Due to my illness last month, I was not able to recap most if any of the financial discussions that led up to the budget being passed. I did want to recap the discussion at the 10/25/2021 Finance Committee meeting regarding the request to approve the use of 2021 American Rescue Plan Act (ARPA) funds and approve the related 2021 Budget amendment since I think it will give at least some idea of the considerations and deliberations that went into that.
Alderperson Matt Reed (District 8) started the discussion. He was the one who requested that the item be referred back from Council to the Finance Committee. His goal was to slow the process down enough to some more robust conversations regarding how the city was going to allocate the funding, given that it was such an unusual circumstance and such a large amount of money. While he felt that there were some really good items on the list, he felt that the taxpayers could benefit tremendously by looking at the funds in an alternate way. There were a couple items he was looking at from a capital project standpoint, and he pointed out that the city had some wastewater projects that are pretty pricy. Alderperson Alex Schultz (District 9) had brought those projects up, and Alderperson Reed thought they were worth taking another look at. “They all qualify for this funding. They’re all gonna fall squarely on the taxpayers of Appleton and only the taxpayers of Appleton to pay this off, so why would we not want to look at a more prudent way to pay for this that’s not gonna come out of taxpayers’ pockets?”
He pointed to a few items in the budget listed under “Facilities”. There was a Wastewater Sludge Storage Options line item of $7.2 million, a Belt Filter Press Upgrade Project of $4.8 million, and a Blended Sludge Piping Replacement Project for $450,000. He thought there was a lot of different piecemeal things the city could do. “Why would we not take the opportunity to look at this as a way to save our taxpayers some money in the long run?”
Alderperson Sheri Hartzheim (District 13) agreed with Alderperson Reed that she would like to discuss this more in addition to the discussion that occurred at the last committee meeting. She had several questions.
Her first question about the $150,000 currently allocated for Consulting and Administrative Support.
She wanted to know to what that money was going to be applied toward and if it was related to the $250,000 line item above it that was supposed to go to Short-Term Direct Community Partner Support.
She also had a question about the first line item allocating $1,991,841 to COVID-19 Response. Mayor Woodford had told the alderpersons that the city’s “Routes to Recovery” aid money was $1.3 million. She wondered if they might think about shaving the $1.99 million allocation of ARPA funds down to closer match the $1.3 million was.
She also said that she wanted to look further into some of the capital projects that Alderperson Reed had mentioned.
Mayor Woodford reiterated what the memo said about the $150,000 for Consulting and Administrative support which was “Category 2 initiatives will require significant process development, community input facilitation, coordination with other ARPA funding recipients, performance documentation, Common Council reporting, and ongoing compliance activity to accomplish. These funds will support administration of those activities.” He said that the $150,000 was aimed at Category 2 Initiatives which he stated would need significant administrative support to manage.
With respect to the $250,000 for Short-Term Direct Community Partner Support, he said that, while it was possible there may need to be some administrative and consulting support for those resources, he anticipated that they could develop a simple grant application and the city should be able to manage that in-house.
Regarding the $1.99 million allocation for the ongoing Covid 19 response, he said that the accounting that the Finance Department had been keeping track of did amount to $1.34 million across a number of different categories including emergency operation activities, medical and protective services and equipment (PPE, cleaning, and sanitizing), other mitigation measures in public areas and facilities, temporary isolation housing for infected or at-risk individuals, and the purchase of services or equipment to facilitate telework by public employees. The rationale for the specificity of the allocation amount was to get the total amount of the first half of the ARPA allocation. They have $8 million set aside for a second tranche or portion of funding. The first portion/tranche of ARPA funding was the 2021 allocations they were discussing which amounted to $6,891,841.
He said it also made sense to round the numbers off in the Covid 19 Response category. This money was intended to be an operating reserve that the city would be able to draw from for continued response activities and since the city continues to be in a pandemic and continues to have response activity, they felt it was important to hold back some reserve from the ARPA allocation. This was an eligible expense category.
He also wanted to clarify that, at the end of the Covid 19 Response allocation recommendation, the memo states “Excess balance of this line at the end of the ARPA spending period would be allocated to lost revenue.” He said that the city was eligible to claim just over $10 million in lost revenue. Their recommendation was for $1.5 million to cover losses in the Parking Utility. He then reiterated, “Anything unspent in that line as we near the end of the spending period which ends December 31, 2024, for all unencumbered funds, would be allocated—reallocated from Covid-19 Response to Lost Revenue.”
