastewater Infrastructure under the Strategic Plan Implementation. To date, these funds have not yet been committed to a specific project/program within the Water/Wastewater Infrastructure. The following information provides updates from the Water/Wastewater Infrastructure category. 

While responding to the COVID-19 pandemic in 2021 and developing a plan for the distribution of anticipated ARP funds, the County was also responding to the effects of the ongoing drought conditions that have impacted our rural communities and agricultural economy. In August 2021, the State announced a water infrastructure funding package consisting of over $4.5 billion in emergency drought funding spread across a dozen funding programs administered by the California Natural Resources Agency.  At the August 31, 2021, Board meeting, the Board allocated $125,000 from general funds for contract grant writing assistance to help staff identify critical needs and eligible projects and also develop funding proposals to apply for these emergency drought funds. Over the past 18 months, staff and the consultant team identified over a dozen water/wastewater projects within our rural communities and worked with project proponents to develop these proposed projects into viable funding applications. To date, staff have assisted with the submittal of over a dozen funding applications for emergency drought funding. (Note: Some projects, such as the Knights Landing and Madison drinking water system replacement projects, were submitted to multiple funding programs such as DWR’s Small Communities Drinking Water program as well as the State Water Board’s SAFER program.)  As of January 4, 2023, six (6) projects totaling $4.686 million have been funded, two have been determined to be ineligible, and two project applications are still pending. 

Staff recommends that the Board defer allocation of the ARP Water/Waste Water funding until the two pending funding applications are resolved (est. timing: April 2023). A follow-up Water/Waste Water update will come to the Board in June 2023. 

American Rescue Plan - Quarterly Report through December 2022
The County of Yolo originally adopted ARP allocations at the Board of Supervisors meeting on September 28th, 2021. At the same meeting, the Board adopted a policy on the use of the American Rescue plan funds that required staff to provide a quarterly report. During the October 11, 2021, Board of Supervisors meeting, staff presented the first quarterly report to the Board as 2021-2022 was spent on determining project-level allocations of ARP funds within the prescribed categories that the Board adopted. 

The County Administrator's Office has been responsible for preparing contracts for the American Rescue Plan with support from County Counsel, General Services, and the Procurement Division. The Department of Financial Services is charged with reviewing expenditures associated with the ARP contracts to ensure that the costs are eligible and in compliance with the contracts prior to payment. The County Administrators' Office has been monitoring the performance of the entities under contract. 

ARP Terminology: 

Allocations
At this point, the County has allocated the entire amount of $42.8 million of ARP funds to different buckets for use. However, the County has still not committed all the funds to specific projects or programs, and $4.9 million remains shown in Attachment A. ARP Allocation Summary.  

The $4.9 million remains in the following categories:

At this time, staff do not recommend reallocating funds from these categories and would recommend continuing to bring these back to the Board as updates and recommendations arise.  

Expenditures
As part of the Board item, a Summary Report of the contracts has been included, which is shown in Attachment B. ARP Contracts and Expense Summary. At the last quarterly report, $3.1 million in ARP funds had been expended, representing 7.3% of the total amount of ARP funds. Through January 2023, $3.8 million in ARP funds have been expended, representing 8.9% of the total funding. However, there are quite a few significant projects that have not begun invoicing yet, which total a funding amount of $17,719,713. There are a couple of reasons for this; 1) contracts are still being drafted, and 2) projects are still in the construction/pre-work phase. As these larger projects start to invoice, the percentage of funds spent is expected to increase quickly. Below is an abbreviated list:

Performance Reporting
The County Administrator's Office and Financial Services collaborated to outreach to agencies that received funding to determine if they needed any assistance in reporting and invoicing. From this collaboration, we received 16 performance reports which can be seen in Attachment C. Performance Reports. 

Department of Financial Services