Mayor Rick Blangiardi published a draft of his plans for the $386 million in federal American Rescue Plan Act funds that he must submit to the Honolulu City Council for approval. It is the first official public glance into how the funds might be used.
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 in 2022.
Blangiardi’s proposal asks the Council to approve the expenditure of all $386 million in ARPA funds, not just the tranche that the city has already received.
During the budgeting process, which ended in June, only about $28 million of ARPA funds were allocated to specific projects. It is now up to the Blangiardi administration to present the Council a plan for the rest of the funds which they will have to vote on.
City Managing Director Michael Formby said the mayor can technically use the funds without the Council’s approval. However, the administration is committed to making the process as collaborative as possible, noting that when the first influx of COVID-19 relief funds came into the city through the CARES Act, the city Council was largely cut out of the process by former Mayor Kirk Caldwell.
In Blangiardi’s proposal to the Council, only about $137 million, or 35% of the full amount of funds, has been allocated to specific programs. Formby said that is on purpose.
“Our preference, still to this day, is that we keep the spending by category broad until we collectively agree how we want to implement and spend money,” he said. “It gives us more flexibility to do things quickly.”
Formby pointed to the spike in COVID-19 cases on the island and the prevalence of the delta variant as the type of changing situation that will require city funds. The city will likely need to use ARPA funds to purchase test kits for community testing in the coming days, so instead of going through the formal process, the administration will notify Council Chairman Tommy Waters about the purchase. In a formal budgeting process, the full Council would have to vote on the expenditure.
In the breakdown of the amount of funds allocated to specific projects, the most money was funneled to an $11 million agricultural grant to support local farmers, a $9.5 million update to the Department of Planning and Permitting’s permitting system and two $10 million COVID-19 programs related to vaccine incentives, increasing testing and the creation of isolation facilities.
Other notable allocations are $10 million for small- business/nonprofit grants and technical assistance, $1.5 million for enforcement positions in DPP to investigate illegal vacation rentals and $3 million for Crisis Outreach Response and Engagement, the 911 diversion program that would send social workers instead of police to some nonviolent emergency calls.
Office of Housing and Homelessness Director Anton Krucky said the program should be starting in September.
However, Formby emphasized that the list is a “living document” that can be changed as needs arise.
“We can go to Council at any time, if they want to schedule monthly hearings or if they want to schedule quarterly hearings and say, ‘We would like you to do this program or do that,’” he said.
“All we have to do is listen to them, put in the recovery plan amendment.”
Although it has been emphasized as a top priority by both the Council and the administration, any allocation of ARPA funding to actually build housing is notably missing.
Waters drafted his own unofficial plan for the full $386 million of ARPA funding as an example the administration could use that incorporates many of the other Council members’ requests for ARPA funding. In his 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.
That allocation is not reflected in the mayor’s version, but Formby pointed to the amount of funds that was allocated in the formal budget for similar purposes. During the formal budgeting process, the Council added about $170 million to support affordable housing, in addition to the $40 million the mayor originally allocated.
“You have to use those (Council-approved) funds in two years. It’s very difficult to use $210 million in two years, because land acquisition, the planning, the design work — all of the things that we have to go through take time,” Formby said.
In comparison, the ARPA funds can be spent over the course of four years, giving the administration more flexibility.
During a Council committee meeting in early August on ARPA funding, Waters urged the administration to be as specific as possible with its allocation.
“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.”
The city is required to send the U.S. Treasury Department by the end of the month a formal plan on how it plans to spend the funds. That plan can be broad and will not need any formal hearing from the Council.
The mayor’s resolution regarding the use of the ARPA funds was transmitted to the Council two weeks ago, and will likely be heard by the Council in the coming weeks.