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 $19,176,261 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 City of Sparks received instructions and guidance from the State of Nevada’s Governor’s Finance Office regarding distribution of the funds to the City of Sparks. The City has complied with those instructions, including the submittal of a Coronavirus Relief Fund Expenditure Plan, and the State of Nevada has dispersed to the City an initial amount equaling 50 percent of the City’s total allocation (or $9,588,131 of the $19,176,261 total allocation). The remaining 50 percent allocation will be released on a reimbursement basis, or upon providing a detailed spending proposal.  The first 50 percent allocation must be spent or planned to be spent by September 1, 2020 in order to be eligible for distribution of the remaining 50 percent 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.

The Coronavirus Relief Fund Expenditure Plan the City submitted to the State of Nevada includes providing financial rental assistance to households affected by COVID-19 pandemic   and that owe back rent to their landlord.  

The State of Nevada also decided to provide state-wide rental assistance to households financially impacted by the COVID-19 pandemic. On July 20, 2020, the State of Nevada launched the CARES Housing Assistance Program, which is being administered by the Nevada Housing Division in coordination with the Reno Housing Authority (RHA), Clark County Social Services, and the Nevada Rural Housing Authority. The State of Nevada is providing $30 million to support the CARES Housing Assistance Program. Of this amount, $5,000,000 is earmarked for Washoe County, including residents of the cities of Sparks and Reno, and will be disbursed by RHA in accordance with the terms of an agreement between RHA and the Nevada Housing Division of the Nevada Department of Business and Industry.

City staff believe the most expeditious option for providing financial rental assistance to Sparks households affected by COVID-19 pandemic, particularly given the federal deadlines for spending the CARES Act funds, is for the City to also contract with RHA. To maintain the efficiency of RHA’s administration and disbursement of CARES Act funds, the proposed Grant Program Contract is based on the agreement between RHA and the Nevada Housing Division. Both the proposed terms of the Grant Program Contract between the City and RHA, and the program criteria for the provision of rental assistance to COVID-19 impacted households, closely reflect the agreement between RHA and the Nevada Housing Division. The key difference is that the CARES Act funds the City would provide to RHA – $2,000,000 is proposed – is restricted to assisting households residing within the corporate boundary of the City of Sparks.

Per the terms of the Grant Program Contract (refer to Exhibit A), RHA will provide rental assistance funds as a grant to eligible Sparks tenants. The funds do not have to be paid back. Funds will be awarded on a first-come, first serve basis, and will be paid directly to landlords on behalf of tenants. Assistance is available to Sparks residents who have experienced a reduction or loss of income due to COVID-19 and are currently delinquent on rent payments. Depending upon the applicant’s situation, rent payments may be made retroactively to April 1 and may continue for several months if the household’s financial hardship continues and money remains available in the program.

In order to be eligible for funds, applicants:

+  Must be a tenant in Sparks with a current, active lease for which back rent is owed;

+  Must be able to demonstrate financial hardship due to COVID-19 (loss of employment, reduction in work hours, and/or reduction in wages);

+  Must have a gross annual household income that is at or below 120% of Area Median Income (as determined by the United States Department of Housing and Urban Development);

+  Must not be receiving Federal Voucher Housing Assistance; and

+  May not have household liquid financial resources in excess of $3,000.

Sparks tenants who have been financially impacted by COVID-19 and have missed

rent payments may initiate the application process through the State of Nevada’s website at www.housing.nv.gov. Applications submitted by Sparks tenants through this portal will be

routed to RHA. Upon successful completion of the application, tenants will be notified upon approval and funds will be disbursed directly to the tenant’s landlord.

Key terms of the proposed Grant Program Contract between the City and RHA include the following:

• The City will provide RHA funds in an amount not to exceed $2,000,000 to provide rental assistance to eligible residential tenants residing within the corporate boundary of the City of Sparks. All funds must be expended or incurred between March 30, 2020, and December 11, 2020.
• The City will advance to RHA $1,000,000 for the purpose of providing RHA working capital to effectively administer the rental assistance program within 15 days after the City receives CARES Act funds from the State of Nevada and after the commencement of the Grant Program Contract. If the first installment of $1,000,000 is not paid to the RHA by September 10, 2020, the RHA may, at its sole option, terminate the contract. The City will advance the remaining $1,000,000 to RHA upon the sooner of notice by RHA to the City that it has spent or incurred obligations of $900,000 or October 31, 2020.
• RHA agrees that any program costs exceeding the $2,000,000 provided by the City pursuant to the Grant Program Contract are, unless otherwise specified, the responsibility of RHA. Up to ten percent (10%) of the funds may be used for program delivery costs. RHA may expend $100,000 as up-front program delivery costs, and may, on or after September 30, 2020, submit a written request to the City for approval to expend the remaining $100,000 of funds for program delivery costs. 
• RHA must provide notice to the City on or before December 15, 2020 of any funds not expended or incurred by December 11, 2020. Unspent or un-incurred funds must be returned to the City by December 30, 2020. This will enable the City to repurpose unexpended funds for other purposes, including eligible City expenses.
• RHA will provide the City with client usage records, including demographic data, on a monthly basis.

The City Council’s alternatives include the following:

1. Approve the proposed Grant Program Contract between the City of Sparks and the Reno Housing Authority.
2. Modify the terms of the proposed Grant Program Contract, subject to agreement by the Reno Housing Authority.
3. Reject the proposed Grant Program Contract and provide direction to the City Manager.

I move to approve the Grant Program Contract (AC-5684) between the City of Sparks and the Reno Housing Authority, in an amount not to exceed $2,000,000 of Corona Virus Aid, Relief and Economic Security Act (CARES Act) funds, to provide residential rental assistance to tenants residing within the corporate limits of the City of Sparks.