Letter from Sonja Berndt on Best Use of American Rescue Plan Act (ARPA) Funds

August 13, 2021

Re:  City Council Meeting 8/16/2021 – Agenda Item #18:  Staff Recommendations for American Rescue Plan Act Appropriations

Dear Mayor Gordo and Members of the Pasadena City Council:

1. Introduction

Our City has received a lifeline from the federal government in extraordinary funds pursuant to the American Rescue Plan Act (“ARPA”) — $26 million this year and $26 million next year.  Last June 14^th, the Council requested staff to come back with a comprehensive scheme for expending these funds.  Mayor Gordo requested a “workshop-type” meeting so that the Council and the public could have input on proposed uses of these funds.

The staff report setting forth staff’s recommendations for expending the remaining $25 million was made publicly available late yesterday, 4 days before the Council would discuss these imprudent and inequitable recommendations.  Respectfully, this does not give most community members sufficient time to review and analyze the report before Monday’s meeting.  Moreover, allowing 2-3 minutes for community members to provide input is not a fair opportunity to be heard on how these funds should be spent to lift up the marginalized in our community and those who have been disproportionately impacted by the COVID pandemic.    

At the June 14^th meeting, many community members submitted correspondence and public comments recommending that the Council use the ARPA funds in an impactful way to bring about positive change such as funding effective, evidence-based, affordable, Public Health programs like Advance Peace and CAHOOTS (Crisis Assistance Helping Out On The Streets).  The ARPA highly encourages the use of funds in this manner, which promotes racial and socioeconomic equity.

Please reject the staff recommendations discussed below and direct staff to conduct a community forum so that the public and experts can weigh in on how the City can best use these funds to help our residents and to promote community equity.

1. Background – Eligible Uses of ARPA Funds

The Interim Final Rule (“IFR”) is the Treasury Department’s guidance for allocating the ARPA funding provided to state and local governments.  It discusses numerous eligible uses for the ARPA funds, many of which would provide critical programs that our most vulnerable and marginalized residents need to move forward from the pandemic.  The ARPA funds must be spent within the four eligible uses identified in the statute—”(1) to respond to the public health emergency and its negative economic impacts, (2) to provide premium pay to essential workers, (3) to provide government services to the extent of eligible governments’ revenue losses, and (4) to make necessary water, sewer, and broadband infrastructure investments.”  (IFR, pp. 78-79.)  Significantly, at the outset, the IFR states that “[t]he ARPA provides a substantial infusion of resources to meet pandemic response needs and rebuild a stronger, more equitable economy as the country recovers.”  (IFR, p. 8, emphasis added.)

ARPA funds may be used to respond to the public health emergency or its negative economic impacts, including for one or more of the following purposes:

1. COVID-19 Response and Prevention

Funds may be used for “COVID-19 related expenses in congregate living facilities, including skilled nursing facilities, long-term care facilities, incarceration settings, homeless shelters, residential foster care facilities . . . and other group living facilities.”  (IFR, p. 138, see also p. 18.)  The funds may also be used for COVID-19 related mental health treatment and other behavioral services. (IFR, p. 140.)

2. Assistance to Households

Assistance to households facing negative economic impacts due to COVID-19 is also an eligible use. This includes food assistance; rent or mortgage assistance; legal aid to prevent eviction or homelessness; cash assistance; and job training.  (IFR, p. 33.)

3. Uses to Address Disproportionately Impacted Communities

The IFR goes into great detail about the disproportionate public health and economic impacts of the pandemic on communities disadvantaged before it began.  “Low-income communities, people of color, and Tribal communities have faced higher rates of infection, hospitalization, and death, as well as higher rates of unemployment and lack of basic necessities like food and housing.”  (IFR, p. 5.)  To address these impacts and the role of pre-existing social vulnerabilities in driving these disparate outcomes, the IFR “identifies a broader range of services and programs that will be presumed to be responding to the public health emergency when provided in a Qualified Census Tract (QCT) [or] to families living in QCTs. . . .” [1] (IFR, pp. 21-22.)  These include:

(i) Programs or services that facilitate access to health and social services such as assistance applying for public benefits; housing services to support healthy living environments conducive to mental and physical wellness; and “evidence-based community violence intervention programs to prevent violence and mitigate the increase in violence during the pandemic.”  (IFR, pp. 22-23, 141-142.)

