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HomeMy Public PortalAbout05-26-20 Agenda Work SessionHuman Resources Director/Town Clerk Katherine Cathey 101 E. Orange St., PO Box 429, Hillsborough, NC 27278 919-296-9441 | katherine.cathey@hillsboroughnc.gov www.hillsboroughnc.gov | @HillsboroughGov Board of Commissioners Agenda | 1 of 1 Agenda Board of Commissioners Work Session (Remote) 7 p.m. May 26, 2020 Town of Hillsborough YouTube channel Due to current public health concerns, the Board of Commissioners is conducting its work session remotely on May 26, 2020 utilizing Zoom. Members of the Board of Commissioners will be participating in the meeting remotely. Members of the public will be able to view and listen to the meeting via live streaming video on the Town of Hillsborough YouTube channel. Compliance with the American with Disabilities Act interpreter services and/or special sound equipment is available on request. If you are disabled and need assistance with reasonable accommodations, call the Town Clerk’s Office at 919-296-9441. Please use the bookmark feature to navigate and view the item attachments. 1.Opening of the workshop 2.Agenda changes and approval 3.Items for decision — consent agenda A.Miscellaneous budget amendments and transfers B.Planning Board — Resolution asking the Board of County Commissioners to re-appoint Chris Johnston to a three-year, out of town term C.Resolution to adopt the town's portion of the Eno-Haw Regional Hazard Mitigation Plan D.2020 Board of Commissioners meeting calendar amendment 4. In-depth discussions and topics A.Utility Customer Payment Plans under Executive Order 124 B.Coronavirus Relief Fund Plan and Allocations C.COVID-19 Business Recovery Considerations D.FY2021 Manager’s Recommended Annual Budget presentation 5.Other business 6.Committee updates and reports 7.Adjournment Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Administration - Budget Public Hearing: Yes No Date of Public Hearing: __________________________ For Clerk’s Use Only AGENDA ITEM # 3.A Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Emily Bradford, Budget Director ITEM TO BE CONSIDERED Subject: Miscellaneous budget amendments and transfers Attachment(s): 1.Description and explanation for budget amendments and transfers Brief Summary: To adjust budgeted revenues and expenditures where needed due to changes that have occurred since budget adoption. Action Requested: Consider approving budget amendments and transfers. ISSUE OVERVIEW Background Information & Issue Summary: N/A Financial Impacts: As indicated by each budget amendment. Staff Recommendations/Comments: To approve the attached list of budget amendments. BUDGET CHANGES REPORT TOWN OF HILLSBOROUGH FY 2019-2020 DATES: 05/26/2020 TO 05/26/2020 REFERENCE NUMBER DATE BUDGET CHANGE BUDGET ORIGINAL BUDGET AMENDEDCHANGE USER 10-10-6610-5700-743 CAPITAL - SOFTWARE 05/26/2020 20,000.00 -12,000.00To cover PD Annex AV & phone 16728 8,000.00EBRADFORD 10-30-5800-5300-310 GASOLINE 05/26/2020 31,350.00 -1,000.00To cover bulk item collection 16724 30,350.00EBRADFORD 10-30-5800-5300-458 C.S./BULK CONTAINERS RENTAL & HAULI 05/26/2020 7,100.00 1,000.00To cover bulk item collection 16725 8,100.00EBRADFORD 10-71-5100-5982-004 TRANSFER TO PUBLIC SAFETY FACILITY 05/26/2020 0.00 12,000.00To cover PD Annex AV & phone 16729 176,560.00EBRADFORD 30-80-7200-5300-041 ATTORNEY FEES 05/26/2020 0.00 5,000.00To cover yr-end Attorney Fees projections 16733 17,000.00JDELLAVALLE 30-80-8120-5300-150 MAINTENANCE - PLANT & EQUIPMENT 05/26/2020 57,300.00 -8,400.00To cover yr-end chemical expenses 16726 67,891.00JDELLAVALLE 30-80-8120-5300-320 CHEMICALS 05/26/2020 143,000.00 8,400.00To cover yr-end chemical expenses 16727 151,400.00JDELLAVALLE 30-80-9990-5300-000 CONTINGENCY 05/26/2020 400,000.00 -5,000.00To cover yr-end Attorney Fees projections 16732 305,878.00JDELLAVALLE 47-20-5100-5700-570 MISCELLANEOUS 05/26/2020 0.00 12,000.00To cover PD Annex AV & phone 16730 84,145.00EBRADFORD 47-70-3870-3870-100 TRANSFER FROM GENERAL FUND 05/26/2020 0.00 12,000.00To cover PD Annex AV & phone 16731 176,560.00EBRADFORD 72-20-5100-5300-052 ABC BOARD EXPENDITURES 05/26/2020 0.00 -13,880.00To cover used vehicle 16722 1,120.00EBRADFORD 72-20-5100-5700-740 CAPITAL VEHICLES-ABC GRANT 05/26/2020 0.00 13,880.00To cover used vehicle 16723 13,880.00EBRADFORD 24,000.00 JPrivuznak 4:13:03PM05/18/2020 fl142r03 Page 1 of 1 GF: Information Services Solid Waste Solid Waste Police Admin WSF: Admin of Enterprise Water Treatment Plant Water Treatment Plant Contingency Public Safety Bldg. Public Safety Bldg. Restricted Rev./Police Admin. Restricted Rev./Police Admin. Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Planning Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 3.B Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Margaret A. Hauth, Planning Director/Assistant Town Manager ITEM TO BE CONSIDERED Subject: Planning Board — Resolution asking the Board of County Commissioners to re-appoint Chris Johnston to a three- year, out of town term Attachment(s): 1.Resolution 2. Application form 3.Attendance record Brief Summary: Mr. Johnston was originally appointed in 2017. He is eligible for a second term. Mr. Johnston has only missed one held meeting during his tenure. Action Requested: Adopt the resolution requesting the Board of County Commissioners appoint Chris Johnston to a three-year, out of town term on the Planning Board. ISSUE OVERVIEW Background Information & Issue Summary: N/A Financial Impacts: N/A Staff Recommendations/Comments: RESOLUTION REQUESTING A RE-APPOINTMENT TO AN EXTRATERRITORIAL JURISIDICTION SEAT ON THE HILLSBOROUGH PLANNING BOARD WHEREAS, as a result of the end of a term, it is necessary to re-appoint a person to a seat reserved on the Hillsborough Planning Board for persons residing within the town’s extraterritorial planning jurisdiction; and WHEREAS, if a resident of the ETJ cannot be identified to fill the position, the Orange County Board of Commissioners may appoint a resident of the county; and WHEREAS, by state statute and town ordinance, the Orange County Board of Commissioners initially has the authority and responsibility to appoint ETJ members to the town’s Planning Board. NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE TOWN OF HILLSBOROUGH RESOLVES: Section 1. The Orange County Board of Commissioners is respectfully requested to re-appoint the following individual to an ETJ seat on the Hillsborough Planning Board, whose term would expire May 31, 2023: Mr. Chris Johnston 305 N English Hill Lane Hillsborough, NC 27278 Section 2. If the Orange County Board of Commissioners fails to appoint persons willing to serve in the capacity described above within 90 days of receiving this resolution, then the Hillsborough Town Board may make this appointment. Section 3. The Town Clerk shall send a copy of this resolution to the Orange County Manager. Section 4. This resolution shall become effective upon adoption. The foregoing resolution having been submitted to a vote, received the following vote and was duly adopted this 26th day of May 2020. Ayes: Noes: Absent/excused: I, Katherine M. Cathey, Town Clerk to the Town of Hillsborough, do hereby certify that the foregoing is a true and correct copy of a resolution adopted by the Hillsborough Town Board of Commissioners on May 26, 2019. Katherine M. Cathey Town Clerk Advisory Board Application If you are a Town of Hillsborough resident, at least 18 years old and willing to volunteer your time and expertise to your community, please complete this form. Name: Chris Johnston Home address: 305 N English Hill Lane Home phone number: (919)753-6687 Work phone number: (919)719-7549 Email address: cojohnst@gmail.com Place of employment: The Hill Center Job title: Technology Support Specialist Birth date: May 4, 1989 Ethnic origin: Caucasian Boards you would be willing to serve on: Planning Board (Town or extraterritorial jurisdiction resident) Reason for wanting to serve: I have a personal interest in town planning, as it was my focus of study in college. I think citizen involvement is critical in a well functioning and representative town government, and advisory groups like the planning board are a way for citizens to contribute their time, expertise, and to be heard. I came to this town after I graduated from UNC and have decided it's a place I want to start a family. As a homeowner in the Extraterritorial Jurisdiction (ETJ) I feel it's important to be a part of the conversation about our towns direction, as it affects both the town and those of us just outside its limits. I want to be a part of the process. Work experience: I currently work administering IT systems at The Hill Center, a small school in Durham. Volunteer experience: I regularly donate time, money, and blood, to different organizations as needs arise, including the American Red Cross, Habitat for Humanity of Orange County, and political advocacy organizations. Educational experience: UNC Chapel Hill Political Science / Public Policy major, Urban Planning Minor Considering graduate school for a masters in Public Administration. How you heard about this opportunity: Other Agreement: ✓ I have been advised that I am committing to attend the volunteer board's regular meetings. Attendance at the regular meetings shall be considered a prerequisite for maintaining membership on the board. The Board of Commissioners may declare a vacancy on the board because of non-attendance. Member Appointed Oct Nov Dec 2018 Jan Feb Mar Apr May Jun Jul Jul wksn Aug Sep Oct Nov Dec 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020 Jan Feb Mar Apr May Chris Johnston 01/10/2017 P P P X P P P P P P P P P P P X P P P P P P P P P P P P P X X P P: Present E: Excused A: Absent X: No MeetingCurrent through – May 31, 2020 BOCC Attendance Report For Advisory Board Appointments Hillsborough Planning Board Oct / 2017 – May / 2020 Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Fire Marshal Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 3.C Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Jerry Wagner, Fire Marshal ITEM TO BE CONSIDERED Subject: Resolution to adopt the town's portion of the Eno-Haw Regional Hazard Mitigation Plan Attachment(s): 1. Resolution of Adoption of the 2020 Eno-Haw Hazard Mitigation Plan Brief Summary: The Hazard Mitigation Plan is required by State and Federal Law. Action Requested: To approve a resolution adopting the Eno-Haw Regional Hazard Mitigation Plan as approved by the North Carolina Division of Emergency Management. ISSUE OVERVIEW Background Information & Issue Summary: In October 2000, the "Disaster Mitigation Act of 2000" (OMA 2000) (PL 106-390) was signed into law, which amended the "Robert T. Stafford Disaster Relief and Emergency Act of 1988." OMA 2000 requires local governments to adopt a hazard mitigation plan in order to be eligible for hazard mitigation funding. To remain eligible for funding, each local government must update the hazard mitigation plan every five years. In addition, North Carolina General Statute §166-A -19.41 states as a condition of State public assistance funds following a disaster "the eligible entity shall have a hazard mitigation plan approved pursuant to the Stafford Act." Previously, the Town of Hillsborough, in partnership with the counties of Orange, Alamance and Durham, and their respective municipalities, came together to form a regional plan. This was done in an effort to reduce costs associated with hazard mitigation planning; the State began prioritizing planning funding provided to counties who collaboratively created regional hazard mitigation plans with neighboring jurisdictions that are faced with comparable or similar hazards. The goal was to combine efforts and have counties create comprehensive, multi-county/ multi-jurisdictional plans while using fewer resources. For the 2020 Eno-Haw Regional Hazard Mitigation Plan, Orange, Alamance and Durham Counties are now joined by Person County and the City of Roxboro. With this plan update, no local control is lost by our participation in the regional plan, and each participant retains the right to apply for State or Federal funding. Furthermore, as an additional benefit, any combination of participants can choose to share the cost of any required local match when applying for project funding. Financial Impacts: There are no direct financial impacts associated with the adoption of the Eno-Haw Regional Hazard Mitigation Plan. The State has provided funding for contracting services associated with compiling the plan. State and Federal law require a jurisdiction to have an adopted and approved hazard mitigation plan in place to be eligible for hazard mitigation assistance funds. Work at the local level was accomplished using existing town and county staff. Staff Recommendations/Comments: Approve the attached resolution adopting the Eno-Haw Regional Hazard Mitigation Plan. TOWN OF HILLSBOROUGH BOARD OF COMMISSIONERS RESOLUTION ADOPTING THE "ENO-HAW REGIONAL HAZARD MITIGATION PLAN" WHEREAS, in October 2000, the President of the United States signed into law the "Disaster Mitigation Act of 2000" (PL 106-390) to amend the "Robert T. Stafford Disaster Relief and Emergency Act of 1988" which requires local governments to adopt a mitigation plan in order to be eligible for hazard mitigation funding; and WHEREAS, Federal mitigation planning regulations require local mitigation plans to be updated and resubmitted to the Federal Emergency Management Agency for approval every five years in order to continue eligibility for Federal Emergency Management Agency hazard mitigation assistance programs; and WHEREAS, North Carolina General Statute §166-A - 19.41, approved by the North Carolina General Assembly in June 2001 requires local governments to have a hazard mitigation plan approved in order to receive state public assistance funds; and WHEREAS, Town staff along with representatives from partnering jurisdictions in conjunction with contract services have performed a comprehensive review and evaluation of the Eno-Haw Regional Hazard Mitigation Plan and have updated the plan as required under regulations at 44 CFR Part 201 and according to guidance issued by the North Carolina Division of Emergency Management; and WHEREAS, the North Carolina Division of Emergency Management has deemed the Eno-Haw Regional Hazard Mitigation Plan compliant with Section 322 of the Disaster Mitigation Act of 2000, as well as with relevant state requirements; and WHEREAS, the Federal Emergency Management Agency has received a draft of the Eno-Haw Regional Hazard Mitigation Plan and is currently reviewing; NOW THEREFORE, BE IT RESOLVED, that the Board of Commissioners of the Town of Hillsborough hereby adopts, by way of this resolution, the "Eno-Haw Regional Hazard Mitigation Plan" as approved by the North Carolina Division of Emergency Management. The foregoing resolution was put to a vote of the Town of Hillsborough Board of Commissioners, the results of which vote are as follows: Ayes: Noes: Absent or Excused: Dated: Katherine Cathey, Town Clerk Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Planning and Administration Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 3.D Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Margaret A. Hauth, Planning Director/Assistant Town Manager and Katherine M. Cathey, Human Resources Director/Town Clerk ITEM TO BE CONSIDERED Subject: 2020 Board of Commissioners meeting calendar amendment Attachment(s): 1. 