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2020-049 CARES ActDate: 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 Stuart.Birdseye@cityofdenton.com (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, Eddie Daffern, TML President Mayor, City of Staples Martha Castex-Tatum, Vice Mayor Pro Tem City of Houston Steve Adler, Mayor City of Austin Dee Margo, Mayor City of El Paso Jeff Williams, Mayor City of Arlington Dan Pope, Mayor City of Lubbock Karen Hunt, TML President-Elect Mayor, City of Coppell Ron Nirenberg, Mayor City of San Antonio Betsy Price, Mayor City of Fort Worth Joe McComb, Mayor City of Corpus Christi Ginger Nelson, Mayor City of Amarillo Harry LaRosiliere, Mayor City of Plano Jeff Cheney, Mayor City of Frisco Scott LeMay, Mayor City of Garland Joe Zimmerman, Mayor City of Sugar Land Rick Stopher, Mayor City of Irving George Fuller, Mayor City of McKinney Chris Watts, Mayor City of Denton Ron Jensen, Mayor City of Grand Prairie James D. Yarbrough, Mayor City of Galveston Toby Powell, Mayor City of Conroe Jane Hughson, Mayor City of San Marcos Kenny Phillips, Mayor City of Mobile City Henry Wilson, Mayor City of Hurst Linda Martin, Mayor City of Euless Cecelia Cissy Gonzalez-Dippel, Mayor City of Floresville Larry Vernon, Mayor City of Eastland Laurie Blanco, Mayor City of Dalworthington Gardens Tom Daly, Mayor City of Selma Roy Tovar, Mayor City of Waelder Don Denbow, Mayor City of Corsicana GeoJan Wright GeoJan Wright, Mayor City of Coffee City Flora Brady, Mayor City of Andrews Gerald Joubert, Mayor City of Forest Hill Lynn Ramsey Lynn Ramsey, Mayor City of Shamrock Bill Blackburn, Mayor City of Kerrville Andrew S. Friedberg, Mayor City of Bellaire Michel J. Bechtel, Mayor City of Morgan’s Point Dr. Ambrosio Hernandez, Mayor City of Pharr Michael Barnhart, Mayor City of Lake Dallas Manny Baeza, Mayor City of Marfa Susie Houston Susie Houston, Mayor Town of Laguna Vista Lane Horwood Lane Horwood, Mayor City of Sterling City Dorothy Welch Dorothy Welch, Mayor City of Splendora Steve Spicer, Mayor City of Jamaica Beach Lynda Lynn Lynda Lynn, Mayor City of Electra Garry Manitzas Garry Manitzas, Mayor City of Fair Oaks Ranch Glen Smith Glen Smith, Mayor City of Palacios Keith Short Keith Short, Mayor City of McLendon-Chisholm Cathy Young, Mayor City of Chillicothe David Rutledge David Rutledge, Mayor City of Bridge City Jim McInnis Jim McInnis, Mayor City of Hamilton Thomas G. Kolupski, Mayor City of Seabrook Jim McKenzie, Mayor City of Sweetwater Scott Neu, Mayor City of Lindsay Trey Mendez Trey Mendez, Mayor City of Brownsville Stephen Mason, Mayor City of Cedar Hill Doyle Robinson Doyle Robinson, Mayor City of Panhandle Pam Frederick Pam Frederick, Mayor City of Bullard Gilbert Gomez, Mayor City of Robstown Paul Johnson Paul Johnson, Mayor City of Jonestown BJ McGinnis BJ McGinnis, Mayor City of Blanket David Suarez, Mayor City of Weslaco Roger Shugart Roger Shugart, Mayor City of Brazoria Billy P.Davis Billy P. Davis, Mayor City of Crowley Cathy Skurow, Mayor City of Portland Gary Chumley Gary Chumley, Mayor City of Gatesville Stephen L. Santellana, Mayor City of Wichita Falls Lisa B. Pierce Lisa B. Pierce, Mayor City of Kirby David R. Turner David R. Turner, Mayor City of Odessa Martin Heines, Mayor City of Tyler George R. Haehn George R. Haehn, Mayor City of Buda Ritch Wheeler Ritch Wheeler, Mayor City of Shenandoah Dale Ross, Mayor City of Georgetown Carl Marino Carl Marino, Mayor City of Fayetteville Galen Mansee Galen Mansee, Mayor City of Stagecoach Mary Moore Mary Moore, Mayor City of Pearsall William D. Sciscoe, Mayor City of Dish Andrew L. Smith Andrew L. Smith, Mayor City of Hillsboro Emmanuel Wealthy, Mayor City of Wilmer Thurman Bill Bartie, Mayor City of Port Arthur Jeff Jordan, Mayor City of Kaufman Nancy Moore Nancy Moore, Mayor Pro Tem City of Tye Charles Bujan Charles Bujan, Mayor City of Port Aransas Joe Chow, Mayor Town of Addison Trudia Preston Trudia Preston, Mayor City of Goliad Frank George Frank George, Mayor City of Kirbyville Mark Groneman Mark Groneman, Mayor City of Vega Bob Bruggeman, Mayor City of Texarkana Anita Rodriguez, Mayor City of Yoakum Luis D. Carrera Luis D. Carrera, Mayor City of Cockrell Hill Brenda Gunter, Mayor City of San