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2020-049 CARES Act[Icon] Date: May 8, 2020 Report No. 2020-049 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Provide updates to the City Council regarding the federal CARES Act and COVID-19 funding opportunities and requests BACKGROUND: The CARES Act of 2020 appropriated coronavirus relief funding for all 50 states and local governments with populations above 500,000. Within the Act, the State of Texas was eligible to receive an estimated $11.243 billion for coronavirus response activities while Denton County was eligible to receive an estimated $145.9 million. The CARES Act does not require state governments to make their funding directly available to subsidiary local governments. The City of Denton, and its federal and state legislative consultants, will continue to advocate for all local governments to be eligible for direct federal funding in future federal legislation in addition to advocating for the State of Texas to provide direct pass-through CARES Act funding to local governments with a population under 500,000. City staff will continue to identify City programs that are eligible to receive these funds, while also pursuing other funding opportunities as they become available. This recurring report will update the City Council on the status of CARES Act related funding and additional opportunities that may have been identified. DISCUSSION: The following updates are provided for the week of May 4 through May 8, 2020. CARES Act Funding From the State of Texas – On May 5, 2020, Mayor Watts joined a Texas Municipal League initiative for mayors across the state to make a formal request to Governor Abbott (Attachment 1) to prioritize the creation of guidelines for how local governments with populations under 500,000 may apply for CARES Act funding through the State of Texas (of which Texas was granted over $8 billion). The letter notes the impact that COVID-19 has had on cities regardless of their population size and emphasizes the leading role all cities will play in sparking economic recovery and leading the state out of the pandemic. This letter was transmitted to the Governor on Thursday, May 7. Request for Support for FLEX Act – On Wednesday, May 6, Mayor Watts submitted a letter (Attachment 2) to the Office of Representative Michael Burgess requesting his support for the Flexibility for Localities and Eligibility Expansion Act of 2020 (FLEX Act). The FLEX Act is a bipartisan bill proposing amendments to the recently-enacted CARES Act and its provisions regarding the $150 billion Coronavirus Relief Fund (CRF), which is providing assistance to states and to cities and counties over 500,000 population. The bill would explicitly allow the State of Texas and Denton County to share their CRF funds with Denton and other cities under 500,000 population. It would also modify the CARES Act to allow states and local governments to use CRF funds to offset lost revenue due to COVID-19. Staff will continue to monitor this legislation. Date: May 8, 2020 Report No. 2020-049 CARES Act NEA Grant Eligibility – Council Member Meltzer asked if the City of Denton would be eligible for grants made available through the National Endowment for the Arts (NEA) from the CARES Act. The NEA released guidelines for the CARES Act grants in early April. To be eligible for an NEA grant, organizations must: Be a nonprofit, tax-exempt 501(c)(3), U.S. organizations; units of state or local government; or federally recognized tribal communities or tribes; Have received an Arts Endowment award within the past four years; Meet the NEA legal requirements; Have submitted final reports for all previous awards received. Based on the criteria of having to have received an Arts Endowment award within the past four years, the City of Denton is not eligible to apply directly. CARES Act Funding from the State of Texas for ESG The CARES Act (March 27, 2020) included $4 billion to be distributed through the federal Emergency Solutions Grant (ESG) Program to provide services to help persons that are at-risk of homelessness or homeless quickly regain stability in permanent housing. • $38,525,059 in ESG CARES was distributed by HUD directly to several cities and counties in Texas. Based on formula allocations, the City is not eligible for direct allocations from HUD. • $33,254,679 was allocated to the State through the Texas Department of Housing and Community Affairs (TDHCA). The City is eligible to apply for State ESG funding. TDHCA allocated $13,329,434 to existing ESG Subrecipients. Denton County Friends of the Family, Inc. has conditionally been awarded ESG CARES First Allocation funds in the amount of $225,055. TDHCA allocated $16,377,511 for Continuum of Care (CoC) lead agencies to award through a CoC award process. Out of the $16,377,511 allocated to all CoC’s in Texas by TDHCA, there is $6,928,889 in ESG-CV grant funding available for eligible agencies in the Texas Balance of State Continuum of Care (TX BoS CoC). After consultation with local agencies and the United Way of Denton County which is the backbone agency for the Denton County Homelessness Leadership Team (DCHLT), Community Development has submitted a Letter of Intent to apply for the ESG- CV funds allocated to the TX BoS CoC lead agency, Texas Homeless Network. Staff will work with local agencies to apply once the TX BoS CoC releases the ESG-CV grant funding application. Additional Funding Opportunities – Finance staff has also learned this week that the Fire Department may be eligible for additional CARES act funding through a second round of disbursement from the Department of Health and Human Services. Staff submitted the application and supporting documentation this week. Round 2 eligibility and allocation amount will be determined by looking at the money received from Round 1 and the Fire Department’s total 2019 revenue. Staff will update Council as eligibility and funding details are received. The chart below provides a summary of grant activity. Date: May 8, 2020 Report No. 2020-049 ATTACHMENTS: 1. Texas Municipal League Funding Letter 2. Letter of support for HR 6652 STAFF CONTACT: Stuart Birdseye Assistant to the City Manager [email protected] (940) 349-8009 REQUESTOR: Staff initiated PARTICIPATING DEPARTMENTS: City Manager’s Office, Public Affairs, Economic Development, Finance STAFF TIME TO COMPLETE REPORT: One hour May 7, 2020 Dear Governor Abbott, First, thank you for your guidance and leadership during this uniquely challenging time. As mayors from cities across Texas, we fully understand the need to revitalize economic opportunity for all Texans while also ensuring we are doing all we can to protect public health by stopping the spread of COVID-19. We stand ready to assist you in this endeavor in every way possible. On March 27th, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, which provided over $2 trillion in emergency relief funds to help mitigate the financial harm caused by COVID-19. Included in the funding was $11.24 billion from the Coronavirus Relief Fund (CRF), which was split between the state of Texas and local governments in Texas with populations exceeding 500,000. While the six largest cities in Texas received a direct allocation of this funding from the federal government, no other Texas city has received CRF revenue to assist with disaster response. Needless to say, the virus representing our common enemy at the moment does not acknowledge city boundaries or population distinctions. Every single Texas city has a role to play in the battle for our state’s health and prosperity. To that end, we’ve been encouraged to learn that your office is currently establishing a program for the distribution of a portion of the state’s revenue received from the CRF to cities with populations under 500,000. This funding is critical to support Texas cities and the services they are providing on the front lines of the COVID-19 emergency. We ask that you consider allowing any funds received by Texas cities to be used in the most flexible manner permitted by law. Though the U.S. Department of Treasury’s guidance prohibits the use of CRF funds for revenue replacement of budget shortfalls in governments’ budgets, there are ongoing discussions at the congressional level about potentially expanding permissible CRF expenditures to include revenue replacement. Should federal legislation allow for increased expenditure flexibility, we request that any state program follow suit. However, we are concerned that guidelines on how to apply for that funding have not yet been released to the public. Cities are now in the midst of preparing budgets, and barring CRF information, cities are left with making tough budgetary decisions that affect their entire communities and organization. Furthermore, there is no clear indication on where cities, that are under the 500,000-population requirement, but fall within a county receiving assistance from the CRF, should apply for funding. These cities are unsure on whether to work with the state or with their county on financial assistance. We ask that application guidelines, including a clarification for cities within a 500,000-population county, be published swiftly so that cities can continue to plan and provide public services without serious interruption. Texas cities are in a unique position to both stem the tide of COVID-19 in Texas, and to help spark our economic recovery. With the necessary resources, we are confident that Texas cities will lead the state back towards a prosperous and vibrant future. Sincerely,
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