2020 Board of Commissioners meeting calendar Brief Summary: At the May regular meeting, the board supported the idea of an additional public hearing to limit delays due to COVID-19. The board authorized the Mayor to determine the best course of action in coordination with the staff. Mayor Weaver and the Planning Director considered all the preferences of the board members and the workload. They agreed that calling a special hearing on June 18 to handle text amendments seemed to meet the most preferences and allowed everyone to ease into remote public hearings. This option also leaves open the possibility to have an additional public hearing in August if the developments heard in July require additional time or new applications come in and are complete. See the background section for more details on this. Action Requested: Amend the meeting schedule to call a special public hearing on June 18 (during the Planning Board regular meeting) and designate the meeting location for all Board of Commissioners meetings in June to remote (Town of Hillsborough YouTube channel). ISSUE OVERVIEW Background Information & Issue Summary: A third development application for the Habitat townhome project was timely filed on May 18, but it’s uncertain that it will be ready for a public hearing in July. This request would require a quasi-judicial hearing. Having 3 development projects on one remote public hearing is likely too much to process at one time. Staff is asking board members to hold either August 10 (regular meeting) or August 20 (planning board meeting) as possible additional hearing dates. We won’t need to decide about this until the end of June or even at the July hearing. Financial Impacts: Staff Recommendations/Comments: Adopted: Sept. 9, 2019 Amended: Feb. 10, 2020 Amended: May 11, 2020 Amended: May 26, 2020 Hillsborough Board of Commissioners Meeting Calendar — 2020 All meetings start at 7 p.m. and are in the Town Hall Annex Board Meeting Room, 105 E. Corbin St., unless otherwise noted. Times, dates and locations are subject to change. Due to public health concerns related to COVID-19, the Board of Commissioners may conduct remote meetings utilizing Zoom. Members of the Board of Commissioners will participate in the meetings remotely. Members of the public will be able to view and listen to the meeting via live streaming video on the Town of Hillsborough YouTube channel. Monday, Jan. 13 Regular meeting Thursday, Jan. 16 Joint public hearing with Planning Board Monday, Jan. 27 Work session Monday, Feb. 10 Regular meeting Monday, Feb. 24 Work session Saturday, March 7 Budget retreat (9 a.m.) Monday, March 9 Regular meeting Monday, March 23 Work session — State of the Town Address (Remote) Monday, April 13 Regular meeting (Remote) Thursday, April 16 Joint public hearing with Planning Board – CANCELED Monday, April 27 Work session – CANCELED Monday, May 11 Regular meeting (Remote) Tuesday, May 26 Work session (Remote) Monday, June 8 Regular meeting (including budget public hearing and workshop) (Remote) Monday, June 15 Budget work session — if needed (Remote) Thursday, June 18 Joint public hearing with Planning Board (Remote) Monday, June 22 Work session — if needed (Remote) Monday, June 29 Work session and budget adoption (Remote) Thursday, July 16 Joint public hearing with Planning Board Monday, Aug. 10 Regular meeting Monday, Aug. 24 Work session Monday, Sept. 14 Regular meeting Monday, Sept. 28 Work session Monday, Oct. 12 Regular meeting Thursday, Oct. 15 Joint public hearing with Planning Board Monday, Oct. 26 Work session Hillsborough Board of Commissioners Meeting Schedule — 2020 Page | 2 Monday, Nov. 9 Regular meeting Monday, Nov. 23 Work session Monday, Dec. 14 Regular meeting Board of Commissioners Agenda Abstract Form Meeting Date: _May 26, 2020_______________ Department: __Finance_____________________ Public Hearing: Yes No Date of Public Hearing: ___ _________ For Clerk’s Use Only AGENDA ITEM # 4.A Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Finance Director, Daphna Schwartz ITEM TO BE CONSIDERED Subject: Utility Customer Payment Plans under Executive Order 124 Attachment(s): None Brief Summary: Executive Order (EO) 124, which suspends certain local government utility collection practices and imposes some additional duties due to the COVID-19 pandemic is scheduled to end on June 1, 2020. Legally, the Board may decide to reinstate utility disconnections, late penalties and delinquent fees beginning on or after June 2, 2020 with one exception. EO 124 prohibits local governments from terminating service to residential customers who incurred a delinquency between March 31, 2020 and June 1, 2020 and who are otherwise complying with the terms of a payment plan. A local government must offer a residential customer a reasonable payment plan option to pay any delinquencies that occur between March 31 and June 1, 2020. By the terms of the EO, the payment plan must allow a residential customer at least six months from the termination of the EO to pay off any delinquent amounts accumulating during this 60-day period. The local government utility may set the terms of the payment plan and amount of periodic payments. The local government may automatically place customers on the payment plan and start including the payment amount on the customer’s regular utility bill. Payment Plan Terms to Consider 1. Payment increments: equal monthly installments, percentage of total amount each month, etc. 2. Customer initiative: require the customer to sign-up or implement an automatic payment plan. 3. Payment plan period: limit to six months or allow flexibility to extend the plan. 4. Specify the customer must remain current on amounts that come due after June 1 or the date the board decides to reinstate disconnections, penalties and delinquent fees. 5. Specify the customer will be disconnected if the payment plan amounts and new amounts are not paid by the due date. 6. Refer to normal written policies after June 1 or the date the board decides to reinstate disconnections, penalties and delinquent fees. Action Requested: Discuss a timeline for reinstating disconnections, penalties and delinquent fees. Discuss the terms of the payment plan in enough detail as to allow staff to draft a payment plan to be approved at the June 8 board meeting. ISSUE OVERVIEW Background Information & Issue Summary: See above. Financial Impacts: Staff Recommendations/Comments: Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Administration Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 4.B Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Town Manager Eric Peterson ITEM TO BE CONSIDERED Subject: Coronavirus Relief Fund (CRF) Plan and Allocations for Hillsborough Attachment(s): 1. Hillsborough Finance Director email regarding acceptable uses for CRF funding 2. UNC School of Government Coates Cannons Blog Post: Using CRF Monies for Small Business Support 3. CRF Frequently Asked Questions (Covers permitted and non-permitted uses for the funds) 4. Orange County Agenda Abstract and Information from their May 19 meeting on Coronavirus Relief Funding (CRF) to North Carolina Counties Brief Summary: Orange County received a $2.66 million share of CRF funds that are being distributed through the State of North Carolina. The Orange County Board of County Commissioners voted to distribute those funds via the same per capita formula used to distribute sales tax. Hillsborough will receive 3% or up to $79,972.59. Orange County is considering hiring a consult to manage recovery operations for a three to six month period. If this occurs, the cost will likely be funded through each government’s prorated share. If this occurs it could reduce Hillsborough’s fund allocation by about $10,000 +/- several thousand dollars. Orange County is the receiving entity and they must report how the funds will be used to the state by June 1. The municipalities must report to the county how they intend to use their allocation by Tuesday or Wednesday. Therefore, the town board must decide at the Tuesday night meeting how Hillsborough will use these funds. The funds are intended to provide relief/assistance related to public health, safety, small business assistance, reimbursement of COVID-19 related costs to governments, and other types of assistance. Assistance with preventing homelessness, utility payments, and other related matters are also permitted. For more details please refer to the attachments referenced above. Use of the funds appears to be flexible, but much of the guidance on how to use the funds is vague. Thus, there are varying views and disagreements on how funds can be used. For example, the UNC SOG blog post is clear there are significant limitations on how these funds can be distributed to small businesses, such as North Carolina law prohibits grants to businesses, but states a loan program can be established. To add to the confusion, the act states this is a permissible use, UNC SOG says no and goes into substantive details, yet some other governments still appear to intend to offer grants to businesses. In the issue overview below, several possible uses are identified along with comments. The staff recommendation section below includes a recommendation from the town manager to give the town board a starting point for deliberating on how to allocate these funds. Due to the extremely short time window and limited opportunity to plan, investigate, and analyze, staff will continue to look for additional information and options through Tuesday night’s meeting. Thus, additional information may be provided during the meeting. Action Requested: Discuss and provide direction on the types of uses and percentage of the funds to be allocated for each use. ISSUE OVERVIEW Background Information & Issue Summary: CRF Act Eligible Uses • Provide Grants to small businesses experiencing financial loss due to COVID-19 • Support COVID-19 related expenditure for public health staff and program costs, personal protective equipment (PPE), public safety staff expense, medical expense, overtime or mandatory pay, distance learning and teleworking requirements • Expenses must be incurred between March 1, 2020 — December 30, 2020; and not accounted for in FY 2019-20 Budget • Eligible expenses if any prior to March 1, 2020 should be applied for through FEMA • Must apply for either CRF or FEMA; trigger date is determinant • Before March 1 apply through FEMA; minimal County coronavirus expenses within this timeframe • After March 1 apply through CRF; majority of coronavirus expenses • Funds cannot be used to replace lost local government revenue • Note: The U.S. Treasury may allow revenue replacement in any future CRF allo® RAN • Others: see attachments for greater detail on eligible uses. Funding Options for Consideration: • Supplement the homelessness prevention activities, including eviction prevention support The town has been using the payment in lieu funds from Forest Ridge to assist with homelessness prevention activities now managed by Orange County (previously different organizations). These funds have basically been exhausted and are only released as new houses are occupied. Other jurisdictions in the county have earmarked large sums for this effort. A scaled contribution to assist residents in the city limits & on our utility system is possible. The funds are currently reimbursed by the town to the county after they have assisted someone. As Orange County is sharing these recovery funds with us, the town could simply ask them to earmark a flat amount for these efforts for Hillsborough residents and customers. The town would have no responsibility for tracking, reporting or making these payments. This is a highly efficient way, from an administrative perspective, to assistance people heavily impacted by COVID-19. Estimated amount: $7,000 - $10,000 to be roughly on scale with neighboring jurisdictions. It’s important to note there is no way to estimate the need in the immediate future as the economic impacts of COVID-19 are still evolving. Needs are currently funded by Orange County but may very well be exhausted. Thus, we anticipate there is a good probability the municipalites will be asked to supplement Orange County’s housing emergency assistance programs. Those funds would have to come from the Hillsborough budget. This is another reason to consider using CRF monies to support this program at least at the $7,000 to $10,000 level to be on par with what other localities have already done and possibly more to address anticipated need in this area. • Utility bill assistance This allows assistance to directly to persons facing economic hardship so they can pay utility fees to continue these essential services. Orange County Department of Social Services (OCDSS) and Orange Congregations in Mission (OCIM) currently provide assistance to Hillsborough water and sewer customers, as well as other utilities. The town currently provides funds to OCIM to assist customers in need. The funds from OCDSS that are used to help utility customers come from another source. Clarification is needed on several points: o If the town directs CRF money to OCDSS and/or OCIM, could these funds be designated for use only with Hillsborough water/sewer customers (that would include both out-of-town and in-town customers)? o Confirmation that OCDSS will accept funds from the town to be administered to only Hillsborough residents (within the corporate limits) as well as out-of-town water/sewer customers. Since OCDSS is another governmental entity this is clearly allowed. o Can the town direct funds to OCIM to augment/support the current existing program? It appears so, but this needs clarification. • Assistance to small businesses Note: per the summary above, the UNC School of Government is clear that these funds cannot be used for grants to businesses. If staff gets information to the contrary since this seems to be a point of debate, it will be shared with the town board. Loan programs are allowed, but the town has no such program or infrastructure to administer. If grants were deemed allowable, options depend on the board’s priorities. Are certain enterprises targeted or is this general relief as all segments have been impacted? The $5,000 Orange County awarded to the town from the economic development tax could supplement any funds awarded under this topic and combine these efforts. It appears to minimize IRS reporting issues the grants would likely need to be below $600. Possible uses might include: • Provide flat grant of less than $600 per business on first-come-first serve basis. Screening criteria could be established, such as number of employees (less than 10 or 15?), percent decreased business or activity in Q1 & Q2 (decrease of at least 20%), and normal activity thresholds (below $50,000). • Reimbursement for PPE expenses. This may be allowed since it’s a reimbursement. Staff would need to develop a system to manage a PPE reimbursement program for businesses (e.g., application process, criteria, proof via receipts, disbursement/payment process, documentation and audit to Orange County and the State of North Carolina for verification of CRF compliance). a. Pros – i. impact of the funding likely greater – more money per business ii. reaches smaller businesses b. Cons – i. Many checks to write – but we would know how many based on the funding available. ii. Requires business to request funding & release some business information. iii. Potentially arbitrary and unsure how the funds would be used, unless for PPE only. Financial Impacts: No use of town monies from any of the three funds. The biggest impact will be on staff time in terms of administering, monitoring, possibly processing checks, documenting, and auditing. Staff Recommendations/Comments: Conceptual checklist to guide decisions on CRF funding:  Clearly permissible uses.  Impact. Amount of funds provided makes a noticeable difference in the area intended for aid (i.e., is not so diluted or spread out that there is little actual help).  Social equity considered via assisting people in distress.  Efficient to administer.  