Alderperson Reed asked if there would be further specific routes to recover funding or what that a one-time thing?
Finance Director Tony Saucerman answered that it was a one-time thing and there was no indication of any more funds coming.
Mayor Woodford said that the old saying that one in the hand is worth two in the bush applied in his opinion. They know these funds have been allocated to the city, so rather than pin their hopes on the prospect of addition dollar or grants down the road that may never come to fruition, he thought it was important to make sure they have the dollars they need now to continue responding to the pandemic and meet anticipated future needs.
Alderperson Hartzheim asked if the mayor or the Finance Director could elaborate on the library broadband allocation. It sounded to me like she wanted to know what specifically that would be going for.
Mayor Woodford responded that those were provisional numbers in terms of the cost of the library project. The allocation would be aimed at enhancing the broadband access provided by the library. Of course, the library project will provide access to broadband, but there may be opportunities to improve that infrastructure and the accessibility of the internet and information more broadly to the public through the project.
Alderperson Hartzheim asked if there was justification for $2 million or if this was a situation where they were just allocating it for that because that was an eligible category for ARPA funds.
Mayor Woodford answered that because they were early in the design process for the library project, they didn’t have line-item expenses clear yet. $2 million was a provisional dollar amount, but he said they did expect that general network infrastructure and access points were going to amount to at least a couple million dollars if not more.
Alderperson Reed asked if this allocation would allow the city to borrow less for the library or would this be in addition to the $24 million already planned for the library.
Mayor Woodford answered, “Our intention would be to use this to reduce borrowing if at all possible. What we’ve been clear about with the library project is that the total amount of that project in terms of bond funded taxpayer funded support for that project–local tax payer support–would be $26.4 million all in. So that amount hasn’t changed. We’re holding to that number as we continue to work through the project budget and think about sources and uses for those dollars, but it’s possible that these funds could be used to cover any overages as we all know the expense of doing capital projects has been on the rise lately with inflationary pressure–something I talked about with the Finance Committee last time we were here and talking about the city budget more generally. So, again, having the flexibility to apply these funds either on top, so in addition to, to cover any potential overages or to allow us to reduce the amount of debt which is a goal of mine across all–the entire city budget would be helpful. So that’s a little bit more about the rationale for this recommendation.”
Alderperson Katie Van Zeeland (District 5) mentioned that the $1.99 million allocated for Covid-19 Response also included expenses for public health and safety. She spoke with Fire Chief Jeremy Hanson and Police Chief Todd Thomas about that at the Safety and Licensing Committee meeting two weeks prior and both of them mentioned the negative impact that Covid-19 had had on their budgets due to having to purchase protective equipment, cleaning supplies, and covering the cost of overtime for fire and police personnel who had to go out on leave after contracting Covid. She wanted people to keep in mind that the Covid-19 response was not just public health but involved other departments as well.
She also wanted to ask what some of the feedback was that the city had received from the ARPA feedback sessions it had held with citizens. She knew that information was used in putting together the ARPA allocation recommendations, and wanted to have a general idea of the things that had been expressed in those meetings.
Mayor Woodford said that the Post Crescent had attended and done a write-up on the feedback. He said that the public feedback led to the bifurcation of the ARPA recommendations. There was the 2021 budget amendment that they were currently discussing and then there were recommendations that were included in the 2022 executive budget.
The 2021 budget amendments included a couple of things that had been brought up in the listening sessions specifically related to concern about local community not-for-profit organizations that bolster the local economy, community wellness, and pandemic recovery. They also heard interest in water issues like lead service lines and safety.
The 2022 use of funds needed further definition. The major themes for that were concerns around childcare, early childhood development, and issues facing families during pandemic recovery. There was also significant input around housing affordability and workforce housing, and around what might be considered “social infrastructure” such as violence prevention programs, mental healthcare, and community wellness.
All of that input led to the development of a bifurcated plan. The 2021 budget amendments, generally speaking, covered city uses such as the ongoing Covid-19 response, lost revenue, lead service line abatement, and leveraging the library project to make enhancements that are covered by ARPA.
