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06. APRA Funds and Vehicle Purchases Staff Report Date of Meeting: August 7, 2024 For: Honorable Mayor and Council From: Kyle Morell, City Administrator Subject: APRA Funding for Vehicle Purchases Background: In December 2022, as part of the 2023 budget approval, the Council designated the City’s ARPA funding to the Bliss Sewer Fund. The current balance of the APRA funding is $466,422.00. It's important to note that the Council took no official action to memorialize this designation. It was discussed as part of the 2023 budget, and the budget was approved without specifically mentioning this designation. When the federal government approved the distribution of ARPA funding, all recipients were given until December 31, 2024, to spend the funds or to obligate them and expend them by December 31, 2026. I have contacted The League of Minnesota Cities to seek clarification on what the federal government means by “obligate.” I believe that a signed contract with the contractor was needed stating the City’s intention to use the funds to pay for the work approved by the signed contract. The legislature's failure to approve a bonding bill means we will not meet this requirement by the end of the year. If obligate means designating the funds for a future project without an approved contract, then the City has met the federal requirements. As you are aware, the City has approved three significant equipment purchases, including a new plow truck and a fire department tanker and engine, totaling $1,531,603.58. Last year, the city received $176,529 from the State of Minnesota in Public Safety Aid, which can be used toward the purchase of new public safety vehicles. By applying this amount to the total purchase price of the three vehicles, the City’s obligation is reduced to $1,355,074.58. The attached spreadsheet demonstrates how using ARPA funding can significantly reduce the City's reliance on equipment certificates. If we were to use all of the ARPA funds for vehicle purchases, the amount of equipment certificates the City would need to issue would be reduced to $850,000. The 2025 draft preliminary budget presented in the packet falls under the partial ARPA funding chart. It calls for ARPA funding to pay for the plow truck and leaves the remaining funding for the sewer fund. Staff believes this is a beneficial compromise, as it uses federal funding to help lower our long-term debt obligation while still leaving funds for other important projects. This information is presented for your consideration. No action is needed at this meeting. I will continue to clarify whether a signed contract for service is needed to keep ARPA funds beyond December 31, 2024, and will update you as I learn more. Attachments: Vehicle Purchasing with APRA Funds PW Plow Truck FD Tanker FD Engine Sewer Funding Total 337,320.58$ 387,666.00$ 806,617.00$ ARPA 466,422.00$ 337,320.58$ -$ 129,101.42$ -$ 466,422.00$ PSA 176,529.00$ -$ 176,529.00$ -$ -$ 176,529.00$ EQ Cert -$ -$ 200,000.00$ 650,000.00$ -$ 850,000.00$ Cash -$ -$ 11,137.00$ 27,515.58$ -$ 38,652.58$ 337,320.58$ 387,666.00$ 806,617.00$ 0 PW Plow Truck FD Tanker FD Engine Sewer Funding Total 337,320.58$ 387,666.00$ 806,617.00$ ARPA 466,422.00$ 337,320.58$ -$ -$ 129,101.42$ 466,422.00$ PSA 176,529.00$ -$ 176,529.00$ -$ -$ 176,529.00$ EQ Cert -$ -$ 200,000.00$ 800,000.00$ -$ 1,000,000.00$ Cash -$ -$ 11,137.00$ 6,617.00$ -$ 17,754.00$ 337,320.58$ 387,666.00$ 806,617.00$ 129,101.42$ PW Plow Truck FD Tanker FD Engine Sewer Funding Total 337,320.58$ 387,666.00$ 806,617.00$ APRA 466,422.00$ -$ -$ -$ 466,422.00$ 466,422.00$ PSA 176,529.00$ -$ 176,529.00$ -$ -$ 176,529.00$ EQ Cert -$ 337,320.58$ 200,000.00$ 800,000.00$ -$ 1,337,320.58$ Cash -$ -$ 11,137.00$ 6,617.00$ -$ 17,754.00$ 337,320.58$ 387,666.00$ 806,617.00$ 466,422.00$ With Partial APRA Funding With APRA Funding No APRA Funding