Audit compliance: efficient to document for grant requirements and annual CAFR. • Homelessness, eviction prevention, and utility assistance programs. Recommended for funding. From the finance director’s assessment email from the FAQ’s, funding the following items seem to meet all five checklist items: homelessness, housing/eviction, and utility bill assistance. In addition to providing aid to members of the community clearly facing financial hardship (not that others are not), these areas should be the most efficient in terms of ease of administration. Funds are directed to the county and/or OCIM to manage already existing programs designed to provide assistance in these areas. a. Homelessness and eviction prevention support: 50% of Hillsborough CRF allocation b. Utility bill assistance program(s): 50% of Hillsborough CRF allocation Defer and Look for Alternative Funding Sources • Small business loan program. Even if using these funds for business loans is permissible, setting up a program to do so creates an on-going system or bureaucracy we then have to manage. Doing something like this rapidly greatly increases the risk of it being problematic. Since the total amount of funds is likely to get split amongst the other competing needs, a concern is whether the impact of the loans would make an impact in assisting business and it would involve significant administration over a prolonged period of time. • Grants to small businesses. Due to combination of the UNC SOG interpretation that grants to businesses are not allowable reimbursement and the administrative challenges. In addition, if funds are also being allocated for homelessness, eviction prevention, and utlitity assistance the total amount of funds available for business grants, coupled with the small amounts to be distributed per business (likely less than $600 each) would provide a questionable impact in this sector. • Hazard pay to qualifying town employees. The town is already developing a proposal to provide modest payments to employees that have been exposed to high risks and/or factors during the pandemic. While use of CRF funds for this program would be the most beneficial for the town’s finances, it’s still recommended to use CRF for the homelessness, eviction assistance, and utility bill assistance programs. Funding for hazard or related pay may become available from federal sources. Some unspent funds in FY20 can be identified to cover this fiscal year’s costs. Coates' Canons Blog: Using Federal Coronavirus Relief Funds for Small Business Support By Tyler Mulligan Article: https://canons.sog.unc.edu/using-federal-coronavirus-relief-funds-for-small-business-support/ This entry was posted on May 11, 2020 and is filed under Development Finance, Development Finance, Grants On May 6, 2020, the North Carolina Office of State Budget and Management delivered a letter to counties with the amount of federal funds that will be distributed to each county from the “Coronavirus Relief Fund” (CRF) pursuant to the federal CARES Act. Guidance from the U.S. Department of Treasury Department says that CRF can be used for local government expenditures related to COVID-19, and the list of examples includes grants and loans for businesses. The federal guidance merely offers examples and provides no separate authority for activities, and importantly it does not override state law. The CRF is welcome news for local governments that have enacted loan programs in compliance with state law (as described in prior posts here and here). This means that local governments may receive reimbursements for capital outlays for loans. In addition, programs to aid individuals in need, which are also permitted under state law, can utilize CRF. Grants for businesses, however, remain legally and practically problematic for multiple reasons. This post explores state law surrounding these possible uses of CRF allocations. What is the Coronavirus Relief Fund (CRF)? The federal CARES Act (full text here) established the “Coronavirus Relief Fund” (CRF) and sets forth permitted uses of CRF in Section 5001 of the Act: (d) Use of funds.—A State, Tribal government, and unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the State, Tribal government, or unit of local government that— (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); (2) were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. This is sparse language. The CARES Act contains a few other regulatory requirements such as reporting, but it doesn’t offer any other explanation of the allowable uses of funds. In other words, CRF is an incredibly flexible pool of funds that can offset any number of unforeseen COVID-related expenses of a local government, ranging from the purchase of protective equipment to upgrading space for improved social distancing. The U.S. Treasury Department provided their interpretation of allowable uses in written guidance. The examples seem to cover just about every imaginable local government expense related to COVID-19, including economic support to businesses. The fact that one use or another appears in the federal guidance is not relevant to North Carolina local governments, which derive all of their powers from the state. In North Carolina, a local government cannot engage in any activity unless a statute permits it. There are statutes on the books authorizing local governments to aid needy individuals, and even for engaging in public activities to support businesses. However, the primary concern is compliance with the state constitution. North Carolina Legal Authority to Provide Financial Aid to Individuals Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. The North Carolina Constitution, the law of the land in this state, tells us that it is a “first duty” of the State to aid “the poor, the unfortunate, and the orphan.” In other words, it is always constitutionally permissible to provide direct aid to individuals in need. For example, the North Carolina Supreme Court has authorized loans for education for those “of slender means,” State Education Assistance Authority v. Bank of Statesville, 276 N.C. 576 (1970); loans for veterans to purchase homes, Hinton v. Lacy, 193 N.C. 496 (1927); provision of residential housing for sale or rental to persons and families of lower income, Martin v. N.C. Hous. Corp., 277 N.C. 29 (1970); and loans for persons of low and moderate income to acquire housing, In Re Denial of Approval of Bonds, 307 N.C. 52 (1982). A local government cannot engage in any activity unless it has statutory authority to do so. Fortunately, there is ample authority for aiding individuals in need. Existing statutes authorize cities and counties to establish “community development programs” to provide for the “welfare needs of persons of low and moderate income.” G.S. 160A-456(a)(2) (cities), G.S. 153A-376(a)(2), and G.S. 160D-1311(a)(2) [effective in August 1, 2021]. There are two important points to note: (1) recipients of welfare aid must be limited by income, and (2) the reference to “community development programs” refers to federal programs, such as Community Development Block Grants (CDBG), which provide funding for activities that benefit low income persons. These statutes provide authority for activities such as providing safe and decent housing for persons of low income; construction of community facilities for the benefit of low-income persons; and training programs for the unemployed. Finally, the North Carolina Attorney General in a 1999 opinion examined whether the General Assembly could provide disaster aid to individuals and opined that it was permissible. The Attorney General noted that it is a “first duty” to aid the “poor” and the “unfortunate,” and concluded that aid to individuals in need can serve a public purpose under the North Carolina Constitution, provided the program is properly tailored to address the immediate emergency. Using CRF for aid to individuals in need The federal CRF allocation can help pay for new COVID-related programs designed to aid individuals in need. Examples in the federal guidance include the following: Expenses for food delivery to residents, including, for example, senior citizens and other vulnerable populations COVID-19-related expenses of maintaining state prisons and county jails, including as relates to sanitation and improvement of social distancing measures Expenses for care for homeless populations provided to mitigate COVID-19 effects North Carolina Legal Authority to Provide Financial Aid to Businesses Providing aid to a for-profit business is an entirely different matter from aiding “poor” and “unfortunate” individuals. For one thing, state constitutions across the country were intentionally designed to prevent aid to private enterprises after widespread government bankruptcies occurred in the late 1800s following the collapse of quasi-public railroads in which governments had invested. State constitutions were amended to include “public purpose” and “gift” clauses to avoid future entanglements with private enterprise. Those clauses reflect the national rule to this day. Osborne M. Reynolds, Jr., Local Government Law 515 (4th ed. 2015) (“Gifts of property by local governments—at least to private individuals—are generally banned by statute or as a matter of common law; any transfer of municipal property must be supported by some reasonable compensation or benefit in return.”); John Martinez, 3 Local Government Law § 21:7, at 21-25 (2d ed. 2017) (“Local government property cannot be conveyed to a private party without adequate consideration, for to do so would constitute an improper gift of public property or the granting of a subsidy contrary to state constitutional constraints.”). Specifically in North Carolina, the state constitution requires all expenditures of public funds to be “for public purposes only.” In addition, no private entity may receive “emoluments or privileges” (gifts) unless a public service is provided in return. Under North Carolina’s “exclusive emoluments and privileges” clause, a local government isn’t even allowed to make a donation to a charitable nonprofit entity. See my faculty colleague Frayda Bluestein’s blog post on the topic here. A local government can enter into a contract with a private entity and pay the entity a reasonable price for a valuable public service (such as paying a business to repair the roof of a public building), but the government cannot make a gift to a private entity. For an expenditure to serve a public purpose and not amount to an unconstitutional gift, the expenditure must meet a two- Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. part test. First, the activity must be reasonably connected to a legitimate aim of government. Second, the ultimate gain must be the public’s, not that of an individual or private entity. Under this test, even loans to businesses have been denied. Mitchell v. N. Carolina Indus. Dev. Fin. Auth., 273 N.C. 137 (1968) (industrial development bonds not a public purpose); Stanley v. Dep’t of Conservation & Dev., 284 N.C. 15 (1973) (financing for pollution control not a public purpose). In 1996, the North Carolina Supreme Court created an exception to the general rule when it determined that business location incentives serve a public purpose when a business promises to create substantial “jobs and tax base” that “might otherwise be lost to other states.” Maready v. City of Winston-Salem, 342 N.C. 708 (1996). Most disaster relief programs don’t involve creation of substantial jobs and tax base that “might otherwise be lost to other states,” and North Carolina courts haven’t created an exception for disaster relief in the same way that they created an exception for business location incentives. However, there is reason to believe that a disaster loan program for businesses would meet the two-part legal test for public purpose. Disaster relief for those in need is, in general, a legitimate aim of government and therefore a tailored program would meet the first part of the test. The second part, ensuring that public benefits predominate over private interests, is probably achieved by a loan program for businesses damaged by a disaster. The public benefit is achieved because a loan with flexible collateral and payment terms will keep the business afloat in the short-term, allowing the business to repair damage, hire back its employees, and spread any losses over future years. A requirement for a business to hire unemployed workers would place the program on even more solid footing, because the focus of the program would be aiding needy individuals, rather than focusing on businesses. The public benefit predominates because, ultimately, a business owner takes only so much of a (properly structured) loan as the owner needs, and then the private interests are minimal because the loan gets paid back. The North Carolina Attorney General was asked for a formal opinion regarding whether the state could legally offer loans to businesses adversely affected by a disaster. The Attorney General performed the two-part public purpose test, and in particular examined the second part regarding whether the public benefit predominated over private interests. The Attorney General determined that a loan program would likely be upheld, so long as it was tailored to address the emergency situation. The opinion offered an example, saying that the General Assembly should limit the loans only to businesses (1) that “suffered substantial damage” due to the disaster and (2) that were “not otherwise fully compensated” for that damage. One concern in the current crisis is that businesses have not suffered physical “damage” as a result of COVID-19, and many have received assistance from the federal government and can now benefit from the state’s loan program, too. There are multiple sources from which a business may have been compensated. An advantage of a loan program in this situation is that a loan can be structured to ensure that federal and state loans remain more advantageous for a business, thereby encouraging borrowing businesses to utilize the federal and state loan programs before resorting to a local government program (or pay back a local government loan with proceeds from a federal or state loan). Advice on structuring a loan program to achieve this result, in addition to avoiding competition with commercial banks, is described in blog posts here and here. Using CRF for a local government loan program for small businesses One of the challenges faced by local governments in offering COVID loan programs is a lack of capital; that is, many local governments don’t have the financial means to create a loan program. CRF can be used for the capital outlays and related costs of a local government loan program. We know that loan programs are eligible for CRF because one of the examples of allowable programs in the Treasury guidance is a “payroll support program,” which is a type of loan program offered by Treasury for air carriers and other companies (see CARES Act §§ 4112-4117). Thus, a loan program established in response to COVID-19 would meet the stated requirements of CRF: (d)(1): the expenditure is “necessary due to the public health emergency”; (d)(2): “not accounted for in the budget most recently approved”; and (d)(3): costs were incurred since March 1. Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Using CRF for a loan program may allow a local government to accept more risk in the loan program and offer loans with very business-friendly payment structures. An example of a business-friendly loan might be something like the following: A two-year “no payment” period (during which interest accrues but is not paid). For comparison, the General Assembly recently enacted a loan program with a six month no payment period (Section 4.2. of Session Law 2020- 4). At the end of the no payment period, the loan converts into a very long amortization period, such as 10 or more years. To view the sizable impact of the amortization period, see the loan model available through a link in this blog post. Unsecured/no collateral required. For comparison, the General Assembly’s loan program requires borrowers to provide collateral in the form of a UCC Financing Statement, but some cities are offering unsecured loans (with a higher interest rate to account for the higher risk of the loan). Minimal underwriting. In my experience with small businesses, a loan with this structure would make an enormous difference, allowing the business to pay bills and keep moving, with plenty of runway (two years) before a single payment was required. The School’s Development Finance Initiative (UNC DFI) is offering free consults for local governments who would like assistance structuring a legal and effective loan program. What about grants for businesses, rather than loans? The federal guidance issued by Treasury also lists the following as an eligible use of CRF: “grants to small businesses to reimburse the costs of business interruption caused by required closures.” It is difficult to decipher this example in the guidance because there are few “costs” of business interruption due to closure; rather, businesses take losses as their bills pile up and revenue is reduced. Do “costs” mean purchase of masks and disinfectant by a business? Can CRF only be used for such costs? Setting aside the fact that the Treasury guidance is unclear on this point, there is a more important issue. Regardless of what is listed as an example in federal guidance, state law controls and grants to businesses are generally not permitted under the state constitution. Recall that North Carolina courts will evaluate the public purpose of an expenditure by conducting a two-part test. The two- part test is the same described previously for loan programs, except that in a grant program, private interests are far more substantial—a business never pays back a grant, even if the business ultimately recovers and could have paid it back. Thus, grant programs are generally not permissible because they cannot pass the two-part test; private interests are dominant. Demand for a grant program is no indication of public benefit nor financial need. A rational business will always seek a grant, so a grant program or other subsidy program will be over-subscribed even if applicant businesses don’t need it or qualify for it (as seen with COVID-related federal grant and loan programs). Community development programs (G.S. 160A-456(a)(2), G.S. 153A-376(a)(2), and G.S. 160D-1311(a)(2)) occasionally involve grants to businesses, but only when the grant is necessary to achieve benefit for low-income individuals. It bears repeating: the primary focus is benefit for low income persons, not the business. Examples might include prison reentry programs and apprenticeship programs for the unemployed, in which a business receives some incidental benefit from a training program designed to assist individuals in need. A grant program for developers of privately-owned housing for low income persons is another common example (as described in an earlier blog post). The guiding federal program in this area, the Community Development Block Grant (CDBG) program, requires documentation to verify that low income persons are benefited. When a for profit business receives aid through CDBG, administrators must perform underwriting to ensure the benefit for low income persons will be achieved and that the recipient has properly structured debt and equity, that profits are not excessive, and that the business will remain financially viable in order to deliver the promised benefit to low income persons. Thus, local governments implementing a community development program that provides some benefit to businesses would need to determine the following: (1) assisting low and moderate income persons is the focus of the effort; and (2) the level of aid to the business is necessary to achieve the benefit for low and moderate income persons after evaluating Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. the recipient business in terms of debt, equity, and viability of the business, and considering other forms of assistance the business is receiving from federal and state sources (standard underwriting to determine first whether a loan works). This is a business-by-business determination that can be quite burdensome. A properly structured loan program, in contrast, can be established quickly and with less administrative burden, because businesses only take as much loan as they need and then pay it back. In a recent webinar about COVID loan programs, a city manager of a small community explained how the city’s first-ever loan program, administered by city staff, went from concept to issuing loans in less than two weeks. Consider “fundamental constitutional precepts” North Carolina courts have stated in multiple decisions that “direct state aid to a private enterprise, with only limited benefit accruing to the public, contravenes fundamental constitutional precepts.” This quote was approvingly restated by the North Carolina Supreme Court in the Maready case. Consider how the legal concepts discussed above are connected to other areas of law. For example, if grant programs are established, then legal requirements governing property conveyance at fair market value can be worked around. Grants could be used to undermine uniformity of taxation as classes of grant recipients could receive the equivalent of tax refunds. Utility law requirements about treating similarly situated customers the same could be easily avoided. Procurement rules and the outcomes of bidding processes could be nudged up or down by offering a grant. State law, rooted in constitutional principles, contains a carefully constructed web of requirements and prohibitions designed to minimize direct government aid to private enterprises. These legal implications should be considered when weighing the legal validity of small business grant programs as compared to more legally sound and equally effective loan programs. Local governments should exercise caution when considering grant programs. Consequences for making unconstitutional grants can be severe. Public officials can be criminally prosecuted for knowingly ignoring legal requirements. See, e.g., State v. James, 184 N.C.App. 149 (2007). In addition, any taxpayer may file a lawsuit against their local government for making unlawful appropriations. If the taxpayer succeeds, the transaction will be unwound, disrupting the business, and the local government will be required to pay the plaintiff’s litigation costs. Can a local government pay a nonprofit to do what the local government cannot? Could a local government simply turn funds over to a charitable nonprofit partner and let that partner issue grants to businesses? The answer is no for two reasons. The first reason should be obvious. A nonprofit cannot use government funds to do something that the appropriating government is not permitted to do. Public funds remain subject to constitutional requirements even when appropriated to another entity. Briggs v. City of Raleigh, 195 N.C. 223 (1928); Dennis v. City of Raleigh, 253 N.C. 400 (1960). The second reason is less obvious. Charitable partners are subject to their own requirements and are not permitted to provide grants to businesses. The IRS says it quite succinctly: “A business is not an appropriate charitable object.” The IRS follows the same distinction that was discussed above under North Carolina law: aiding needy individuals is permissible, whereas aiding businesses generally is not. Even in a disaster, the rules for charitable organizations are strict. IRS Publication 3833, Disaster Relief: Providing Assistance through Charitable Organizations, covers the topic. It draws on guidance that was provided to 501(c)(3) organizations following the September 11 attacks, when New York City was shut down and businesses were struggling. Charitable organizations are clearly permitted to provide aid to individuals affected by a disaster, including “basic necessities, such as food, clothing….” The publication makes clear that the appropriate aid “depends on the individual’s needs and resources.” Once a victim’s immediate needs are met, further aid depends on “individual financial needs assessments.” Thus, even when individuals are bonified victims of a disaster, charities can address immediate needs but thereafter must assess financial need prior to disbursing aid. The IRS publication directly addresses when it is appropriate to aid businesses in disaster areas. Basically, the focus of charitable assistance should remain on needy individuals. It might be permissible to aid a business in order to aid an individual (such as a sole proprietor who could lose their livelihood), but the focus remains on the individual and any Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. benefit to the private business must be “incidental.” All of the following considerations were important in determining that aiding a business was acceptable: Businesses selected for aid were ones which “would hire unemployed or underemployed residents” (Rev. Rul. 74- 587); Aided businesses would not likely locate or remain in the area without the charity’s assistance; and The aided businesses did not have adequate resources from their own assets, conventional financing, or insurance. A charity that aids a business must make an assessment of financial need before disbursing aid to the business, and then once a business has been “restored to viability … further assistance from a charity is no longer appropriate.” The charitable organization is required to have “criteria and procedures in place to determine when aid should be offered and discontinued.” An assessment of financial need is critically important. This highlights an advantage of a properly structured loan program with a risk-adjusted interest rate. Business owners won’t take a loan unnecessarily—interest charges encourage applicant businesses to take only what they need, thereby boosting confidence that they meet the financial need test. Links home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-State-Territorial-Local-and-Tribal- Governments.pdf www.congress.gov/bill/116th-congress/house-bill/748/text#toc-H109BD2E80F6D42BD9840A634F49CC3C4 www.ncleg.gov/Sessions/2019/Bills/House/PDF/H1043v7.pdf dfi.sog.unc.edu/ dfi.sog.unc.edu/home/covid-19/ www.npr.org/2020/05/04/848389343/how-did-the-small-business-loan-program-have-so-many-problems-in-just-4- weeks www.law.cornell.edu/cfr/text/24/appendix-A_to_part_570 www.irs.gov/pub/irs-pdf/p3833.pdf www.irs.gov/pub/irs-tege/eotopicm03.pdf Page Coates' Canons NC Local Government Law https://canons.sog.unc.edu Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved. Page Copyright © 2009 to present School of Government at the University of North Carolina. All rights reserved.This blog post is published and posted online by the School of Government to address issues of interest to government officials. This blog post is for educational and informational use and may be used for those purposes without permission by providing acknowledgment of its source. Use of this blog post for commercial purposes is prohibited. To browse a complete catalog of School of Government publications, please visit the School’s website at www.sog.unc.edu or contact the Bookstore, School of Government, CB# 3330 Knapp-Sanders Building, UNC Chapel Hill, Chapel Hill, NC 27599-3330; e-mail sales@sog.unc.edu; telephone 919.966.4119; or fax 919.962.2707. This blog post is published and posted online by the School of Government to address issues of interest to government officials. This blog post is for educational and informational use and may be used for those purposes without permission by providing acknowledgment of its source. Use of this blog post for commercial purposes is prohibited. To browse a complete catalog of School of Government publications, please visit the School’s website at www.sog.unc.edu or contact the Bookstore, School of Government, CB# 3330 Knapp-Sanders Building, UNC Chapel Hill, Chapel Hill, NC 27599-3330; e-mail sales@sog.unc.edu; telephone 919.966.4119; or fax 919.962.2707. 1 Coronavirus Relief Fund Frequently Asked Questions Updated as of May 4, 2020 The following answers to frequently asked questions supplement Treasury’s Coronavirus Relief Fund (“Fund”) Guidance for State, Territorial, Local, and Tribal Governments, dated April 22, 2020, (“Guidance”).1 Amounts paid from the Fund are subject to the restrictions outlined in the Guidance and set forth in section 601(d) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Eligible Expenditures Are governments required to submit proposed expenditures to Treasury for approval? No. Governments are responsible for making determinations as to what expenditures are necessary due to the public health emergency with respect to COVID-19 and do not need to submit any proposed expenditures to Treasury. The Guidance says that funding can be used to meet payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. How does a government determine whether payroll expenses for a given employee satisfy the “substantially dedicated” condition? The Fund is designed to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. For this reason, and as a matter of administrative convenience in light of the emergency nature of this program, a State, territorial, local, or Tribal government may presume that payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency, unless the chief executive (or equivalent) of the relevant government determines that specific circumstances indicate otherwise. The Guidance says that a cost was not accounted for in the most recently approved budget if the cost is for a substantially different use from any expected use of funds in such a line item, allotment, or allocation. What would qualify as a “substantially different use” for purposes of the Fund eligibility? Costs incurred for a “substantially different use” include, but are not necessarily limited to, costs of personnel and services that were budgeted for in the most recently approved budget but which, due entirely to the COVID-19 public health emergency, have been diverted to substantially different functions. This would include, for example, the costs of redeploying corrections facility staff to enable compliance with COVID-19 public health precautions through work such as enhanced sanitation or enforcing social distancing measures; the costs of redeploying police to support management and enforcement of stay-at-home orders; or the costs of diverting educational support staff or faculty to develop online learning capabilities, such as through providing information technology support that is not part of the staff or faculty’s ordinary responsibilities. Note that a public function does not become a “substantially different use” merely because it is provided from a different location or through a different manner. For example, although developing online 1 The Guidance is available at https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for- State-Territorial-Local-and-Tribal-Governments.pdf. 2 instruction capabilities may be a substantially different use of funds, online instruction itself is not a substantially different use of public funds than classroom instruction. May a State receiving a payment transfer funds to a local government? Yes, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act. Such funds would be subject to recoupment by the Treasury Department if they have not been used in a manner consistent with section 601(d) of the Social Security Act. May a unit of local government receiving a Fund payment transfer funds to another unit of government? Yes. For example, a county may transfer funds to a city, town, or school district within the county and a county or city may transfer funds to its State, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, a transfer from a county to a constituent city would not be permissible if the funds were intended to be used simply to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify as an eligible expenditure. Is a Fund payment recipient required to transfer funds to a smaller, constituent unit of government within its borders? No. For example, a county recipient is not required to transfer funds to smaller cities within the county’s borders. Are recipients required to use other federal funds or seek reimbursement under other federal programs before using Fund payments to satisfy eligible expenses? No. Recipients may use Fund payments for any expenses eligible under section 601(d) of the Social Security Act outlined in the Guidance. Fund payments are not required to be used as the source of funding of last resort. However, as noted below, recipients may not use payments from the Fund to cover expenditures for which they will receive reimbursement. Are there prohibitions on combining a transaction supported with Fund payments with other CARES Act funding or COVID-19 relief Federal funding? Recipients will need to consider the applicable restrictions and limitations of such other sources of funding. In addition, expenses that have been or will be reimbursed under any federal program, such as the reimbursement by the federal government pursuant to the CARES Act of contributions by States to State unemployment funds, are not eligible uses of Fund payments. Are States permitted to use Fund payments to support state unemployment insurance funds generally? To the extent that the costs incurred by a state unemployment insurance fund are incurred due to the COVID-19 public health emergency, a State may use Fund payments to make payments to its respective state unemployment insurance fund, separate and apart from such State’s obligation to the unemployment insurance fund as an employer. This will permit States to use Fund payments to prevent expenses related to the public health emergency from causing their state unemployment insurance funds to become insolvent. 