Regarding the recommendations included in the 2022 budget, he said, “that needs further definition. What we got was a sense from the community that these are areas of concern—these are things that are affecting the community, whether it’s individual community members, not for profit organizations, businesses in the community, and I’ve heard significant input from businesses in the community—direct input around concerns with childcare, access to affordable childcare for their workforce, and also workforce housing affordability. But we need more input and time, to Alderperson Reed’s point, and that is why I put the recommendation forward in the way that I did which is to try and address those sort of known priorities, the things we can get to work on right away, the things we need to quickly deploy resources on, and then to make sure we afford ourselves the time as a community to go a level deeper in planning and public input so that we get it right with that second set of recommendations.”
Alderperson Reed had an idea about the allocations that he wanted to throw out for discussion. He didn’t think they needed to allocate all the money right now, as the mayor had stated multiple times. He thought that some of the money they were getting could be moved. He suggested reducing the amount of money allocated to the Covid-19 response to $1.5 million, keeping lost revenue at $1.5 million and Lead Service Line Abatement at $1 million, then leave out the broadband because the library’s not being built yet and leave out the $450,000 for blended sludge piping replacement currently in the 2022 budget. That would leave them $2.4 million to allocate toward the $4.8 million needed for the belt filter press upgrades. They could take a chunk out of some capital projects without hurting their other projects. He did think the lead service line abatement was vital as was the lost revenue. They would still have a Covid-19 response fund just with less money but it would still cover what has already been paid out plus have some left over for future expenses. He didn’t think it was wise to throw $400k at category two items right now and that those should be thought about as secondary, possibly for next year.
Mayor Woodford thought that it was important to remember that wastewater is funded by the rate payers of the utility. [which included more than just Appleton residents.] He asked Director Saucerman to give a rundown of enterprise fund and revenue bonds vs. general obligation bonds.
Director Saucerman explained that revenue bonds are what they use to fund utility projects. Those are backed by the revenue of the utility, not property taxes like the general obligation bonds are. He said that when you talk about utilities you had to keep in mind that you were talking about ratepayers which include other municipalities that Appleton supports such as Grand Chute and some other retail customers.
Mayor Woodford said that in regards to the suggestions about deferring short term Direct Community Partner Support and Consultation and Administration Support, the reason for including those recommendations in this budget were because there was going to be additional work required to sort out the remainder of the allocations, so they recommended including consulting and administrative support with the budget amendment so they could get help navigating the remainder of the process.
Alderperson Hartzheim said that the line item being contemplated showed $2 million going to capital outlay. [I think she was talking about the library project broadband allocation.] If that money got approved where would the funds be placed?
Director Saucerman said it would be designated for the project in an ARPA grant fund set up for just for the ARPA money. When the library project got started, they would cordon off the costs for the broadband the best they could and charge those costs to the grand fund up to the point where they have spent $2 million. A majority of the library project would be charged to the Library Capital Project, but the $2 million for the broadband would be charged to the ARPA grant fund.
Alderperson Hartzheim asked what would happen if broadband ended up costing less than $2 million.
Director Saucerman said that it would be put to use for something else. The administration or the Common Council would come forward with a recommendation and essentially go through the process they were currently going through with a budget amendment that required a 2/3 vote by the Council.
Alderperson Nate Wolff (District 12) asked to confirm that the idea would be to use the $2 million for the library even if broadband didn’t cost that much and if there was money left over from the allocation, they could use it to decrease the amount of debt for the library.
Mayor Woodford answered that there are requirements for the ARPA funds and limitations on what they can be spent on. Anything they use those funds on need to be compliant wit the rules that are issued by the Treasury Department. Appleton was currently operating under an interim final rule, and under that rule there are only specific types of capital projects that would be eligible for ARPA funds.
Alderperson William Siebers (District 1) who is the chair of the Finance Committee asked what the mayor’s feeling was about approving certain allocations and not approving others.
Mayor Woodford said it was up to the committee at this point, but Alderperson Siebers pressed him on what his specific feelings were.
Mayor Woodford answered, “I really do stand behind the process that we undertook as an administration to put these recommendations together. We went through an extensive process of gathering input both internally and externally. We made sure–I aligned this process intentionally with the budget process so that our departments would be already in the process of thinking about capital projects and needs in their departments in relation to the eligible uses of these funds as we went through….We went through an intentional process, we gathered extensive input, and what you have before you are my best recommendations to you, but they’re not the only way to go with this. There are many different paths and philosophies, really as I think I’ve said to you before. There are just about as many ways to handle this as there are communities receiving these funds which is like every community in the country. So, there are lots of different ways to go, but what’s before you is our best effort to try to and address as many city priorities as possible to be as best aligned as we felt we could be with the overarching principles of ARPA and what it was intended to do, or what the stated purpose of ARPA was, and to do it in a way that positively impacted as many residents in the community as we could, particularly focusing on, as ARPA prioritizes, those hardest hit by the pandemic. So, trying to do our best to direct these funds in ways that address those in–the areas of greatest need in the community.”
