The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was passed into law on March 27, 2020.  The CARES Act established the Coronavirus Relief Fund to provide up to $150 billion to States, local governments, certain territories, and Tribal governments.  Allocations to States were based upon population with minimum allocations of $1.25 billion.  The State of Nevada received the minimum allocation.

The CARES Act provides that Counties and Cities with populations greater than 500,000 are eligible to receive direct funding from the federal Department of the Treasury.  In Nevada, only Clark County and the City of Las Vegas met this qualification and received direct funding.  The remaining funds were sent to the State of Nevada and according to the formula established by the CARES Act, $148,551,100 remained to be allocated to local governments other than those eligible for direct reimbursement. 

Of that amount, the City of Sparks’ allocation is $19,175,261 which was allocated proportionately according to population amongst eligible local governments.

The CARES Act provides that payments from the Coronavirus Relief Fund may only be used to cover costs that:

1. Are necessary expenditures incurred due to the public health emergency with respect to COVID-19;
2. Were not accounted for in the budget most recently approved as of March 27, 2020 for the State or government; A cost meets this requirement if:
   1. The cost cannot lawfully be funded using a line item, allotment, or allocation within that budget; OR
   2. The cost is for a substantially different use from any expected use of funds in such a line item, allotment, or allocation.
   3. A cost is not considered to have been accounted for in a budget merely because it could be met using a budgetary stabilization fund, rainy day fund, or similar reserve account.
3. Were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.

The CARES Act also specifies that these funds may not be used to offset revenue shortfalls that occur due to the COVID-19 pandemic.

The Department of Treasury’s Guidance for State, Territorial, Local, and Tribal Governments published on June 30, 2020 is included as an attachment to this agenda item for reference purposes.

The Department of Treasury’s Coronavirus Relief Fund Frequently Asked Questions published on July 8, 2020 is also included as an attachment to this agenda item for reference purposes.

The City of Sparks has received instructions and guidance from the State of Nevada’s Governor’s Finance Office regarding the mechanics of how these funds are to be distributed to the City of Sparks.  According to those instructions, the State of Nevada will disperse to the City of Sparks an initial amount equaling 50% of the City’s total allocation (or $9,588,131 of the $19,176,261 total allocation) upon receipt from the City of Sparks the following documents:

1. Coronavirus Relief Fund Eligibility Certification letter signed and notarized by the City Manager (attached to this agenda item for reference);
2. Coronavirus Relief Fund Terms and Conditions for Local Governments signed by the City Manager as acknowledgement of understanding (attached to this agenda item for reference); and
3. A Coronavirus Relief Fund Expenditure Plan

The State will release the first 50% allocation to the City of Sparks immediately upon receipt of the above documents, with the remaining 50% allocation to be released on a reimbursement basis, or upon providing a detailed spending proposal.  The first 50% allocation must be spent or planned to be spent by September 1, 2020 in order to be eligible for distribution of the remaining 50% of the City’s allocation.  All funds must ultimately be spent or incurred by December 30, 2020, and any funds not spent or incurred by December 30, 2020 must be returned to the State of Nevada no later than March 1, 2021.

Additionally, monthly reports must be filed with the State of Nevada Governor’s Finance Office according to prescribed expenditure report forms, with the first report due by August 1, 2020 showing costs spent or incurred between March 1, 2020 and June 30, 2020.  A final summary report showing costs spent or incurred between March 1, 2020 and December 30, 2020 must also be filed by March 1, 2021.

The State of Nevada is requiring local governments to report eligible expenditures grouped into the following seven categories:

1. Medical Expenses;
2. Public Health Expenses;
3. Payroll Expenses for Public Employees Dedicated to COVID-19;
4. Expenses to Facilitate Compliance with COVID-19 Measures;
5. Expenses Associated with Economic Support;
6. Expenses to Respond to Second Order Effects of COVID-19; and
7. Other COVID-19 Expenses Reasonably Necessary

The State of Nevada’s Terms and Conditions that needs to be signed by the City Manager provides a “Cost Test” noting that:

“If all responses for the particular incurred cost are “true” for all six statements below, then a jurisdiction can feel confident the cost is eligible, if it is also within other limitations set forth in the Treasury Guidance and Frequently Asked Questions documents:

1. The expense occurs between March 1 and December 30, 2020;
2. The expense is connected to the COVID-19 emergency;
3. The expense is “necessary”;
4. The expense is not filling a shortfall in government revenues;
5. The expense is not funded through another budget line item, allotment or allocation, as of March 27, 2020 OR is funded, but the cost is for a substantially different use from any expected use of funds (e.g., base salary funded but duties become substantially different to respond to COVID-19 emergency);
6. The expense wouldn’t exist without COVID OR would be for a “substantially different” purpose.

It is the responsibility of each locality to define “necessary” or “substantially different”, giving the jurisdiction the authority and flexibility to make their own determination using the Treasury Guidance and Frequently Asked Questions documents.”

Direction is being sought by the City Manager today regarding how to best utilize the $19,176,261 allocated to Sparks through the CARES Act Coronavirus Relief Fund. 

Examples of possible general uses of these funds include, but are not limited to:

• Reimbursement of City direct expenditures;
• Payment of the City’s portion of regional costs incurred by the Incident Management Team (Sparks’ share is 15% of such costs by agreement);
• Ensure the ability for City departments to operate safely, work remotely, and maintain services during the COVID-19 pandemic;
• Partnering with the University of Nevada on a program to investigate the presence of SARS-COV-2 in sewage flowing through the Truckee Meadows Wastewater Treatment Facility (TMWFR);
• Residential eviction relief assistance;
• Community business economic assistance;
• Provide resources to assist social distancing needs of the homeless population

There are many other examples of needs within the community that have been created from the COVID-19 pandemic emergency.  The above list is intended to represent categories of possible uses of the Coronavirus Relief Fund resources rather than specific action plans, and is not intended to be an exhaustive list.

The City Manager is seeking approval of the conceptual bucket of examples listed above and direction from Council to work with our regional partners in determining the best way to utilize these funds to mitigate the many impacts from the COVID-19 pandemic within both City of Sparks and the region as a whole.

• City Council may approve the conceptual spending categories as presented and direct the City Manager to work with the City’s regional partners to determine the best use of the Coronavirus Relief Fund allocation of $19,176,261.
• City Council may reject the conceptual spending categories as presented and offer alternative direction.

I move to approve the conceptual spending categories as presented and direct the City Manager to work with the City’s regional partners to determine the best use of the Coronavirus Relief Fund allocation of $19,176,261.