3 Are recipients permitted to use Fund payments to pay for unemployment insurance costs incurred by the recipient as an employer? Yes, Fund payments may be used for unemployment insurance costs incurred by the recipient as an employer (for example, as a reimbursing employer) related to the COVID-19 public health emergency if such costs will not be reimbursed by the federal government pursuant to the CARES Act or otherwise. The Guidance states that the Fund may support a “broad range of uses” including payroll expenses for several classes of employees whose services are “substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” What are some examples of types of covered employees? The Guidance provides examples of broad classes of employees whose payroll expenses would be eligible expenses under the Fund. These classes of employees include public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. Payroll and benefit costs associated with public employees who could have been furloughed or otherwise laid off but who were instead repurposed to perform previously unbudgeted functions substantially dedicated to mitigating or responding to the COVID-19 public health emergency are also covered. Other eligible expenditures include payroll and benefit costs of educational support staff or faculty responsible for developing online learning capabilities necessary to continue educational instruction in response to COVID-19-related school closures. Please see the Guidance for a discussion of what is meant by an expense that was not accounted for in the budget most recently approved as of March 27, 2020. In some cases, first responders and critical health care workers that contract COVID-19 are eligible for workers’ compensation coverage. Is the cost of this expanded workers compensation coverage eligible? Increased workers compensation cost to the government due to the COVID-19 public health emergency incurred during the period beginning March 1, 2020, and ending December 30, 2020, is an eligible expense. If a recipient would have decommissioned equipment or not renewed a lease on particular office space or equipment but decides to continue to use the equipment or to renew the lease in order to respond to the public health emergency, are the costs associated with continuing to operate the equipment or the ongoing lease payments eligible expenses? Yes. To the extent the expenses were previously unbudgeted and are otherwise consistent with section 601(d) of the Social Security Act outlined in the Guidance, such expenses would be eligible. May recipients provide stipends to employees for eligible expenses (for example, a stipend to employees to improve telework capabilities) rather than require employees to incur the eligible cost and submit for reimbursement? Expenditures paid for with payments from the Fund must be limited to those that are necessary due to the public health emergency. As such, unless the government were to determine that providing assistance in the form of a stipend is an administrative necessity, the government should provide such assistance on a reimbursement basis to ensure as much as possible that funds are used to cover only eligible expenses. 4 May Fund payments be used for COVID-19 public health emergency recovery planning? Yes. Expenses associated with conducting a recovery planning project or operating a recovery coordination office would be eligible, if the expenses otherwise meet the criteria set forth in section 601(d) of the Social Security Act outlined in the Guidance. Are expenses associated with contact tracing eligible? Yes, expenses associated with contract tracing are eligible. To what extent may a government use Fund payments to support the operations of private hospitals? Governments may use Fund payments to support public or private hospitals to the extent that the costs are necessary expenditures incurred due to the COVID-19 public health emergency, but the form such assistance would take may differ. In particular, financial assistance to private hospitals could take the form of a grant or a short-term loan. May payments from the Fund be used to assist individuals with enrolling in a government benefit program for those who have been laid off due to COVID-19 and thereby lost health insurance? Yes. To the extent that the relevant government official determines that these expenses are necessary and they meet the other requirements set forth in section 601(d) of the Social Security Act outlined in the Guidance, these expenses are eligible. May recipients use Fund payments to facilitate livestock depopulation incurred by producers due to supply chain disruptions? Yes, to the extent these efforts are deemed necessary for public health reasons or as a form of economic support as a result of the COVID-19 health emergency. Would providing a consumer grant program to prevent eviction and assist in preventing homelessness be considered an eligible expense? Yes, assuming that the recipient considers the grants to be a necessary expense incurred due to the COVID-19 public health emergency and the grants meet the other requirements for the use of Fund payments under section 601(d) of the Social Security Act outlined in the Guidance. As a general matter, providing assistance to recipients to enable them to meet property tax requirements would not be an eligible use of funds, but exceptions may be made in the case of assistance designed to prevent foreclosures. May recipients create a “payroll support program” for public employees? Use of payments from the Fund to cover payroll or benefits expenses of public employees are limited to those employees whose work duties are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. May recipients use Fund payments to cover employment and training programs for employees that have been furloughed due to the public health emergency? Yes, this would be an eligible expense if the government determined that the costs of such employment and training programs would be necessary due to the public health emergency. 5 May recipients use Fund payments to provide emergency financial assistance to individuals and families directly impacted by a loss of income due to the COVID-19 public health emergency? Yes, if a government determines such assistance to be a necessary expenditure. Such assistance could include, for example, a program to assist individuals with payment of overdue rent or mortgage payments to avoid eviction or foreclosure or unforeseen financial costs for funerals and other emergency individual needs. Such assistance should be structured in a manner to ensure as much as possible, within the realm of what is administratively feasible, that such assistance is necessary. The Guidance provides that eligible expenditures may include expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures. What is meant by a “small business,” and is the Guidance intended to refer only to expenditures to cover administrative expenses of such a grant program? Governments have discretion to determine what payments are necessary. A program that is aimed at assisting small businesses with the costs of business interruption caused by required closures should be tailored to assist those businesses in need of such assistance. The amount of a grant to a small business to reimburse the costs of business interruption caused by required closures would also be an eligible expenditure under section 601(d) of the Social Security Act, as outlined in the Guidance. The Guidance provides that expenses associated with the provision of economic support in connection with the public health emergency, such as expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures, would constitute eligible expenditures of Fund payments. Would such expenditures be eligible in the absence of a stay-at-home order? Fund payments may be used for economic support in the absence of a stay-at-home order if such expenditures are determined by the government to be necessary. This may include, for example, a grant program to benefit small businesses that close voluntarily to promote social distancing measures or that are affected by decreased customer demand as a result of the COVID-19 public health emergency. May Fund payments be used to assist impacted property owners with the payment of their property taxes? Fund payments may not be used for government revenue replacement, including the provision of assistance to meet tax obligations. May Fund payments be used to replace foregone utility fees? If not, can Fund payments be used as a direct subsidy payment to all utility account holders? Fund payments may not be used for government revenue replacement, including the replacement of unpaid utility fees. Fund payments may be used for subsidy payments to electricity account holders to the extent that the subsidy payments are deemed by the recipient to be necessary expenditures incurred due to the COVID-19 public health emergency and meet the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, if determined to be a necessary expenditure, a government could provide grants to individuals facing economic hardship to allow them to pay their utility fees and thereby continue to receive essential services. Could Fund payments be used for capital improvement projects that broadly provide potential economic development in a community? 6 In general, no. If capital improvement projects are not necessary expenditures incurred due to the COVID-19 public health emergency, then Fund payments may not be used for such projects. However, Fund payments may be used for the expenses of, for example, establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity or improve mitigation measures, including related construction costs. The Guidance includes workforce bonuses as an example of ineligible expenses but provides that hazard pay would be eligible if otherwise determined to be a necessary expense. Is there a specific definition of “hazard pay”? Hazard pay means additional pay for performing hazardous duty or work involving physical hardship, in each case that is related to COVID-19. The Guidance provides that ineligible expenditures include “[p]ayroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” Is this intended to relate only to public employees? Yes. This particular nonexclusive example of an ineligible expenditure relates to public employees. A recipient would not be permitted to pay for payroll or benefit expenses of private employees and any financial assistance (such as grants or short-term loans) to private employers are not subject to the restriction that the private employers’ employees must be substantially dedicated to mitigating or responding to the COVID-19 public health emergency. May counties pre-pay with CARES Act funds for expenses such as a one or two-year facility lease, such as to house staff hired in response to COVID-19? A government should not make prepayments on contracts using payments from the Fund to the extent that doing so would not be consistent with its ordinary course policies and procedures. Questions Related to Administration of Fund Payments Do governments have to return unspent funds to Treasury? Yes. Section 601(f)(2) of the Social Security Act, as added by section 5001(a) of the CARES Act, provides for recoupment by the Department of the Treasury of amounts received from the Fund that have not been used in a manner consistent with section 601(d) of the Social Security Act. If a government has not used funds it has received to cover costs that were incurred by December 30, 2020, as required by the statute, those funds must be returned to the Department of the Treasury. What records must be kept by governments receiving payment? A government should keep records sufficient to demonstrate that the amount of Fund payments to the government has been used in accordance with section 601(d) of the Social Security Act May recipients deposit Fund payments into interest bearing accounts? Yes, provided that if recipients separately invest amounts received from the Fund, they must use the interest earned or other proceeds of these investments only to cover expenditures incurred in accordance with section 601(d) of the Social Security Act and the Guidance on eligible expenses. If a government deposits Fund payments in a government’s general account, it may use those funds to meet immediate cash management needs provided that the full amount of the payment is used to cover necessary 7 expenditures. Fund payments are not subject to the Cash Management Improvement Act of 1990, as amended. May governments retain assets purchased with payments from the Fund? Yes, if the purchase of the asset was consistent with the limitations on the eligible use of funds provided by section 601(d) of the Social Security Act. What rules apply to the proceeds of disposition or sale of assets acquired using payments from the Fund? If such assets are disposed of prior to December 30, 2020, the proceeds would be subject to the restrictions on the eligible use of payments from the Fund provided by section 601(d) of the Social Security Act. 