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Phoenix in January 2021.

Phoenix’s economic development director said a new "boots on the ground" effort will help small businesses hurt by the pandemic.

During Tuesday’s City Council meeting, members approved a variety of ways to spend $193 million the city received last month from the American Rescue Plan Act. It includes $10 million for a workforce wraparound tuition/apprentice program.

“This isn’t a social media effort of saying, ‘Call us, we’re here,” Mackay said.

She said the department has six employees that will meet with business owners with fewer than 25 workers to understand what they need to retain and attract employees and grow their businesses.

“What are the upskilling that their existing workforce needs? How could we work to put together some cohorts and train numbers of people all at one time,” Mackay said. “Maybe it’s multiple businesses that need the same training and could we put together one cohort that trains that workforce. Maybe it’s some just one-off training.” 

The council also approved $8 million for small and micro businesses. That’s in addition to the $11 million the council approved last year through federal coronavirus relief funds known as CARES Act funding. 

During last year’s allocation from the CARES Act, Mackay said the first grant process was like driving to fire while building the fire truck and training firefighters at the same time. Besides being unable to reach some businesses due to closures and lockdowns, she said some owners faced language and technology barriers.

“What we would propose this time is we actually send team members that are both English and Spanish speaking out into the market to be able to meet with the businesses with tablets in hand to help them fill out the applications,” Mackay said.

Last year Phoenix received $293 million in CARES Act funding. As part of the American Rescue Plan Act, the city received $198 million in May 2021 and expects another $198 million in May 2022. 

An overview of the $198 million plan for the first year was part of Tuesday’s council agenda:

Community Investment: $143 million

The Community Investment category, the largest proposed allocation in this plan, is strategically focused on providing assistance to vulnerable populations, businesses and those hardest hit by the COVID-19 pandemic. 

This portion of the plan includes six distinct focus areas consisting of multiple programs. The proposed strategic plan assumes Community Investment will receive approximately 72% of ARPA funding, or $286 million, over two years.

If the proposed Contingency is ultimately allocated to further enhance the programs listed below it would result in 75% of funding, or $296 million, being allocated to Community Investment. 

The six Community Investment focus areas include the following:

Phoenix Arts, Business and Employee Assistance: $40 million

Small business is the heart and soul of the local economy. Many of our small businesses are still struggling to stay open due to COVID-19. These funds will provide resources that Phoenix businesses, including our vibrant arts community, need to stay open, pay employees, and cover other operational costs due to the downturn in business. 

Funds are also proposed to provide robust job training opportunities for those that lost their jobs during the downturn. Additionally, as the local economy recovers, staff is proposing a robust arts program that provides the arts community with a lifeline that will ultimately provide working capital to the struggling arts industry.

Mitigation and Care of Vulnerable Populations: $31,500,000

Research shows that the pandemic has disproportionately impacted underserved populations.

This focus area proposes funding that provides resources to address homelessness, mental and behavioral health, veterans issues, and funding for the senior and refugee community. Some of the funding in this category also lends itself to a larger regional approach to address the issues of homelessness and mental and behavioral health. 

Youth Sports, Recreation, Education, After-School and Wireless: $28,800,000 

As parents return back to the workplace and families struggle to give recreational and educational opportunities to their children, staff is proposing to use ARPA funds to provide resources to restore after-school programs, provide financial assistance to youth sports leagues and to enhance library programs. 

As well, funding will be used to continue the development of the large wireless project that staff has been working on with regional partners and to further enhance free wireless access for Phoenix residents in public housing and for customers in city facilities. 

Household and Residential Assistance: $28,000,000

Funding in this category is intended to provide families with the resources needed to address rent, mortgage and utility shortages. More specifically, these funds are intended to provide resources for residents who do not qualify for the Emergency Rental Assistance Programs (ERA 1 or 2). 

Funding is also proposed to provide families with financial assistance to cover childcare costs and other household necessities. Staff will need Council discussion and direction on the scope of any such program. 

Funds are also proposed to provide public transportation subsidies to those in need of financial assistance due to loss of wages or employment because of COVID-19. 

Also included is a plan to provide childcare options for impacted workers at Phoenix Sky Harbor Airport.

