American Rescue Plan Act Phase 2
Council Adopted, Summary
The City Council Adopted $43 million of new spending from the American Rescue Plan Act Fund on May 26, 2022.
American Rescue Plan Act Funding for Minneapolis
The American Rescue Plan Act (ARPA) was signed into law in March 2021, providing Minneapolis with $271 million through the Coronavirus State and Local Fiscal Recovery Fund. The Mayor's Recommendations for spending the remaining unobligated funds from this legislation are detailed below, in addition to a summary of the process and appropriations made to date.
ARPA funds can be used to cover costs incurred between March 3, 2021 and December 24, 2024. The U.S. Treasury has issued guidance on the eligible uses and intended goals for these funds:
- Fight the pandemic and support families and businesses struggling with its public health and economic impacts,
- Maintain vital public services, even amid declines in revenue, and
- Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity
Minneapolis has planned to direct some ARPA funds to specific proposals focused on Economic Recovery, Public Safety, Climate and Public Health, and Housing and Homelessness and the remaining funds on replacing lost City revenue. The three year plan for utilizing ARPA funds to replace lost revenue was adopted as a part of the Five Year Financial Direction in the 2022 Council Adopted Budget, and will be updated annually as revenue and spending projections are finalized.
Proposals to address the impacts of the pandemic and invest in an equitable recovery have been made in several steps:
- Phase 1 in Summer 2021
- Interim Appropriations in the Fall and Winter of 2021
- Phase 2
On July 2nd, 2021 the City Council Adopted a series of proposals to be funded with American Rescue Plan Act dollars in the first phase of decision-making. View the final financial schedule showing spending by Department and year. A record of the public comments was collected as a part of this decision-making.
At that time, it was recognized that tension existed between getting support funding into the community quickly and conducting robust engagement with residents and other jurisdictions. To balance those two interests Minneapolis chose to do two phases of decision-making on ARP spending. Proposals in the first phase focused on solving the following problems:
- Housing instability;
- Small business closures and financial stress;
- Business, non-profit, and public organization's capacity and preparation for the lifting of social distancing measures; and
- Responding to the nationwide increase in violent crime.
These proposals were authorized through a budget decision-making process that began with a Mayor recommendation in early June that utilized the work done by the subject matter experts and included input from Council and staff, and then went to City Council for amendments and adoption. A total of $101.966 million was approved to be spent in 2021-2024 in phase 1, less than half of the $271 million awarded to the City of Minneapolis. Spending in 2022-2024 is related to staffing costs associated with implementing programs funded in phase 1.
Several appropriations and actions have been taken in the time since Phase 1 passed, but prior to Phase 2. These include:
- $11.5 million - In the fall of 2021, several projects needed funding prior to Phase 2 allocations:
- $6 million for shelter capital improvements (Including Simpson Shelter)
- $3.2 million for Minneapolis Parks and Recreation Board Youth Investments,
- $1.25 million for city capacity surrounding employee COVID-19 protection. and
- $1 million for tenant eviction representation.
- $3.75 million - As part of the 2022 City Budget, the City Council approved $3.75 million dollars for violence prevention.
- $119 million - The 2022 City budget includes $47 million to make up for lost revenue, and the Mayor has recommended $72 million to make up for lost revenue in 2023-2024.
- $7.8 million - Many of the Phase 1 appropriations did not finish their work in 2021 so funding was "rolled over" into 2022. Projects that finished in 2021 with unspent money, projects with unspent staff money, and projects with are no longer proceeding allowed for some unspent money to be redistributed. The amount to be redistributed is approximately $7.8 million.
The total amount still left to spend is approximately $43 million.
Total ARP Budget by Goal Area, Current
Includes Phase 1 appropriations as modified by the rollover process and interim appropriations from the Fall and Winter of 2021. $109 million detailed below, plus the $119 planned for revenue replacement leaves $43 million left to be appropriated in Phase 2.
