Naperville allocating $13.3 million in ARPA funds to capital improvement projects

With a looming deadline, the Naperville City Council voted to allocate $13.3 million in federal COVID-19 relief funds for capital improvement projects.

But because of what they perceived as a rushed decision and poor optics, not all the council members were on board.

According to Rachel Mayer, the city's finance director, the funds from the 2021 American Rescue Plan Act must be obligated by the end of 2024 and spent by the end of 2026 or else be returned to the U.S. treasury.

In a memo, however, Mayer said the recent debt ceiling negotiations were "a reminder that the rules and timeline for using these funds can be amended at the federal government's will."

To alleviate the risk of losing the funds, Mayer recommended the money be allocated to the 2023 budget for previously approved, ARPA-eligible capital projects. That would free up $13.3 million in the city's $72 million capital improvement budget to be utilized elsewhere.

The motion to allocate the money passed 5-3 at Tuesday's council meeting. Jennifer Bruzan Taylor, Ian Holzhauer and Nate Wilson voted "no."

Bruzan Taylor was particularly critical, saying the city's had two years to develop plans for the funds but made little progress. She also expressed concern that the shifted $13.3 million would be lost in the shuffle of the overall budget.

"I had expected that we were going to get something back, or staff was going to talk to us about different ideas and impactful things we could do with that money," Bruzan Taylor said. "It's just very surprising that, all of a sudden, this is hitting us to rush."

Holzhauer didn't feel comfortable with the idea of shifting around the funds, saying, "How could the federal government possibly be OK with that?"

Mayer said a lack of consensus on what to do with the money is partly why it hadn't yet been allocated. She said meetings with city stakeholders produced ideas but nothing fully vetted or shovel-ready.

Half the federal money was received in May 2021, and half in May 2022. It's been kept in a separate city revenue fund, Mayer said.

"Finance and the city manager's office worked together and thought this was the best course of action so we didn't risk in the future having to forgo those dollars," Mayer said. "If council directed us to keep those dollars separate so that we then would use them for something special or transformative, that's part of council's option in the future."