Suamico holds off using ARPA funds
By Kevin Boneske
SUAMICO – Village officials aren’t in a hurry to spend the more than $1.3 million Suamico is expecting in federal grant money from the American Rescue Plan Act (ARPA).
Village Administrator Alex Kaker informed the village board last month the village received its first of two payments of $683,066 late last month, with the money placed into a segregated money market account with Fortifi Bank.
The second payment is expected around late June 2022.
Kaker said ARPA funds may be spent through the end of 2026, but they must be obligated for use by the end of 2024.
He said any funds not obligated or expended by the deadlines would have to be returned to the U.S. Treasury.
ARPA was enacted into law in March in response to the COVID-19 pandemic.
Based on the information provided by the federal government, Kaker said there does not appear to be any requirement for the village to use any funds for a particular purpose.
“Under ARPA, the local governments have several opportunities to use that funding,” he said.
Kaker said the village could use ARPA dollars for public health/negative economic impacts, premium pay, revenue loss and investments in water, sewer and broadband.
He said an “interim final rule” from the federal government on using ARPA funds “gives recipients broad latitude to use funds for the provision of government services to the extent of reduction in revenue.”
“Government services can include, but are not limited to, maintenance of infrastructure or pay-go spending for building new infrastructure, including roads,” Kaker said. “However, paying interest or principal on outstanding debt, replenishing rainy day funds or other reserve funds, or paying settlements or judgments would not be considered the provision of a government service.”
As a result, he said the village couldn’t apply APRA funds toward paying the current debt.
However, Kaker said the village has “some substantial road improvement projects” planned in the future, such as the expansion of Lineville Road, for which ARPA funds could be allocated if the board chose to do so.
Based on the calculation method the village received from the U.S. Treasury, he said Suamico had a revenue loss for 2020 of around $440,000.
When also calculating revenue losses for 2021, 2022 and 2023, Kaker said the village could be able to claim its entire ARPA allocation of $1,366,133 as revenue loss.
“So in theory, you could take that $1.3 million – invest it, earn some interest on it – and then apply it to that County M (Lineville Road) expansion project,” he said. “That’s just one option for you.”
Plans to expand Lineville Road call for the project to be split into two portions.
Work on the section from Velp Avenue to Belmont Road would begin in 2024, with the portion from Velp Avenue to West Deerfield Avenue scheduled for 2025.
Kaker said the village has plenty of time before it has to decide how to spend the funds.
“Maybe it would be prudent for us to hold off for a little bit before we make any final decisions,” he said.
Kaker said the League of Wisconsin Municipalities suggested each municipality start with the revenue loss calculation because that option creates the most spending flexibility.
“There are a lot of different projects that we could probably allocate this to,” he said.
Some board members expressed concerns about using ARPA funds.
Trustee Michelle Eckert referred to the village’s use of those funds as “dancing with the government devil.”
“We need to be careful,” she said. “We need to know all the strings attached.”
Laura Nelson – who resigned as village president, effective at the end of the meeting – referred to ARPA funds as a “bait and switch.”
“Once you have the money in your pocket – and of course it’s tantalizing, you want to use – and then they’ve got you roped in, and suddenly, now all the regulations come in and the rules,” she said. “You’ve spent some, or you’ve targeted it (for use), you’re under their grasp, and now you’ve got to dance to their tune.”
Trustee Jason Ward said the Lineville Road expansion is scheduled within the timeframe of when the ARPA funds would have to be used, and the project is far enough in the future for the village to find out what strings could be attached to the funds.
Trustee Sky Van Rossum said the village would not have to spend the ARPA funds if there are concerns.
“We just put it in an interest-bearing account and … see where this goes,” he said.
Van Rossum said there is still a lot to learn about how the ARPA funds may be used.
He said businesses in Suamico “took an inordinate hit” because of the COVID-19 pandemic, and he suggested looking into how the ARPA funds could be used to help existing businesses.
With no action taken on how to use the funds, Kaker said he would bring the matter back to the board for future consideration.