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 19, 2020 Action Agenda Item No. 6-b SUBJECT: Coronavirus Relief Funding Summary Report and Approval of County Plan DEPARTMENT(S): Finance ATTACHMENT(S): INFORMATION CONTACT: 1. PowerPoint Presentation Gary Donaldson, (919) 245-2453 2. Summary of House Bill 1043 - COVID-19 Recovery Funding Act 3. Frequently Asked Questions PURPOSE: To receive: 1) An outline and presentation on the Coronavirus Relief Funding (CRF) to North Carolina counties, including allowable expenses, spend down timeframes and reporting requirements; and 2) Approve an Orange County Coronavirus Plan for submittal by June 1, 2020. BACKGROUND: The North Carolina General Assembly unanimously approved the Coronavirus Relief Funding that was signed by the Governor on May 4, 2020. The CRF package includes relief measures related to public health and safety, education, small business assistance, and continuity of state government operations. The State has included $150 million in initial relief funding, with each county's allocation distributed on a per capita basis, with the exception of the largest three counties — Guilford, Wake, and Mecklenburg. Those three counties received Coronavirus Relief funding directly from the U.S. Treasury based on their populations exceeding 500,000. The Orange County State-wide per capita share is $2,665,753 of the $150 million allocated to NC counties. House Bill 1043 does not appropriate any funds directly to a city or town but instead delegates that funding decision to counties. If the BOCC directed staff to allocate a share of the County's CRF funds to the municipalities, then a County per capita allocation is proposed as a fair and reasonable allocation methodology. A per capita allocation is currently used for the distribution of local option sales tax including Article 44 Hold Harmless sales tax. The table below indicates funding distribution for CRF based on a per capita allocation. Coronavirus Relief Per Capita Fund 2,665,753.00 Allocation ORANGE 1,546,136.74 58% CARRBORO 266,575.30 10% CHAPEL HILL 746,410.84 28% DURHAM 0% HILLSBOROUGH 79,972.59 3% MEBANE 26,657.53 1% TOTAL 2,665,753.00 100% 2 COVID-19 Eligible Expenses: Provide Grants to small businesses experiencing financial loss due to COVID-19 Support COVID-19 related expenditure for public health staff and program costs, personal protective equipment (PPE), public safety staff expense, medical expense, overtime or mandatory pay, distance learning and teleworking requirements Expenses must be incurred between March 1, 2020 — December 30, 2020 Funds cannot be used to replace lost local government revenue Note: The U.S. Treasury may allow revenue replacement in any future CRF allocations. Reporting Requirements: June 1, 2020 - Counties determine a funding plan Beginning October 1 - Submit Quarterly Reporting of expenditures to the State The Funding Plan categories due by June 1, 2020 are: 1) Medical expenses 2) Public health expenses 3) Payroll expenses 4) Expenses to facilitate compliance with COVID-19-related public health measures 5) Expenses associated with economic support including small businesses FINANCIAL IMPACT: The State has allocated $2,665,753 to the County for eligible COVID-19 expenses. SOCIAL JUSTICE IMPACT: The following Orange Social Justice Goal is applicable to this item. GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs, and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board receive this summary report and approve an appropriate CRF Funding Plan for submittal by the June 1, 2020 deadline. ft' 3 114%W-MMOM. ram ORANGE COUNTY NORTH GAROLINA Coronavirus Relief Fund Act Summary May 19, 2019 4 Background State of North Carolina allocation from the Federal CARES Act is $4 billion; The North Carolina General Assembly approved the Coronavirus Relief Fund Act House Bill 1043, Governor signed legislation House Bill 1043 on May 4, 2020; House Bill 1043 appropriates $150 million from the State to be allocated among 97 counties on per capita basis; U.S. Treasury is providing direct funding to Guilford, Mecklenburg and Wake counties; there populations exceed 500,000, House Bill 1043 allows NC counties to determine municipality funding; Orange County per capita share from the State is $2,665,753 Fair and reasonable allocation is methodology is each town per capita share within Orange County; similar to current Local Option Sales Tax per capita N4e -- ORANGE COUNTY NORTH CAROLINA County- Based Per Allocation 5 Per Capita Coronavirus Relief Fund 2,665,753.00 Allocation 1,546,136.74 58% 266,575.30 10% CHAPEL HILL 746,410.84 28% 0% HILLSBOROUGH 79,972.59 3% 26,657.53 1% 2,665,753.00 100% ORANGE COUNTY NORTH CAROLINA 6 CRF Act Eligible Uses Provide Grants to small businesses experiencing financial loss due to COVID-19 Support COVID-19 related expenditure for public health staff and program costs, personal protective equipment (PPE), public safety staff expense, medical expense, overtime or mandatory pay, distance learning and teleworking requirements Expenses must be incurred between March 1, 2020 — December 30, 2020; and not accounted for in FY 2019-20 Budget Eligible expenses if any prior to March 1, 2020 should be applied for through FEMA Must apply for either CRF or FEMA; trigger date is determinant Before March 1 apply through FEMA; minimal County coronavirus expenses within this timeframe After March 1 apply through CRF; majority of coronavirus expenses Funds cannot be used to replace lost local government revenue Note: The U.S. Treasury may allow revenue replacement in any future CRF allo®RANGE COUNTY NORTH CAROLINA 7 State Reporting Tirnefrarne June 1- Submit a Funding Plan to the Office of State Budget and Management Quarterly Funding Reports on October 1, 2020 and January 1, 2021 All Funds must be expended by December 30, 2020 Unexpended fund to be returned to the State ORANGE COUNTY NORTH CAROLINA 8 Next Steps BOCC Approval- Two Step Process to Decide; 1) Municipalities Allocation 2) Eligible Uses Allocation by June 1 Inform Town Finance Officers of Federal and State Guidelines, Tracking Expenditures and Reporting Timeframes Implement Funding Plan ORANGE COUNTY NORTH CAROLINA 9 Questions ORANGE COUNTY NORTH CAROLINA 10 M,Y w.IJ HOUSE BILL 1043: 2020 COVID-19 Recovery Act. Qu v 2019-2020 General Assembly Committee: Senate Appropriations/Base Budget Date: May 2, 2020 Introduced by: Reps. Bell, Jackson, Lewis Prepared by: Luke Gillenwater Analysis of: PCS to Third Edition Dan Ettefagh H1043-CSMLa-13 Committee Co-Counsel OVERVIEW. House Bill 1043 provides aid to North Carolinians in response to the Coronavirus Disease 2019 (COVID-19) crisis. CURRENT LAW: House Bill 1043 does the following: Section 1.1 —Establishes the title of the act as the "2020 COVID-19 Recovery Act." Section 1.2 — Establishes definitions used throughout the act, including defining "COVID-19 Recovery Legislation" as the following legislation enacted by Congress: The Coronavirus Aid, Relief, and Economic Security(CARES)Act, P.L. 116-136. The Families First Coronavirus Response Act, P.L. 116-127. The Coronavirus Preparedness and Response Supplemental Appropriations Act,2020,P.L. 116-123. Paycheck Protection Program and Health Care Enhancement Act, P.L. 116-139. Section 1.3 — States the purpose of the act. Section 1.4 — Provides that the appropriations and allocations in the act are for the maximum amounts necessary to implement the act, and directs State agencies to maximize the use of federal funds made available in the act prior to using other State funds. Section 1.5—Provides that allocations made under this act that conflict with applicable federal law are repealed and the funds are to be transferred back to the Coronavirus Relief Reserve. Section 1.6 — Directs the Office of State Budget and Management (OSBM) to work with State agencies to ensure that receipts awarded pursuant to COVID-19 Recovery Legislation are used in accordance with applicable federal laws and regulations. Additionally, provides that funds may not be used for recurring expenditures, funds awarded under The CARES Act may not be used for revenue replacement, and, depending on the award, employ additional time-limited State personnel. Section 1.7 —Requires reports from OSBM and State agencies or departments that receive funds under the act detailing how the funds are used. The reports are to be provided to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division. Section 1.8 — Requires the State Auditor to conduct a preliminary financial audit and final performance audit of the Coronavirus Relief Fund no later than 3/l/21. Section 2.1 — Establishes the Coronavirus Relief Reserve (Reserve) to maintain federal funds received from the Coronavirus Relief fund created under The CARES Act, P.L. 116-136. Section 2.2—Establishes the Coronavirus Relief Fund(Fund)to be used to provide necessary and appropriate relief and assistance from the effects of COVID-19. All funds in the Fund must be Kory Goldsmith Legislative Drafting Director 919-733-6660 H 1 0 4 3 — S M M L — 2 0 C S M L A — 1 3 — V — 2 This bill analysis was prepared by the nonpartisan legislative stafffor the use of legislators in their deliberations and does not constitute an official statement of legislative intent. 11 House PCS 1043 Page 2 used for necessary expenditures incurred due to the public health emergency resulting from COVID-19, and the expenditures must have been incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Section 2.3 —Establishes the Local Government Coronavirus Relief Reserve (Local Reserve). Additionally, transfers the sum of$300,000,000 from the Reserve to the Local Reserve. Lastly, specifies that it is the intent of the General Assembly to appropriate a sum of up to $150,000,000 if local governments experience a revenue shortfall and The CARES Act, P.L. 116-136, is amended to allow the use of federal funds to address the shortfall(s). Section 3.1 —Transfers the sum of$1,275,988,029 from the Reserve to the Fund and$150,000,000 from the Local Reserve to the Fund. Section 3.2 —Appropriates the sum of$1,425,988,029 in nonrecurring funds for the 2019-2020 fiscal year from the Fund to OSBM to be used in accordance with Section 3.3 of the act. Further, specifies that funds appropriated in this section that remain unspent at the end of the 2019-2020 fiscal year shall not revert and shall remain available to expend until December 30, 2020. Section 3.3 —Directs OSBM to allocate the sum of$1,425,988,029 it received from the Fund as follows: o $50M for supplies and equipment for life safety, health, and sanitation and purchase of PPE meeting federal and CDC standards, divided between NC Healthcare Foundation 50%),NC Senior Living Association and NC Health Care Facilities Association in equal amounts (15%),NC Medical Society(10%), and the Division of Emergency Management in DPS for entities it deems essential (25%). o $150M for counties ineligible to receive direct funding from the CARES Act. Each county receives a base funding of $250,000, with remainder distributed on a per capita basis. Funds can be allocated to municipalities if a necessary expenditure and consistent with federal guidance on COVID-19 relief. o $70M for continuity of operations of State government for expenditures incurred between 3/l/20 and 12/30/20 for listed expenditures. Includes up to $2M for the North Carolina Pandemic Recovery Office and up to $500k for the audit to be performed by the State Auditor as required by this act. o $300M for the General Maintenance Reserve in the Highway Fund if federal guidance is revised to allow the use of funds for revenue replacement. This allocation reverts if federal guidance is not updated before 6/15/20. o $20M to OSBM for allocation to State agencies negatively impacted by loss of anticipated receipts, but only if federal guidance is revised to allow the use of funds for revenue replacement. o $100k for the General Assembly to reimburse funds to Wake Forest University Health Services for COVID-19 research data for future legislative committees. o $75M to DPI for school nutrition services provided in response to COVID-19 in the School Lunch or Breakfast Programs from 3/16/20 through the end of the school year. o $lM to DPI for improving Internet connectivity through extended reach mobile wife gateway router devices in school buses. o $11M to DPI for improving Internet connectivity for students through mobile Internet access points. 12 House PCS 1043 Page 3 o $30M to DPI for computers or other electronic devices for use by certain public school students in response to COVID-19. o $5M to DPI for certain public schools to provide computers or other electronic devices for use by school personnel. o $4.5M to DPI to establish a shared cybersecurity infrastructure and district cybersecurity monitoring and support. o $10M to DPI for allocation conforming for school health support personnel for physical and mental health support services for students in response to COVID-19,including remote services. o $70M to DPI for certain public schools to provide a supplemental summer learning program in response to negative effects of COVID-19. At least $35M is to be used for students in grades 2 and 3 during the 19-20 school year, and up to 25% may be used for supplemental literacy support for students in grades 3 and 4 during the 20-21 school year not on track to meet 20-21 year-end expectations. Remaining funds are to be used for kindergarten and grades 1 and 4. o $1.488M to DPI for public school units to provide remote instruction. o $3M to DPI to provide nondigital remote instruction resources to students with limited connectivity. o $15M to DPI for grants to public school units for extraordinary costs of providing Extended School Year Services or future services for exceptional children. o $660,029 to DPI for the Governor Morehead School for the Blind, the Eastern NC School for the Deaf, and the NC School for the Deaf for school nutrition, cleaning, sanitizing, remote learning, compensatory services, and Extended School Year Services. o $5M to DPI for the Extended Learning and Integrated Student Supports Competitive Grant Program. o $25M to Community Colleges for campuses to enhance online learning, cover expenses for resources and supports for faculty and staff,provide Small Business Center councelors, cover expenses for expanded IT demands, and provide sanitation and other expenses required for ongoing campus operations. o $44.4M to BOG of UNC for increased costs for online coursework, implementation of digital learning accelerator, providing sanitation and other expenses for ongoing campus operations, covering necessary eligible expenses for students and employees. o $20M to BOG of UNC for the State Education Assistance Authority for private postsecondary institutions to transition to online education. o $15M for the Duke University Human Vaccine Institute to develop a COVID-19 vaccine. o $29M to UNC Chapel Hill to allocate to the NC Policy Collaboratory for the development of countermeasures for COVID-19, a vaccine for COVID-19, community testing initiatives, and other research to address health and economic impacts of COVID-19. o $15M to the Brody School of Medicine at ECU for the development of countermeasures for COVID-19, vaccine for COVID-19, community testing initiatives, and other research to address health and economic impacts of COVID-19. 13 House PCS 1043 Page 4 o $6M for Campbell University School of Osteopathic Medicine for community testing initiatives, community-based health care treatment, monitoring rural populations, educating health professionals on best practices, and supporting rural community primary care. o $20M to Wake Forest University Health Services to expand COVID-19 study to include syndromic surveillance and representative sample antibody testing for near-real-time virus data. o $20M to DHHS for local health departments, rural health providers, State Laboratory, and behavioral health and crises services for increasing nurses, community health workers, telehealth services, infection control support in nursing and adult care homes and diverting behavioral health emergencies. o $6M to DHHS to allocate equally among each of the six food banks in the State and encourages food banks to use North Carolina-based farmers and vendors. o $290k to DHHS, Division of Social Services, to provide funds for the LINKS program, a foster care support program for youth ages 13-21 years. o $25M to DHHS for State-County Special Assistance-licensed facilities to offset increased costs of serving residents during the COVID-19 emergency in the amount of 1325/resident as of 4/l/20. o $50M to DHHS for rural and underserved communities for health provider grants, Medicaid assistance for rural hardship grants,enhanced telehealth services,critical services transportation, health care security for uninsured, and related items. o $5M for NC Association of Free and Charitable Clinics for cost of eligible health services provided during the COVID-19 emergency. o $1.5M to DHHS to provide a grant to NC MedAssist to offset increased costs for prescription assistance for indigent or uninsured individuals for the COVID-19 emergency. o $5M to the NC Community Health Centers Association for cost of eligible health services provided during the COVID-19 emergency. o $25M to DHHS to expand public and private initiatives for COVID-19 testing, contact tracing, and trends tracking and analysis,provided the requirements in Section 4.10 of this act are met. o $20M to DHHS to provide funds to support behavior health and crisis services to respond to COVID-19. o $19M to DHHS to provide for food banks, support for residential settings incurring additional costs to mitigate COVID-19 positive cases, adjust and child protective services response, support for homeless and domestic violence shelters, child care response, NCCARE360, and technology changes to support emergency relief to beneficiaries. o $1.8M to Old North State Medical Society for rural and African American communities to address COVID-19 disparities. o $65M for a grant to NC Healthcare Foundation for grants to hospitals designated by the Center for Medicare and Medicaid Services as critical access hospitals or non-critical access rural hospitals to offset response care for COVID-19. 