TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: APRIL 28, 2026
Reviewed by:
City Manager: AP
SUBJECT:
Title
AMERICAN RESCUE PLAN ACT (ARPA) UPDATE AND REALLOCATION OF UNSPENT FUNDS (FUNDING SOURCE: AMERICAN RESCUE PLAN ACT FUND)
Body
SUMMARY
On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law by President Biden. In May 2021, The United States Department of the Treasury (Treasury) published the Interim Final Rule (IFR) describing eligible and ineligible uses of funds (as well as other program provisions), sought feedback from the public on these program rules, and began to distribute funds.
On January 6, 2022, the Treasury issued its Final Rule, which took effect on April 1, 2022. The final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback received during the comment process. The final rule provides state and local governments with increased flexibility to pursue a wider range of uses, as well as greater simplicity so governments can focus on responding to the crisis in their communities and maximizing the impact of their funds. Among other clarifications and changes, the final rule offers a standard allowance for revenue loss of up to $10 million. Recipient agencies that select the standard allowance may use that amount, in many cases their full award, for general government services, with streamlined reporting requirements. The City of Claremont received $8.7 million in ARPA funding and is therefore eligible to use the standard allowance for the full amount of the City's APRA allocation.
In March 2022, the City conducted two surveys with community members and businesses, asking for input on what ARPA funding priorities they would like to see for the community. The 385 community respondents ranked thirteen potential uses of the funding in the Claremont community which were most important to them, while twenty-seven businesses provided feedback on the types of assistance that would be helpful for their businesses/ organizations now and in the future.
In May 2022, the City Council authorized the appropriations of $4.5 million in ARPA funds and provided direction to staff to return with recommendations on the remaining $4.1 million. Throughout the 2022-24 Budget period, additional funds were allocated and appropriated by the City Council.
In June 2024, the City Council made additional allocations and appropriations of ARPA funds that would be included in the 2024-26 Budget.
In November 2024, the City Council confirmed the determination that these ARPA funds would be claimed under the revenue replacement definition established by the Treasury pursuant to the 2022 Final Rule and that the standard allowance calculation would be applied to calculate the revenue loss. Additionally, the City Council made further reallocations of unspent ARPA funds and approved the obligation of any unspent funds through Inter-Agency Agreements (IAAs) that would satisfy requirements set by the Treasury’s Obligation IFR.
These IAAs were executed between the City and the Departments to obligate funds. The various SLFRF rules will not allow any new program or project to be created after December 31, 2024, when the obligation deadline expired. Only those programs and projects that were included in the IAAs are eligible for the use of remaining ARPA funds after the obligation deadline. The IAAs also provide the City the ability to amend as needed with respect to increasing or decreasing budgets up and until December 31, 2026. ARPA funds unspent by December 31, 2026 need to be returned to the Treasury.
The purpose of this report is to provide recommendations to reallocate funds that are projected to be unspent by December 31, 2026 to other programs or projects obligated in the existing inter-agency agreements that would result in the funds being spent prior to the deadline.
RECOMMENDATION
Recommended Action
Staff recommends the City Council:
A. Reallocate and reappropriate unspent American Rescue Plan Act appropriations of $142,036 to the Police Department Women’s Locker Room Addition Project as allowed by the Obligation IFR;
B. Authorize the City Manager to execute an amendment to the Inter-Agency Agreement with the City Manager’s Office increasing the budget amount for the Women’s Locker Room Addition to the Claremont Police Station by $142,036;
C. Authorize the City Manager to execute an amendment to the Inter-Agency Agreement with the Community Development Department reducing the budget amount for the Business Grant Program by $65,000 and reducing the Commuter Rebate Program by $56,839;
D. Authorize the City Manager to execute an amendment to the Inter-Agency Agreement with the Community Services Department decreasing the budget amount for the Sign Replacement Program by $11,806; and
E. Authorize the City Manager to execute an amendment to the existing professional services agreement with Data Climb, LLC, increasing the compensation by $85,000 for a total contract amount of $340,108.
Body
ALTERNATIVE TO RECOMMENDATION
In addition to the recommendation, there is the following alternative:
• Request additional information from staff.
FINANCIAL REVIEW
The staff cost to prepare this report is estimated at $730 and is included in the operating budget of the Financial Services Department.
ANALYSIS
The City of Claremont received a funding allocation of $8,675,598 in ARPA Funds from the US Treasury in two installments in July 2021 and July 2022. As of the date of this report, the City has recorded that $7,537,839 has been spent with $1,137,759 remaining to be spent by the December 31, 2026 deadline. The table below summarizes the status of these funds.
|
Status of Funds |
Amount |
|
Funds expended (spent) |
$7,537,839 |
|
Remaining funds obligated through Inter-Agency Agreements |
$1,137,759 |
|
Total: |
$8,675,598 |
Reallocation of Unspent ARPA Funds
Under the SLFRF program, recipients were required to obligate all award funds by December 31, 2024, and expend funds by December 31, 2026. Appropriations to various projects were made by the City Council in previous years and obligated through IAAs prior to the obligation deadline. Staff has evaluated the potential to spend these funds prior to the expenditure deadline and is recommending a reallocation of remaining obligated funds from programs or projects where unlikely to be spent to another program or project. A summary of the funds available for reallocation are provided in the table below with the project they are recommended to be reallocated to.
|
Department |
Program/Project Description |
Reallocation |
|
Community Development |
Business Grant Program |
($65,000) |
|
Community Development |
ADU Pre-Approved Designs |
($155) |
|
City Manager’s Office |
Council Chamber Redesign |
($8,235) |
|
Community Development |
Commuter Rebate Program |
($56,839) |
|
Community Services |
Sign Replacement Program |
($11,806) |
|
City Manager’s Office |
Police Department Women’s Locker Room |
$142,036 |
ARPA funds obligated to the Business Grant Program in the amount of $65,000 are expected to be unspent due to the majority of grantees not participating in the internship (IC2) program. Savings of $155 are being recognized from the ADU Pre-Approved Designs program. Savings of $8,235 were also recognized from the project to upgrade and redesign audio visual equipment in the Council Chamber. In January, the City Council directed staff to keep participants in the Commuter Rebate Program at their current level. This resulted in an estimated $56,839 in savings from the funds obligated to that program. Savings of $11,806 were recognized from the Sign Replacement Program funds previously obligated.
As a result of this analysis, staff is recommending the reallocation of $142,036 from the programs and projects described above to fund the Police Department Women’s Locker Room Addition. This reallocation meets the guidelines of the Treasury’s Obligation IFR and will ensure that ARPA funding is spent prior to the expenditure deadline of December 31, 2026.
Staff will continue to monitor the spending of the remaining ARPA funds and will return to the City Council with recommendations for further reallocations if needed. Programs or projects that may be at risk of not spending their full allocation could include Community Based Organization (CBO) Funding and Homeless Services Funding as well as funds allocated to implement Traffic Calming Measures.
Contract Amendment
Additionally, staff is requesting an amendment to the contract with Data Climb, LLC in the amount of $85,000. Data Climb, LLC provides consulting services for the implantation of the Financial ERP System upgrade that is also obligated with ARPA Funds. The contract increase will use funds already obligated and appropriated to the ERP Project and will not require any additional funding and will use expected savings from the contracted days with Tyler Technologies who is also contracted for this project. The contract amendment will increase the total compensation for Data Climb, LLC to $340,108 and is expected to be spent prior to the expenditure deadline of December 31, 2026.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Sustainable City Plan, Economic Sustainability Plan, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director