Alderperson Hartzheim asked about the feasibility or possibility of applying some of the ARPA funds toward the concrete paving program or any of the city’s road projects which the city already knew it was behind on in terms of funding.
Director Saucerman said that unfortunately those would not qualify for ARPA funds.
Alderperson Katie Van Zeeland (District 5) said that regarding the wastewater situation, when she looked into the bond situation, her understanding was that if the city was to take up a project with ARPA funds that that would end up negatively affecting the return on the bonds. She asked for some clarification on that.
Director Saucerman said it wouldn’t have an effect on the city’s ability to borrow. Instead, it would reduce their borrowing because the city would be able to use ARPA funds instead of borrowing. It also wouldn’t have a negative effect on the city’s financial rating.
Mayor Woodford suggested that part of her question might be about early calls. Early call options aren’t usually an option in most cases and the city doesn’t have early call provisions in much of its debt.
There was a little back and forth between Director Saucerman and Alderperson Van Zeeland as she tried to clarify her concerns.
Director Saucerman eventually told her that as the city issues debt and takes on more expenses in the utility, that could lead to a rate increase because as they take on more expenses, they have to get revenue from someplace and that revenue comes from the rate payer. If they used ARPA funds instead of issuing more debt that could put off the need for rate increases further into the future.
It was also confirmed that the city could use ARPA money to pay down current debt.
Alderperson Reed said he was coming at it from the standpoint that less borrowing means smaller rate increases to pay off debt, but he wanted to make sure that it would not somehow hurt revenue or rate payers if Appleton borrowed less. He wasn’t clear on what the downside would be to using ARPA funds for wastewater expenses.
Director Saucerman answered that, when there are two competing interests to use ARPA funds for such as the water utility and the library, as an example, decreasing the library borrowing resulted in 100% to Appleton taxpayers because that borrowing was funded 100% by Appleton taxpayers. The water utility, however, was paid for by around 305 wholesale customers (who were not in Appleton) and 70% Appleton rate payers, so 30% of the benefit would go toward people outside of Appleton. When deciding between competing items, the best investment was probably the one that solely benefited Appleton taxpayers. In that case, the library project looked like the better deal because 100% of the return benefited Appleton taxpayers.
Alderperson Reed thanked him for clarifying that. He also wanted to make sure that the $150,000 consulting and administration fee was to oversee all of the ARPA money and not just the $250,000 for the Short Term Direct Community Partners Support.
There was a little bit of levity as Mayor Woodford confirmed that that money was to administer the entirety of the ARPA money and not just $250,000. If he were recommending spending $150,000 to administer $250,000 there would be a big problem.
Alderperson Martin was appearing remotely and said that the library project had been in the works for over 10 years. He thought the $2 million allocated for library broadband was the best use of the money.
Alderperson Vered Meltzer (District 2) stated, “I just want to say that I really appreciate how this package is put together between the phase 1 and the phase 2. I think there’s a way in which you can sort of look at is as low hanging fruit or what we can move on immediately vs. the things that are gonna take more time to figure out, and I think especially after weathering the past couple of years, if there’s anything we can move quickly on, those are the things that we should use haste and the other things—yes it’s appropriate to take all the time that we can to figure them out, but some things are already known quantities, and I don’t think we need to spend any time figuring them out. I really like how this is distributed across all of our departments. In the Covid Response as Alderperson Van Zeeland brought up, this has an impact on the police and fire department, Lost Revenue helps the Parking Utility, Public Works the Lead Service Line Abatement has been a priority for the Utilities Department and I also really appreciate in the memo the part that if there are any remaining funds after the lead service lines are addressed, those funds would be directed to eligible sewer and water infrastructure projects. The broadband access and information infrastructure–I think that we have clearly identified over the past couple of years what a priority this library project is for our community and I think it would be inappropriate for us to not find a way to include that project, and I think that this is an absolutely wonderful way to do that. I think that the Short Term Direct Community Partner Support and the Consulting Administration can go without saying, but I think that together these create a really, really good package and I think that they’ll give us the time to both move forward on things and take the time doing longer deliberations about all the other things that need a deeper dive. So, I would encourage my colleagues on the committee to support this as it was given to us. I think it’s a simple but very well interlocked set of puzzle pieces.”