(ii) Programs or services that address housing insecurity, lack of affordable housing, or homelessness where the economic impacts of COVID-19 have likely been most acute, such as supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless; development of affordable housing to increase supply of affordable and high-quality living units; and housing vouchers, residential counseling or housing navigation assistance.  (IFR, pp. 39, 142.)

(iii) Programs or services that address or mitigate the impacts of COVID-19 on education, such as new or expanded early learning services; assistance to high-poverty school districts to advance equitable funding across districts and geographies; and educational and evidence-based services to address the academic, social, emotional, and mental health needs of students.  (IFR, p. 142.)

(iv) Programs or services that address or mitigate the impacts of COVID-19 on childhood health or welfare, such as new or expanded childcare; programs to provide home visits by health professionals and social service professionals to individuals with young children to provide education and assistance for economic support, health needs, or child development; and services for child welfare-involved families and foster youth to provide support and education on child development, positive parenting, coping skills, or recovery for mental health and substance use.  (IFR, pp. 142-143.)

III.     Staff’s Imprudent and Inequitable Recommendations for Expending the                  Remaining $25 million in ARPA Funds Received this Year

9. $9.8 Million to the General Fund

Staff recommends that the General Fund receive a huge portion of ARPA funds to “backfill revenue losses, maintain essential services, and eliminate the projected operating deficit for FY22.”  (Staff Report, p. 3.)  Since our Housing Department receives miniscule General Fund appropriations ($1.475 million for FY 2022) and our Public Health Department receives none, our vulnerable and marginalized communities will see little benefit from this recommended appropriation.

Sections 602(c)(1)(C) and 603(c)(1)(C) of the ARPA does allow local government to use ARPA funds to provide government services to the extent of the reduction in revenue experienced due to COVID-19 and to avoid cuts in government services.  (IFR, pp. 51-53.)  “These budget shortfalls are particularly problematic in the current environment, as State, local, and Tribal governments work to mitigate and contain the COVID-19 pandemic and help citizens weather the economic downturn.”  (IFR, p. 52, emphasis added.)  Such “government services” include critical infrastructure, health services, education services and public safety programs.  There is a detailed 10-page explanation of this eligible use in the IFR, but there is no discussion included in the staff report.  Staff should be directed to explain how this huge reimbursement is “helping citizens weather the economic downturn.”

Moreover, while staff says this General Fund appropriation is to “maintain essential services” and staff predicts a FY22 operating loss of $9.77 million, staff clearly needs to explain the references in Attachment A that the FY22 forecast includes over $21 million in “Debt Service,” $10 million of which is a “contribution to RBOC to cover Debt Service and Amerifest.”  This is because “expenses associated with obligations under instruments evidencing financial indebtedness for borrowed money would not be considered the provision of government services, as these financing expenses do not directly provide services or aid to citizens.  Specifically, government services would not include interest or principal on any outstanding debt instrument. . . .”  (IFR, p. 60, emphasis added.)  Unless staff can adequately explain how this recommendation qualifies as an eligible use under the IFR, and how it can include $21 million in “debt service” to justify recommending this appropriation as an eligible use, it does not appear to be an eligible use.

8. $8.539 Million to the Capital Improvement Program Budget

Staff recommends another huge appropriation of the ARPA funds for sidewalk improvements, bridge enhancements, traffic signals, etc.  Are these enhancements and improvements necessary at a time when we are still suffering the economic effects of the pandemic?  We are left to speculate because there is no discussion in the staff report about the urgency of any of these improvements.

Further, are these improvements more important than sheltering our nearly 300 unsheltered persons or providing assistance to housing-insecure persons?  Instead, the City should create more interim housing and supportive housing and services for our unhoused, more affordable housing for our low-income residents, and more community programs that address health and mental health issues and violence prevention, particularly in our underserved communities.

2. $2.4 million to Remodel Fire Station #38 and for Seismic Upgrade of       Fire Station 37

With regard to staff’s recommendation to appropriate $400,000 of the ARPA funds for seismic work for Fire Station 37, this may be reasonable provided staff demonstrates that this work is urgent and cannot be included in the $1.5 million already budgeted for this fire station’s improvements.

As for the $2 million appropriation to remodel Fire Station 38, staff asserts the improvements (remodeling the kitchen and dining and living areas, etc.) are “necessary to maintain operational standards of the facility,” but provides no showing to support that assertion.  This Council has already approved $1 million for FY22 to remodel the Police Department building to provide “an open floor plan,” furniture, etc.  This continuing effort to prioritize buildings over people even during a pandemic needs to stop.  We have nearly 300 unsheltered persons experiencing homelessness and thousands who are housing insecure who are more deserving of assistance.