Phoenix Resilient Food System: $9,700,000 

One of the city's most successful CRF-funded programs was the Feed Phoenix Food Program. This allocation of funding builds off of that success and provides additional resources to develop more sustainable food options for Phoenix residents. 

Based on Council input, this program also includes funding to provide resources to local and neighborhood food banks and food kitchens. 

Better Health and Community Outcomes: $5,000,000 

This funding would be used to expand the use of the mobile testing vans that the city has deployed to assist underserved communities with COVID-19 testing. These funds could also be used to offset any costs associated with the city taking on a more active role in vaccine distribution. 

City Operations: $50 million

The City Operations category, the second largest of the three plan areas, is strategically focused on General Fund (GF) resiliency and capitalizing on the one-time nature of this funding source to address issues that will free up future GF resources and support transformational investments. 

The proposed strategic plan assumes City Operations will receive approximately 25% of ARPA funding, or $100 million, over two years. 

This area includes the following areas of focus:

Infrastructure, Technology and Capital Needs: $23,000,000

This funding will be used to provide resources needed to address key infrastructure, technology and capital projects that have been deferred or exacerbated as a result of the pandemic.

One example is to provide resources to upgrade the 27th Avenue Recycling Facility. The need to replace this facility has intensified due to the increase in residential tonnage due to COVID-19.

Funding can also be used for other capital and technology projects that improve the efficacy of economic relief programs designed to address negative impacts to targeted populations. 

An example of such a project is the replacement of the Case Management System used by Human Services staff to provide resident services. The system is antiquated and does not allow for online applications. Replacing this aging system would enhance the delivery of services to our residents. 

Staff also recommends critical storm water, flood control and energy conservation projects that comply with federal guidance.

Revenue Replacement: $22,400,000 

Unlike CRF funds, ARPA funds are allowed to be used for revenue replacement. Because of the pandemic, the Phoenix Convention Center has been severely impacted due to the downturn in the travel, tourism and hospitality industry. As a result, there are significant concerns about how long that industry will take to recover and how deep of an impact that recovery will have on the Convention Center's fund balance.

It is important to note that the Convention Center is ultimately backed by GF revenues. If the tourism and convention downturn lags as long as some economists suggest, this could impair Convention Center revenues enough that the GF would be forced to make reductions to provide working capital. 

Allocating ARPA funds to replace a portion of the revenue lost by the convention center over the last 15 months would be a sound financial decision that would be viewed favorably by the city's rating agencies. The proposed plan assumes the Convention Center would receive approximately $31 million in relief over the two allocations. 

Additionally, ARPA allows the city to offset costs for trust fund expenses that are directly tied to COVID-19 expenses. For example, the city has seen over $2.4 million in worker's compensation related claims due to COVID-19. Staff recommends these claims are eligible to be replaced with ARPA funds and would reduce the actuarial impact to future city resources. 

Administrative Oversight and Staff Augmentation to Support New ARPA Funded Initiatives: $4,000,000 

In order to successfully deploy the wide range of programs that the ARPA funds will provide, service levels must be enhanced in key areas of the organization. These staffing enhancements will also provide the oversight and compliance functions that are critical to ensure a clean audit at the end of funding cycle. 

PPE, Cleaning, Sanitizing/Testing and Vaccine Distribution: $600,000 

One thing the city learned during the first few months of the pandemic was that the city did not possess an adequate supply of personal protective equipment and sanitizing agents needed to ensure that employees were adequately protected. We also realized like many other cities across the country that the impact of not being fully prepared led to significant supply chain disruption. 

This allocation of funds will be used to stockpile equipment and supplies needed to ensure that our staff is adequately protected against the spread of COVID-19 and to ensure that the city is not a victim to future disruptions in the supply chain for these necessary items. 

Funding could also be used to address additional employee testing and vaccination related costs as needed. 

Contingency: $5 million 

A $5 million contingency is proposed to preserve resources in case the federal government changes guidance to allow the funds to be used in new areas of concern for the City Council or to supplement funding for an approved program that exhausts its allocation of funds before more funding becomes available. 

The contingency would also be available to cover other unexpected COVID-19 expenses that could occur later in the year. The reserve is not a requirement and council could allocate this funding immediately or at any other point in the fiscal year as necessary. In an effort to address more initiatives, the contingency allocation has been reduced by 50% since our last report.