Angelo Jason Tabor, Mayor City of Santa Fe Nancy Ruckstaetter Nancy Ruckstaetter, Mayor City of Log Cabin Bruce Archer Bruce Archer, Mayor City of Mesquite Frank Moreno Frank Moreno, Mayor City of Crystal City Cyndie Rathbun, Mayor Town of Rancho Viejo Nick Sanders Nick Sanders, Mayor Town of Trophy Club Phyllis Santleben Phyllis Santleben, Mayor City of Castroville Harold D. Chandler, Mayor City of East Tawakoni Royking Potter, Mayor City of Shallowater Victor A. Contreras, Mayor City of Marion Janice Whitehead Janice Whitehead, Mayor City of Sealy Curtistene S. McCowan Curtistene S. McCowan, Mayor City of DeSoto Andy Williams Andy Williams, Mayor City of Nolanville Clarence Burns Clarence Burns, Mayor City of Linden Todd Purcell, Mayor City of Dripping Springs Lindsey L. Webb, Mayor City of Abernathy Oscar Trevino Oscar Trevino, Mayor City of North Richland Hills John Packer, Mayor City of Marble Falls Bruno Lozano, Mayor City of Del Rio James C. Samples James C. Samples, Mayor City of Hughes Springs Sam Miller Sam Miller, Mayor City of Sudan Becky Ames Becky Ames, Mayor City of Beaumont Jerry B. Dittrich, Mayor City of Benbrook Leroy Hughes Leroy Hughes, Mayor City of San Augustine Johnnie Hauerland, Mayor City of Meridian Terri Brown, Mayor City of Marshall Sara Post Meyer, Mayor City of Cuero Ray Smith, Mayor Town of Prosper George Rivera George Rivera, Mayor City of Palm Valley Allyson Crenshaw Allyson Crenshaw, Mayor City of Robert Lee Lewis Ivey Lewis Ivey, Mayor City of Diboll Geronimo M. Gonzales, Mayor City of Brownfield Tom Simons Tom Simons, Mayor City of Hereford Mark Turner Mark Turner, Mayor City of Wills Point Benjamin Gomez, Mayor City of San Benito Scott Anderson Scott Anderson, Mayor City of Patton Village Merle Aaron, Mayor City of Humble Jose Segarra, Mayor City of Killeen Scott Cain, Mayor City of Cleburne Jim Olk Jim Olk, Mayor City of Lucas cc: Texas Congressional Delegation Texas State Senate Texas House of Representatives Governor Strike Force to Open Texas Office of the Mayor 215 E. McKinney St., Denton, TX 76201  (940) 349-7717 OUR CORE VALUES Integrity  Fiscal Responsibility  Transparency  Outstanding Customer Service ADA/EOE/ADEA www.cityofdenton.com TDD (800) 735-2989 May 6, 2020 The Honorable Michael C. Burgess United States House of Representatives Washington, DC 20515 Via Email: rachel.huggins@mail.house.gov Dear Representative Burgess: I am writing to urge you to cosponsor and support the “Flexibility for Localities and Eligibility Expansion Act of 2020” (FLEX Act), 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. As you know, Denton's population is below this threshold, and as a result we didn't receive any direct allocation these funds. Representative Don Bacon introduced the FLEX Act (HR 6652) with ten original cosponsors, including your colleague, Representative Michael McCaul. This bipartisan legislation would amend the CARES Act by giving state and local governments additional flexibility in how funds can be used, including addressing revenue shortfalls due to COVID-19. The current law and associated Treasury Department guidance prohibits state and local governments from using CRF funds to offset lost revenues, a funding eligibility granted by Congress in the CARES Act to airlines and airports, among others. Representative Bacon’s bill would also explicitly allow the state and Denton County to share their CRF funds with Denton and other cities under 500,000 population. In Denton, in addition to closed business and dramatic declines in consumer and business spending, we have closed facilities, canceled events, programs, and other activities, all of which have adversely impacted city revenues as well as our budget. Enactment of this legislation would allow for cities, including Denton, to offset revenue shortfalls in taxes and fees collected, intergovernmental transfers, and dedicated revenue streams pledged for bond payments for the March 1-December 30, 2020 period. These changes, if adopted, would significantly strengthen our efforts to deal with the financial effects of COVID-19. Thank you for your consideration of our request to cosponsor HR 6652, and we thank you for your continued efforts on behalf of the City of Denton. Sincerely, Chris Watts Mayor