Phase 2 decision-making has been an ongoing process since the fall of 2021. The public was asked for input through a survey and the interactive American Rescue Plan Act Spending Public Survey Results were used to inform decision-making. Project proposals were collected from city staff and community organizations. We have also been monitoring Phase 1 projects implementation for feasibility and learning from the experiences of City staff implementing prior proposals. All of these pieces have been used to evaluate and select proposals. Phase 2 appropriations also include reallocating $7.5 million in funding from three Phase 1 Housing & Homelessness initiatives to new or expanded Housing & Homelessness initiatives in Phase 2 (not reflected in the graph below).
Below you will find summaries of projects by goal area as well as links to project details.
Housing and Homelessness - $5,168,853
Federal guidance determines that the Coronavirus State and Local Fiscal Recovery Funds may be used to respond to the public health emergency or its negative economic impacts. These funds may be used to serve communities that were disproportionately impacted by the COVID-19 pandemic, specifically through the development of affordable housing and support for individuals experiencing homelessness.
The Council approved spending $12.7 million to increase the availability of affordable rental housing, and affordable homeownership opportunities, catch up on a backlog of housing inspections, and house people experiencing homelessness through innovative and cross departmental programing.
Public Safety - $6,460,000
Federal guidance determines that the Coronavirus State and Local Fiscal Recovery Funds may be used to respond to the public health emergency or its negative economic impacts. These funds may be used to serve communities that were disproportionately impacted by the COVID-19 pandemic through evidence-based violence intervention programs.
In 2020 the entire country, including Minneapolis, saw a steep increase in crime. The Council approved spending $6.5 million on violence prevention through funding for additional violence interrupters, trauma and de-escalation response, expanded group violence intervention programming, grant funds for youth and community public safety programs, portable camera and lighting, street lighting, Stevens Square/Loring Heights lighting, and behavioral crisis response vans.
Climate and Public Health - $11,580,476
Federal guidance determines that the Coronavirus State and Local Fiscal Recovery Funds may be used to respond to the public health emergency. These funds may be used to serve communities that were disproportionately impacted by the COVID-19 pandemic through programs or services that facilitate access to health and social services.
The Council approved spending $11.6 million to continue the a plan to eliminate childhood lead poisoning, meet community health needs, weatherize homes, and plant trees.
Economic Rebuilding - $11,055,000
Federal guidance determines that the Coronavirus State and Local Fiscal Recovery Funds may be used to respond to the public health emergency or its negative economic impacts. Support for workers, businesses and nonprofits who have been harmed by the economic downturn is authorized.
The Council approved spending $11 million on support for the Clyde Bellecourt Urban Indigenous Legacy Initiative, job training and employment for the city's youth and adults, expand the service worker trainee program, stimulating city-wide tourism and downtown events, small business and payroll provider subsidy and compliance, small business technical assistance, and a gender-neutral bathroom capaign.
City Capacity and Performance - $8,790,000
Federal guidance determines that the Coronavirus State and Local Fiscal Recovery Funds may be used to address workers that were negatively economically impacted workers, and improve the efficacy of public health or economic relief program.
The Council Approved spending $8.8 million to recruit, hire, and retain employees, provide mental health services to city employees, and provide capacity in key areas including third precinct site community engagement and cultrually specific communication for the East African Community.
Total Council Adopted ARP Budget, Phase 2
Spending by Department
Minneapolis Revenue Loss in 2020 and 2021
Minneapolis Revenue Loss in 2020 and 2021
When large events were cancelled and many businesses shifted to working from home in March of 2020, Minneapolis sales taxes sharply declined. Over the remaining months of 2020 the City saw declines in its permitting and fee revenues as well.
The American Rescue Plan gives a clear formula for cities to use to calculate their revenue loss, not simply compared to the prior year, but compared to where revenues were expected to be pre-pandemic.
Across all of the City's qualifying ARP revenue sources, the City has experienced 5.2% annual growth over the past 3 years - growth which supports the City's core functions and services.
Between potential growth and actual receipts, the City missed $77 million in revenue in 2020 and $265 million in 2021.