Honolulu still deciding how to spend $386 million in federal funds

The city’s first federal deadline to disclose its plans for the $386 million it was awarded through the American Rescue Plan Act is approaching at the end of the month. So far, only about $28 million of those funds has been specifically allocated.

The federal government awarded states and municipalities millions of dollars of relief funds meant to combat the public health and economic impact 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 money is expected next year.

In early June the City Council allocated $28 million of ARPA funding, including $20 million for homeless and housing serv­ices and nonprofits supporting those efforts.

Since then it has been up to Mayor Rick Blangiardi’s administration to present the Council a plan for the funds, which the public has yet to see although a report to the federal government is due at the end of the month. The plan does not need to be approved by the Council.

Council Chairman Tommy Waters drafted his own unofficial plan, which incorporates many of the other Council members’ requests for ARPA funding. He sent it to the city administration as an example of what a plan for the millions of federal dollars can look like. One of the main focuses of that plan: building affordable housing.

In Water’s plan, $40 million of the ARPA funds would be directly used for affordable housing, and $50 million would go to building the island’s infrastructure, one of the most expensive components of any development project on the island.

Faith Action for Community Equity Executive Director Ashleigh Loa emphasized the need for the city to build more units, especially for those making below 80% of the annual median income, which for a family of four is $96,650. She supported Waters’ recommendation to use $20 million to develop housing on city- and state-owned property and another $20 million to acquire vacant properties for housing unstable families.

“We are not only underinvesting; we are significantly underbuilding,” Loa said Wednesday in her presentation on affordable-housing solutions to the Council.

“We have an opportunity for us to explore innovative ideas rather than sticking to the status quo because obviously, the status quo has not worked for us.”

The City Council requested that the Department of Land Management create a list of available city land that could be used to build affordable housing.

Other topics that the drafted plan focused on were recovery for those hit hardest by the pandemic, modernizing city services and economic diversification by investing in local agriculture and supporting green jobs.

Several of the nonprofit organizations that presented to the Council also emphasized the need to support women by creating more affordable child care opportunities.

“We need to get our hands around how do we allow folks to afford sending their children for child care, because it disproportionately impacts a woman’s ability to get back into the workforce,” said Michelle Kauhane, Hawaii Community Foundation’s senior vice president of community grants and initiatives.

Kauhane also explained the difficulty nonprofit organizations have with the procurement of federal funds from the city once they are awarded.

“I just really think that we need clarity, together seeking that clarity from the federal government so that we’re all on the same page and can move forward, and then establishing emergency procurement processes would be awesome.” she said.

“We need to establish payment structures that align with the financial limitations that the small guys have. Not everybody can wait for a reimbursement process, and so we really need to streamline those limitations.”

Oftentimes, nonprofit organizations will need to put up the money for expenses, and ask the city’s Department of Budget and Fiscal Services for a refund, which can be especially difficult for smaller organizations.

The city administration’s draft of its plan for the ARPA funding is expected soon, and although only $28 million has been distinctly allocated, any budget item that has a funding source labeled “federal grant” could use ARPA funds.

Waters urged the administration to include as many specific details about what the funds would be used on.

“Typically, the resolution is submitted to the Council by the administration, and it has specifics on how that money is going to be spent,” he said.

“If you put specifics in there, the administration can always come back and amend it.”

City Managing Director Michael Formby was concerned about not being able to fulfill commitments if the plan was too specific.

“We’ll be as specific as we can be. What we don’t want to do is put out numbers that we have no faith in,” he said.

Waters said he would not mind if the city administration would need to return to the Council several times to amend the resolution.

Kauhane emphasized the need for careful planning for the funds.

“If we don’t spend it and spend it carefully, the recovery is going to take even longer,” she said.

“We’re looking at generational recovery.”