1. $550,000 to Support the Second Pasadena Outreach Response Team           (“PORT”) in FY23 and FY24

Recently, the Council approved using some of the Police Department’s excess operating budget funds to create a second PORT.  Staff now recommends using $550,000 of the ARPA funds to support the second PORT for FY 23 and FY24.  Staff needs to explain to Council and the public: “What is the rush?”  According to a PORT PowerPoint produced in response to my Public Records Act request to the Public Health Department, in addition to case management, “PORT 2” will respond to calls for service in place of an armed police officer.  For many months, the community has asked the City to explore a mobile crisis intervention unit like CAHOOTS that would be available 24-7 to handle non-life-threatening calls for service for persons experiencing a mental health or substance use disorder crisis.  PORT clearly is not that, as its work hours are Monday through Thursday and every other Friday 8-5 pm.

While PORT does good outreach work with persons experiencing homelessness in our City, there has never been a discussion of the best and most cost-efficient way to respond to situations involving persons suffering from a mental illness or a substance use disorder crisis.[2]  I do not oppose funding a second PORT unit, but not at the expense of creating a CAHOOTS-model, 24-7 crisis response in our City.  Funding must be included for a 24-7 response for all non-life-threatening situations involving persons suffering from a mental illness and/or substance use disorder crisis.  Because (1) there has been no discussion of a CAHOOTS-model program, (2) there is no explanation of any urgency for this appropriation for FY23 and FY24, and (3) there are much greater needs for immediate action to fund programs for our unhoused, housing insecure and persons disproportionately affected by policing this recommendation should be rejected.

1. $630,000 to the Housing Department’s FY22 Operating Budget

The $400,000 appropriation staff recommends for bridge housing for PCC students is far too small to address the need of our nearly 300 unsheltered residents.  Moreover, per the 2020 Homeless Count, 87% of our homeless population was age 25 and over, older than most PCC students.  While I support the $400,000 if needed to provide services to PCC students, that has to be a starting point.  The City needs to become serious about meeting the urgent unmet needs of our unhoused residents.

As for the recommendation of $150,000 “to fund additional eviction prevention legal services,” I do not oppose that recommendation, but request the Council to inquire of staff how it arrived at that figure and if that will be sufficient to provide legal services for all who will need them.

The $80,000 recommended appropriation for the addition of a second HOPE Team case manager from Union Station is problematic.  Many community members have already vociferously argued for a crisis intervention response that does not include a uniformed officer for non-life-threatening situations.  This would avoid needless altercations involving persons suffering from mental illness and a waste of taxpayer funds resulting from arresting these persons for assaulting a police officer who should not have been deployed in the first place.  Community members were promised that CAHOOTS would be agendized at the Public Safety Committee and are still waiting.[3]  This recommendation should be rejected until CAHOOTS is agendized, discussed, and the public and experts have a chance to weigh in on what is the most beneficial and cost-effective crisis intervention model for our persons suffering from mental illness and/or a substance use disorder.

1. $200,000 to Support Continued Efforts to Reduce Community Violence

Staff recommends a $200,000 appropriation to the General Fund, City Manager’s Office budget, to support continued efforts to prevent/reduce community violence.  Ricky Pickens and his associates gave a PowerPoint presentation to the Public Safety Committee on July 21^st.  The program appears to be a good investment in the community.  But the $200,000 appropriation seems to be far short of what is needed to sustain this program.  Staff should be directed to provide a detailed explanation of the funds needed to make a significant community impact for a sustained period of time.

1. Conclusion

For all of the stated reasons, the staff’s recommendations discussed herein should be rejected.  Staff should be directed to conduct a community forum so that experts and the public can provide input on how the City can best use these funds to assist our residents and to promote community equity.  Thank you.

Sincerely,

Sonja K. Berndt, Esq. (retired)

[1] Recipients may also provide these services to other populations/geographic areas disproportionately impacted by the pandemic if they can show that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations/geographic areas to be served.  (IFR, p. 22.)

[2] In the PORT PowerPoint, costs for PORT #1 are listed as over $314,000 (for an undefined period), so it is not clear that the $275,000 per year appropriation staff requests would be sufficient to cover PORT 2’s expenses.

[3] On June 7, 2021, the Council promised the community that a CAHOOTS-model crisis intervention response for our City would be agendized in the Public Safety Committee.  Mayor Gordo has not done that.  Even PPD Commander Clawson has said that CAHOOTS for our City should be discussed.