14 House PCS 1043 Page S o $15M to establish the COVID-19 Teaching Hospitals Relief Fund for grants to hospitals classified as teaching hospitals by the Centers for Medicare and Medicaid Services. o $15M to establish the COVID-19 General Hospitals Relief Fund to hospitals not eligible for grants from NCHF or the COVID-19 Teaching Hospitals Relief Fund. o $2.25M to Division of Social Services (DHHS) for serving children in foster care during the COVID-19 emergency in the amount of$100 per child per month for April through June 2020. o $15M to DACS for animal depopulation and disposal. o $5M to Commerce for stimulus investment in Visit NC to develop safe travel concepts and strategies and research tools and analysis needed for implementation. o $125M for Golden LEAF for small business loan assistance. o $9M to DIT for funding the remaining portion of all qualifying GREAT program applications. Section 4.1. —Subsection(a) appropriates funds received from federal grants authorized under the COVID-19 Recovery Legislation. Subsection (b) provides an estimate of North Carolina's allocations from the COVID-19 Recovery Legislation to be deposited in the State's Treasury and administered by State agencies. Subsection(c)specifies that no funds in this act or the State Board of Elections budget shall be used as a matching requirement for federal funds to meet election needs, but instead specifies that it is the intent of the General Assembly to address the State's additional elections needs resulting from the COVID-19 pandemic in separate legislation. Section 4.2—Provides guidelines for the$125,000,000 to Golden LEAF for the purpose of making emergency loans to small businesses adversely affected by the COVID-19 outbreak in North Carolina. Section 4.3—Directs OSBM to establish a time-limited Pandemic Recovery Office to oversee and coordinate federal funds for COVID-19 recovery. Section 4.4. —Requires OSBM to release certain grant funds authorized in the 2017 Budget. Section 4.5 —Authorizes DHHS to provide Medicaid coverage for COVID-19 Testing for certain uninsured individuals during the declared nationwide public health emergency period where the federal medical assistance percentage is 100%. Section 4.6—Requires DHHS to provide a 5%increase in the Medicaid Fee-For-Service rates paid to all provider types by the Division of Health Benefits. The rate increase will be effective 3/1/20, and will expire on the earlier of. (i) the date the nationwide COVID-19 public health emergency expires, (ii) the date Executive order 116 expires or is rescinded, or(iii) 3/31/21. Section 4.7— Specifies that certain provisions of State law pertaining to provider enrollment shall not apply to the Medicaid and Health Choice Programs from 3/l/2020 through duration of the nationwide COVID-19 public health emergency, in order to implement to temporary provider enrollment authorized under the recently approved Medicaid 1135 waiver. Section 4.8—Eliminates requirement that an individual must have received a Supplement Security Income(SSI)payment to qualify for the Disabled Adult Child passalong in the Medicaid program, no later than 6/1/20. Section 4.9 —Uses increased availability from federal Child Care and Development Fund Block Grant funds for the 2019-2020 fiscal year to address immediate child care needs resulting from the coronavirus emergency. 15 House PCS 1043 Page 6 Section 4.10 — Disallows funding for testing contact tracing and trends tracking until DHHS satisfies certain requirements, including diagnostic service reporting, posting of COVID-19 vendors contracted with, and reporting on certain COVID-19 impact data. Section 4.11 — Provides additional information regarding use of funds for the purchase and distribution of units of opioid antagonists at no charge to opioid treatment programs. Section 5.1 —Boilerplate providing headings are for reference only. Section 5.2 — Boilerplate providing invalid portions of the bill are severable from other portions of the bill. EFFECTIVE DATE: Except as otherwise provided, this act is effective when it becomes law. If Senate Bill 704,2019 Regular Session, is vetoed,this act is repealed. If the veto of Senate Bill 704,2019 Regular Session, is overridden, this act is reenacted. 16 Coronavirus Relief Fund Frequently Asked Questions Updated as of May 4,2020 The following answers to frequently asked questions supplement Treasury's Coronavirus Relief Fund Fund")Guidance for State,Territorial,Local,and Tribal Governments, dated April 22, 2020, Guidance").' Amounts paid from the Fund are subject to the restrictions outlined in the Guidance and set forth in section 601(d)of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act("CARES Act"). Eligible Expenditures Are governments required to submit proposed expenditures to Treasury for approval? No. Governments are responsible for making determinations as to what expenditures are necessary due to the public health emergency with respect to COVID-19 and do not need to submit any proposed expenditures to Treasury. The Guidance says thatfunding can be used to meet payroll expenses for public safety,public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. How does a government determine whether payroll expenses for a given employee satisfy the "substantially dedicated" condition? The Fund is designed to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. For this reason, and as a matter of administrative convenience in light of the emergency nature of this program, a State,territorial,local,or Tribal government may presume that payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency,unless the chief executive (or equivalent) of the relevant government determines that specific circumstances indicate otherwise. The Guidance says that a cost was not accounted for in the most recently approved budget if the cost is for a substantially different use from any expected use offunds in such a line item, allotment, or allocation. What would qualify as a "substantially different use"for purposes of the Fund eligibility? Costs incurred for a"substantially different use"include,but are not necessarily limited to, costs of personnel and services that were budgeted for in the most recently approved budget but which, due entirely to the COVID-19 public health emergency,have been diverted to substantially different functions. This would include, for example,the costs of redeploying corrections facility staff to enable compliance with COVID-19 public health precautions through work such as enhanced sanitation or enforcing social distancing measures;the costs of redeploying police to support management and enforcement of stay-at-home orders; or the costs of diverting educational support staff or faculty to develop online learning capabilities, such as through providing information technology support that is not part of the staff or faculty's ordinary responsibilities. Note that a public function does not become a"substantially different use"merely because it is provided from a different location or through a different manner. For example, although developing online The Guidance is available at https://home.treasM.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for- State-Territorial-Local-and-Tribal-Governments.pdf. 1 17 instruction capabilities may be a substantially different use of funds, online instruction itself is not a substantially different use of public funds than classroom instruction. May a State receiving a payment transfer funds to a local government? Yes,provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act. Such funds would be subject to recoupment by the Treasury Department if they have not been used in a manner consistent with section 601(d)of the Social Security Act. May a unit of local government receiving a Fund payment transfer funds to another unit of government? Yes. For example, a county may transfer funds to a city,town,or school district within the county and a county or city may transfer funds to its State,provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, a transfer from a county to a constituent city would not be permissible if the funds were intended to be used simply to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify as an eligible expenditure. Is a Fund payment recipient required to transfer funds to a smaller, constituent unit of government within its borders? No. For example, a county recipient is not required to transfer funds to smaller cities within the county's borders. Are recipients required to use other federal funds or seek reimbursement under other federal programs before using Fund payments to satisfy eligible expenses? No. Recipients may use Fund payments for any expenses eligible under section 601(d) of the Social Security Act outlined in the Guidance. Fund payments are not required to be used as the source of funding of last resort. However, as noted below,recipients may not use payments from the Fund to cover expenditures for which they will receive reimbursement. Are there prohibitions on combining a transaction supported with Fund payments with other CARES Act funding or COVID-19 relief Federal funding? Recipients will need to consider the applicable restrictions and limitations of such other sources of funding. In addition,expenses that have been or will be reimbursed under any federal program, such as the reimbursement by the federal government pursuant to the CARES Act of contributions by States to State unemployment funds, are not eligible uses of Fund payments. Are States permitted to use Fund payments to support state unemployment insurance funds generally? To the extent that the costs incurred by a state unemployment insurance fund are incurred due to the COVID-19 public health emergency, a State may use Fund payments to make payments to its respective state unemployment insurance fund, separate and apart from such State's obligation to the unemployment insurance fund as an employer. This will permit States to use Fund payments to prevent expenses related to the public health emergency from causing their state unemployment insurance funds to become insolvent. 2 18 Are recipients permitted to use Fund payments to pay for unemployment insurance costs incurred by the recipient as an employer? Yes,Fund payments may be used for unemployment insurance costs incurred by the recipient as an employer(for example,as a reimbursing employer)related to the COVID-19 public health emergency if such costs will not be reimbursed by the federal government pursuant to the CARES Act or otherwise. The Guidance states that the Fund may support a "broad range of uses"including payroll expenses for several classes of employees whose services are "substantially dedicated to mitigating or responding to the COVID-19 public health emergency." What are some examples of types of covered employees? The Guidance provides examples of broad classes of employees whose payroll expenses would be eligible expenses under the Fund. These classes of employees include public safety,public health,health care, human services,and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. Payroll and benefit costs associated with public employees who could have been furloughed or otherwise laid off but who were instead repurposed to perform previously unbudgeted functions substantially dedicated to mitigating or responding to the COVID-19 public health emergency are also covered. Other eligible expenditures include payroll and benefit costs of educational support staff or faculty responsible for developing online learning capabilities necessary to continue educational instruction in response to COVID-19-related school closures. Please see the Guidance for a discussion of what is meant by an expense that was not accounted for in the budget most recently approved as of March 27,2020. In some cases,first responders and critical health care workers that contract COVID-19 are eligible for workers'compensation coverage. Is the cost of this expanded workers compensation coverage eligible? Increased workers compensation cost to the government due to the COVID-19 public health emergency incurred during the period beginning March 1,2020,and ending December 30,2020, is an eligible expense. If a recipient would have decommissioned equipment or not renewed a lease on particular office space or equipment but decides to continue to use the equipment or to renew the lease in order to respond to the public health emergency, are the costs associated with continuing to operate the equipment or the ongoing lease payments eligible expenses? Yes. To the extent the expenses were previously unbudgeted and are otherwise consistent with section 601(d) of the Social Security Act outlined in the Guidance, such expenses would be eligible. May recipients provide stipends to employees for eligible expenses(for example, a stipend to employees to improve telework capabilities)rather than require employees to incur the eligible cost and submit for reimbursement? Expenditures paid for with payments from the Fund must be limited to those that are necessary due to the public health emergency. As such,unless the government were to determine that providing assistance in the form of a stipend is an administrative necessity,the government should provide such assistance on a reimbursement basis to ensure as much as possible that funds are used to cover only eligible expenses. 3 19 May Fund payments be used for COVID-19 public health emergency recovery planning? Yes. Expenses associated with conducting a recovery planning project or operating a recovery coordination office would be eligible, if the expenses otherwise meet the criteria set forth in section 601(d) of the Social Security Act outlined in the Guidance. Are expenses associated with contact tracing eligible? Yes,expenses associated with contract tracing are eligible. To what extent may a government use Fund payments to support the operations ofprivate hospitals? Governments may use Fund payments to support public or private hospitals to the extent that the costs are necessary expenditures incurred due to the COVID-19 public health emergency,but the form such assistance would take may differ. In particular, financial assistance to private hospitals could take the form of a grant or a short-term loan. May payments from the Fund be used to assist individuals with enrolling in a government benefit program for those who have been laid off due to COVID-19 and thereby lost health insurance? Yes. To the extent that the relevant government official determines that these expenses are necessary and they meet the other requirements set forth in section 601(d)of the Social Security Act outlined in the Guidance,these expenses are eligible. May recipients use Fund payments to facilitate livestock depopulation incurred by producers due to supply chain disruptions? Yes,to the extent these efforts are deemed necessary for public health reasons or as a form of economic support as a result of the COVID-19 health emergency. Would providing a consumer grant program to prevent eviction and assist in preventing homelessness be considered an eligible expense? Yes, assuming that the recipient considers the grants to be a necessary expense incurred due to the COVID-19 public health emergency and the grants meet the other requirements for the use of Fund payments under section 601(d)of the Social Security Act outlined in the Guidance. As a general matter, providing assistance to recipients to enable them to meet property tax requirements would not be an eligible use of funds,but exceptions may be made in the case of assistance designed to prevent foreclosures. May recipients create a `payroll support program"for public employees? Use of payments from the Fund to cover payroll or benefits expenses of public employees are limited to those employees whose work duties are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. May recipients use Fund payments to cover employment and training programs for employees that have been furloughed due to the public health emergency? Yes,this would be an eligible expense if the government determined that the costs of such employment and training programs would be necessary due to the public health emergency. 