Alderperson Siebers said there was a citizen in the audience who had raised her hand, so he allowed her to speak.
Helen Nagler had two basic comments. The first was that the water utility was formed because there’s a large portion of the city that pays no property tax. She specifically mentioned AAL (which changed its name to Thrivent a number of years ago). The water utility rates are based on users, and it hit everybody in the community whether they pay taxes or not. She thought that if the city wanted to help taxpayers that they had to leave the water utility the way it was. [Presumably because some of the people who would be helped if funds were directed toward the utility would not be taxpayers.]
She said that the other thing she was concerned about was housing. She said that two full blocks of low income and worker housing was torn down and turned into vacant lots for other projects and she did not think there was any way that the city had replaced two full blocks of affordable housing in the community. She mentioned specifically the housing torn down by the YMCA. She didn’t know what was slated to go in that space, but, for the record, that’s where the US Venture project is located. (https://allthingsappleton.com/2021/05/16/city-plan-commission-votes-to-approve-rezoning-and-street-vacation-applications-for-us-venture-project/) She also mentioned that there was housing torn down across a cemetery and she didn’t know why the cemetery needed more property but later on she mentioned something about the cemetery building a medication site. She didn’t like to see housing torn down and left as vacant lots. She thought that the city should look into its ordinances to see if they could stop this. “I see no reason for any of that and I think we have to stop it.” She expressed disapproval of somebody buying housing out toward Little Chute and tearing them all down and leaving vacant lots. She told the committee, “When you’re evaluating the budget, look at housing, and look at how you handle the tax payers.” [Honestly, I didn’t understand her concern about vacant lots. The property by the YMCA is going to be where US Venture locates its building. I would expect that the gentleman buying property out by Little Chute and clearing the existing structures has some sort of development plan, but these things do take time before they come to fruition.]
Alderperson Siebers allowed one more round of comment before holding the vote.
Alderperson Van Zeeland thanked Alderperson Reed for clarifying things regarding the water utility. She wanted to add that in regards to the feedback she received from her constituents about the use of the funds, one concern she had heard was that things are becoming more virtual and the internet is necessarily. Her constituents wanted to make sure that the city was investing in broadband. It was going to become more important than before the pandemic.
Alderperson Wolff said that he would love to spend ARPA money on projects he personally felt would greatly benefit the city, but at the end of the day he strictly listened to his constituents. A lot of people had told him that they support the allocations currently on the table so he was going to support this plan because that’s what his constituents were telling him to do.
Alderperson Denise Fenton (District 6) applauded the care that her colleagues had taken in examining this. She liked how the allocations were split. She listed in at the public feedback sessions and concerns about housing and child issues were what came up most often. She said she would do her best to ensure that those were addressed in the tranche of funds that were in the 2022 budget.
She looked at the 2021 allocation of funds as spending $3 million of ARPA money on projects that were already in the city’s capital improvement plan, so by spending that money they were saving taxpayers money since it was going for things that were already budgeted for. Regarding the $2 million for library project broadband, the best-case scenario was that they would not have to spend that portion of the city’s budget to get robust broadband as it would be paid by ARPA money instead. She stressed the need for internet access in this modern day.
Alderperson Brad Firkus (District 3) appreciated the time and commitment staff had put into putting together the proposal. He thought it was a solid plan and a good starting point.
Alderperson Meltzer was excited about the opportunities to offset borrowing and agreed with Ms. Nagler that they didn’t want to interfere with the way rates are shared among different jurisdictions. Every municipality had its own ARPA money, so Appleton needed to stay focused [I took that to mean stay focused on benefiting Appleton]. Just because the money could be spent on certain items didn’t mean that that would be the most prudent option.
Alderperson Reed thanked everyone for their willingness to have this conversation. He got some clarity that he didn’t have before and he appreciated all the feedback and staff expertise. He said, “This is not perfect in my opinion, but I will vote for it because it is well thought out and there’s some really good things in this list.”
The committee unanimously voted to recommend the 2021 ARPA allocations and budget amendment be approved.
View full meeting details here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=892639&GUID=67E1AE69-D03C-492B-8186-740FF4E4B0E7
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