Honolulu City Council members Tuesday added about $167 million in projects they want funded through the federal American Rescue Plan Act to the proposed city budget, with a focus on housing and job development.
The federal government awarded states and municipalities millions of dollars of relief funds meant to offset the public health and economic impacts of the COVID-19 pandemic. Honolulu was awarded $386 million to be received in two installments. The city received the first $193 million in June, and the rest of the funds are expected this summer.
Mayor Rick Blangiardi’s administration has taken control of the first chunk of ARPA funding due to language written into the 2020 budget that waived the section of the city charter that required the Council to allocate city funds for the money it received through “the Coronavirus Aid, Relief, and Economic Security Act, and any other subsequent act or similar act enacted by Congress or the Hawaii State Legislature that may be used to address needs arising from the coronavirus pandemic, or to relieve its impacts.”
Since the first allotment of ARPA funding came while the 2020 budget was still in effect, the city administration said it would make the allocations. However, the Council will get to decide how the second installment of $193 million will be spent.
The Council wants its allocations codified in the two-year capital improvement project budget that expires June 31, 2024, rather than the city’s one-year operating budget so it doesn’t have to repeat the allocation process in 2023.
All $386 million in ARPA funds must be allocated by the end of 2024, but the city has until the end of 2026 to spend the money.
The Council’s list of 44 ARPA projects that was discussed at Tuesday’s special Budget Committee hearing covered housing, economic revitalization and infrastructure improvement. Cost estimates were listed for each project, but it will be up to the administration to decide the final amounts needed to execute the projects.
The costliest allocation was $25 million for the Honolulu Board of Water Supply to protect the island’s water resources following the aquifer contamination from the Navy’s Red Hill Bulk Storage Facility.
The Council earmarked $20 million for affordable housing that could be administered by the city or in conjunction with nonprofits or private developers.
A $10 million project would develop city housing to serve those at or below 30% of the area’s annual median income, which is $27,450 for individuals or $39,200 for a family of four.
An identical amount was estimated to fund programs for those struggling economically.
If there are additional projects the city administration or Council members want to fund with the second allocation of ARPA money after the budget for the upcoming fiscal year is passed, that can be done via resolution or in a written request to the Council.
Budget Committee Chair Calvin Say said he thought the Council’s approach to allocating ARPA funds “was much more open and transparent,” compared with how the administration determined its allocations.
The administration used a nine-member committee meeting in private to vet and decide on how the first allocation of ARPA funds would be spent. The committee, which will examine the projects proposed by the Council, does not keep minutes and meets behind closed doors, which has raised concerns with community groups and Council Chair Tommy Waters.
City Managing Director Mike Formby defended the committee’s workings during Tuesday’s hearing, explaining it is necessary to make sure all the projects comply with federal guidelines.
“The thing that keeps me up at night is to find out in mid-2024 that we’re not going to be able to get through the legal process, the compliance process, to spend all the money,” he told Budget Committee members.
“What we’re asking now is that we not go back and undo what is a very good process.”
Formby stressed that the administration’s committee safeguards the city from misusing ARPA funds and having to return the money if audited by the federal government.
Despite questioning the process, Waters on Tuesday praised the committee’s choices on the programs it selected for ARPA funding.
“I’m not saying what you’re doing is bad, because it’s not bad, it’s good,” he said. “But to the extent that the public could be more involved, I think that would be a good idea.”
So far, the city has approved $78.4 million and spent $17.1 million in ARPA funds.
The city budget is expected to undergo final reading at the next full Council meeting June 1.