4 20 May recipients use Fund payments to provide emergency financial assistance to individuals and families directly impacted by a loss of income due to the COVID-19 public health emergency? Yes,if a government determines such assistance to be a necessary expenditure. Such assistance could include,for example,a program to assist individuals with payment of overdue rent or mortgage payments to avoid eviction or foreclosure or unforeseen financial costs for funerals and other emergency individual needs. Such assistance should be structured in a manner to ensure as much as possible,within the realm of what is administratively feasible,that such assistance is necessary. The Guidance provides that eligible expenditures may include expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures. What is meant by a "small business,"and is the Guidance intended to refer only to expenditures to cover administrative expenses of such a grantprogram? Governments have discretion to determine what payments are necessary. A program that is aimed at assisting small businesses with the costs of business interruption caused by required closures should be tailored to assist those businesses in need of such assistance. The amount of a grant to a small business to reimburse the costs of business interruption caused by required closures would also be an eligible expenditure under section 601(d)of the Social Security Act, as outlined in the Guidance. The Guidance provides that expenses associated with the provision of economic support in connection with the public health emergency,such as expenditures related to the provision ofgrants to small businesses to reimburse the costs of business interruption caused by required closures, would constitute eligible expenditures of Fundpayments. Would such expenditures be eligible in the absence of a stay-at-home order? Fund payments may be used for economic support in the absence of a stay-at-home order if such expenditures are determined by the government to be necessary. This may include, for example,a grant program to benefit small businesses that close voluntarily to promote social distancing measures or that are affected by decreased customer demand as a result of the COVID-19 public health emergency. May Fund payments be used to assist impacted property owners with the payment of their property taxes? Fund payments may not be used for government revenue replacement, including the provision of assistance to meet tax obligations. May Fund payments be used to replace foregone utility fees? If not, can Fund payments be used as a direct subsidy payment to all utility account holders? Fund payments may not be used for government revenue replacement,including the replacement of unpaid utility fees. Fund payments may be used for subsidy payments to electricity account holders to the extent that the subsidy payments are deemed by the recipient to be necessary expenditures incurred due to the COVID-19 public health emergency and meet the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example,if determined to be a necessary expenditure, a government could provide grants to individuals facing economic hardship to allow them to pay their utility fees and thereby continue to receive essential services. Could Fund payments be used for capital improvement projects that broadly provide potential economic development in a community? 5 21 In general,no. If capital improvement projects are not necessary expenditures incurred due to the COVID-19 public health emergency,then Fund payments may not be used for such projects. However,Fund payments may be used for the expenses of,for example,establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity or improve mitigation measures,including related construction costs. The Guidance includes workforce bonuses as an example of ineligible expenses but provides that hazard pay would be eligible if otherwise determined to be a necessary expense. Is there a specific definition of"hazard pay"? Hazard pay means additional pay for performing hazardous duty or work involving physical hardship, in each case that is related to COVID-19. The Guidance provides that ineligible expenditures include "[playroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency." Is this intended to relate only to public employees? Yes. This particular nonexclusive example of an ineligible expenditure relates to public employees. A recipient would not be permitted to pay for payroll or benefit expenses of private employees and any financial assistance(such as grants or short-term loans)to private employers are not subject to the restriction that the private employers' employees must be substantially dedicated to mitigating or responding to the COVID-19 public health emergency. May counties prepay with CARES Act funds for expenses such as a one or two year facility lease, such as to house staff hired in response to C011ID-19? A government should not make prepayments on contracts using payments from the Fund to the extent that doing so would not be consistent with its ordinary course policies and procedures. Questions Related to Administration of Fund Payments Do governments have to return unspent funds to Treasury? Yes. Section 601(f)(2) of the Social Security Act, as added by section 5001(a)of the CARES Act, provides for recoupment by the Department of the Treasury of amounts received from the Fund that have not been used in a manner consistent with section 601(d) of the Social Security Act. If a government has not used funds it has received to cover costs that were incurred by December 30,2020, as required by the statute,those funds must be returned to the Department of the Treasury. What records must be kept by governments receiving payment? A government should keep records sufficient to demonstrate that the amount of Fund payments to the government has been used in accordance with section 601(d)of the Social Security Act May recipients deposit Fund payments into interest bearing accounts? Yes,provided that if recipients separately invest amounts received from the Fund,they must use the interest earned or other proceeds of these investments only to cover expenditures incurred in accordance with section 601(d)of the Social Security Act and the Guidance on eligible expenses. If a government deposits Fund payments in a government's general account, it may use those funds to meet immediate cash management needs provided that the full amount of the payment is used to cover necessary 6 22 expenditures. Fund payments are not subject to the Cash Management Improvement Act of 1990,as amended. May governments retain assets purchased with payments from the Fund? Yes, if the purchase of the asset was consistent with the limitations on the eligible use of funds provided by section 601(d)of the Social Security Act. What rules apply to the proceeds of disposition or sale of assets acquired using payments from the Fund? If such assets are disposed of prior to December 30,2020,the proceeds would be subject to the restrictions on the eligible use of payments from the Fund provided by section 601(d) of the Social Security Act. 7 Board of Commissioners Agenda Abstract Form Meeting Date: May 26,2020 Department: Planning - Economic Development Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 4.C Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Economic Development Planner Shannan Campbell ITEM TO BE CONSIDERED Subject: COVID-19 Business Recovery Considerations Attachment(s): 1. Draft COVID-19 Business Recovery Considerations Document Brief Summary: Due to COVID-19 many businesses will re-open in Phase 2 & 3 but will have to operate under drastically different circumstances and with public health and safety as their primary concerns. Due to social distancing requirements and reduced occupancy numbers, many businesses are looking for creative ways to offer goods & services while being safe. Other municipalities and jurisdictions are looking for ways that they can be flexible and can work with business owners as they look toward opening and recovery. Hillsborough businesses would like some guidance on what the town will and will not consider for expanded private use of public space on public sidewalks and in public parks. Certain town code and UDO regulations are being requested to be flexible through Aug. 1. Businesses will still have to submit requests and required paperwork to the town for any creative ideas for merchandising, sidewalk dining, or special event permits to obtain approval. Action Requested: Approve, Deny, or Approve with Conditions the ability for town staff to offer flexibility in Town Code Chapter 7, Article I, Section 7-1.a. Private use of public space—Allowance of sidewalk sales and outdoor merchandising; Chapter 5, Article II, Section 5-8.a. Private use of public space—Allowance of outdoor seating on public sidewalks upon issuance of an outdoor seating permit.; Chapter 3, Article VII, Section 3-49. Rules and regulations for town parks and Unified Development Ordinance 6.18 Signage as outlined in the attachment. ISSUE OVERVIEW Background Information & Issue Summary: See above. Financial Impacts: Staff Recommendations/Comments: Town of Hillsborough COVID-19 Business Assistance & Recovery Considerations Private Use of Public Space ordinances, regulations, and flexibility options: • Allows retailers and merchants to set up ‘sidewalk sales’ and outdoor merchandising directly in front of their storefronts without a permit or fee, subject to limited requirements. o The Town is willing to review requests to temporarily expand outdoor merchandising areas beyond the business storefront subject to the approval of the landlord and adjacent tenants. *Under no circumstances will the Town allow the clear, ADA accessible 6ft pedestrian path to be blocked with outdoor merchandise.* • Allows food service establishments and bars to place tables and chairs for outdoor dining on the sidewalk directly in front of their storefronts with a permit (no fee), subject to requirements. o The Town is willing to expedite the review of new sidewalk dining permits. o The Town is willing to review requests to temporarily expand existing dining permits’ seating areas beyond the restaurant storefront subject to the approval of the landlord and adjacent tenants. (The business owner will need to verify with the NC ABC Commission and their insurance carrier that they will be covered in this expanded area/premises.) o The Town is willing to review requests to temporarily waive the physical delineation indicating the limits of the seating area/premises in lieu of sidewalk pavement markings in tape and/or chalk that indicate the service area boundaries/premises. Pavement markings must be maintained while the service area/premises. *Under no circumstances will the Town allow the clear, ADA accessible 6ft pedestrian path to be blocked with tables, chairs, or patrons waiting for food service. Any lines or ques should be planned in coordination with the Town such that they do not block other business entrances, extend into parking lots, driveways, and the roadway.* Public Parking Areas- The Town leases private parking areas for the general public’s use in the King Street Parking lot and Mayo Park Parking Alley/Lot. o The Town is willing to review requests to temporarily sign up to 5 public parking spaces for general business takeout/curbside pickup. Spaces cannot be signed and used only for the benefit of one business. ❖ The Town is willing to review requests and work with Orange County Government to determine if it is possible to utilize vacant County owned public parking lot areas for Special Events and closures for commercial activity. County owned parking areas in Hillsborough include: Library Parking lot, Board of Elections Parking lot, Board of Education Parking lot. Orange County approval will be required for any activity on Orange County property. Public Parks- The Town does not permit direct commercial activity and transactions in the parking areas or within the parks, pavilions, or fields unless a Special Event Permit is issued. o The Town is willing to review and expedite Special Event Permits for commercial activity in Town owned parks. Ideas include, but are not limited to: pop up retail markets, food truck rodeos, etc. Commercial activity will not be permitted on an everyday, on-going basis. Events can be held as frequently as twice weekly. Event organizers/businesses will need to plan to implement CDC and Health Department best practices for social distancing, sanitation, masks, bathroom facilities, and handwashing stations. ❖ The Town is willing to review requests and work with Orange County Government to determine if it is possible to utilize County owned parks and property in Hillsborough for Special Events and closures for commercial activity. County owned parks and property in Hillsborough include: River Park & Farmers Market Pavilion, Fairview Park, Hillsborough Visitors Center grounds, Old Courthouse grounds. Orange County approval will be required for any activity on Orange County property. Additional Considerations: o The Town is willing to expedite Food Truck permits. o The Town is willing to delay sign ordinance enforcement to give businesses the chance to further advertise that they are open. Board of Commissioners Agenda Abstract Form Meeting Date: May 26, 2020 Department: Administration - Budget Public Hearing: Yes No Date of Public Hearing: For Clerk’s Use Only AGENDA ITEM # 4.D Consent Agenda Regular Agenda Closed Session PRESENTER/INFORMATION CONTACT: Eric Peterson, Town Manager ITEM TO BE CONSIDERED Subject: FY2021 Manager’s Recommended Annual Budget presentation Attachment(s): None Brief Summary: The town manager and budget team will provide an overview of the FY2021 Manager’s Recommended Annual Budget. Timeline Tuesday, May 26: Budget Presentation • Town Manager delivers budget presentation to Town Board Friday, May 29: Manager's Recommended Budget • Submit recommended budget to Town Board o Budget Message o Revenue & Expenditure Summary o Master Unfunded List o Budget spreadsheets o Authorized FTE List Wednesday, June 3: Budget with Supplemental Information • Budget with supplemental information submitted to Town Board o Budget Message o Master Unfunded List o Revenue & Expenditure Summary o Budget Highlights Page o Budget Spreadsheets o Departmental Unfunded List o Justification Forms o Authorized FTE Listing o Strategic Plan Monday, June 8: Public Hearing • Budget Public Hearing Monday, June 22: Budget Workshop/Possible Budget Adoption • Budget Ordinance Monday, June 29: Budget Workshop/Budget Adoption, if necessary Action Requested: Receive presentation ISSUE OVERVIEW Background Information & Issue Summary: N/A Financial Impacts: N/A Staff Recommendations/Comments: N/A