2020-21 Year-End General Fund Budget Results and 2022-23 Budget Calendar

This report provides an overview of the 2020-21 General Fund (GF) budget results.
Overall, resources exceeded estimates by $27.9 million representing a variance of 1.8
percent and expenditures ended the fiscal year $4.9 million under the estimate
representing a variance of only 0.4 percent. As a result, the GF ending balance of
$275.6 million was approximately $32.8 million higher than estimated. This report also
requests adoption of the 2022-23 budget calendar.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
The GF ending balance of $275.6 million exceeded the estimate of $242.8 million by
$32.8 million and provides a strong fiscal starting point for the current year. It is
important to note, the fund balance includes a combined $121 million in one-time funds
from the Coronavirus Relief Fund (CRF) approved by City Council to offset public
safety salaries as permitted by the Federal guidelines. The ending balance carries
forward to the current fiscal year and will be used as planned to pay for the
supplemental expenditures approved in the 2021-22 adopted budget. The additional
resources of $32.8 million will be factored into the development of the 2022-23 GF
Budget Status.

Two components make up the GF ending balance: resources and expenditures. GF
2020-21 actual resources were $1,613.5 million and exceeded the estimate of
$1,585.6 million by $27.9 million, or a variance of 1.8 percent. Higher than anticipated
revenue collections contributed to the GF ending balance. GF revenues were $1,488.1
million, representing a variance to the revised revenue estimate of $56.0 million or 3.9
percent. The increased revenue collections were partially offset by increased transfers,
primarily to City trust funds including the Worker's Compensation Trust and the Self-
Insurance Reserve Trust. These trust funds are statutorily and actuarially required to
be adequately funded and additional resources are needed due to increases in the
cost of insurance, claim activity, and required reserve amounts. It is anticipated
increased funding requirements for these trust accounts will continue next fiscal year.
GF expenditures ended the fiscal year at $1,337.9 million, and $4.9 million less than
the revised estimate of $1,342.8 million, representing a variance of 0.4 percent. City


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departments have worked through many challenges since the COVID-19 pandemic
began in the third quarter of 2019-20. Since that time expenditures have been below
estimates, demonstrating staff's commitment to responsible spending while
concurrently providing exceptional service delivery to residents. The GF expenditure
variance of $4.9 million is primarily due to vacancy savings and lower than estimated
capital pay-as-you-go expenditures. Attachment A provides graphical illustrations of
the GF budget results and Attachment B provides a department by department
comparison of GF expenditure actuals to the revised estimate.

Over the coming months staff will develop revised resource and expenditure forecasts
to prepare a 2022-23 GF Budget Status and Five-Year Forecast scheduled to be
presented to the City Council on Feb. 22, 2022.

2020-21 General Fund Results

Resources
Total resources include:

· Beginning fund balance;
· Annual revenue;
· Recoveries of prior year encumbrances that were not spent; and
· Interfund transfers to/from other City funds.

As mentioned above, GF resources were $1,613.5 million for the 2020-21 fiscal year
and include a beginning balance of $169.1 million, revenues of $1,488.1 million,
recoveries of $2.5 million, and net transfers out of $46.2 million. Total GF resources
exceeded estimates by $27.9 million representing a variance of only 1.8 percent. The
reason for the variance was higher than anticipated revenue collections primarily in city
and state sales taxes, offset by lower than anticipated net transfers.

Revenue forecasting throughout the COVID-19 pandemic has been extremely
challenging. Several factors have influenced revenue collections and are
uncharacteristic compared to past economic cycles. Primarily, the infusion of one-time
funds from the federal government via the Coronavirus Aid, Relief, and Economic
Security (CARES) and the American Rescue Plan (ARPA) acts into state and local
economies. According to the State Joint Legislative Budget Committee (JLBC), $60
billion has been provided to Arizona via direct federal COVID-19 aid. This is
remarkable, unprecedented and has certainly influenced City revenue collections.
However, this funding is temporary and contributes to the difficulty in predicting
revenue growth. Budget and Research staff worked diligently over the past 18 months


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since the pandemic started, to analyze revenue data and economic indicators, utilize
our econometric model developed in partnership with the University of Arizona's
Economic and Business Research Center for sales taxes, and listen to our trusted
economic sources to project revenues. Forecasting was also challenging due to the
first ever economic shutdown in the fourth quarter of 2019-20 and increased inflation in
recent months. Fortunately, Phoenix has a strong and diversified economy. We are no
longer reliant on one sector of the economy to provide growth in revenues. This
diversification has resulted in economic resiliency as evidenced by growth in overall
resources for the fiscal year.

Additionally, the overall GF revenue variance of 3.9 percent is less than the variances
of six surrounding cities and is in line with the variance of the JLBC. For example, the
2020-21 GF revenue variance of six surrounding cities were all higher than Phoenix's
revenue variance of 3.9 percent, ranging from 5.9 percent (Scottsdale) to 11.7 percent
(Glendale). And, as reported by the JLBC in the July 2021 Fiscal Highlights report the
2020-21 State GF variance was 3.6 percent. This further demonstrates the difficulty
experienced by several government agencies in estimating local and state revenues
during the pandemic.

Expenditures
Total GF expenditures were estimated at $1,342.8 million, and actual expenditures
were $1,337.9 million, or $4.9 million (0.4 percent) less than estimated. The variance is
due to savings in department operating expenditures of $2.6 million (Attachment B)
and GF capital pay-as-you-go savings of approximately $2.3 million. Savings in
operating expenditures were primarily the result of City departments achieving more
salary savings than expected. Staff built into the expenditure forecasts additional
salary savings based on recent data trends, however the number of vacancies grew
more than anticipated. The variance in capital pay-as-you-go expenditures was due to
less than estimated expenses for facility maintenance projects.

Budget and Research staff are underway with the annual salary and benefits
projection review process and will soon start on the technical expenditure review
process, which is a tried and true method of working with all City departments to
evaluate spending at the line item level. This deep dive into department budgets will
enable us to identify savings and establish realistic estimates necessary to continue
existing programs and services. The process runs through November and is followed
by the central review process, which involves estimating costs for various commodities
such as fuel and electricity and personnel services line items, particularly pension.
These processes are critical steps in development of the GF Budget Status.




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Looking Ahead
The 2020-21 GF ending fund balance variance of $32.8 million is in "reserve" until the
budget status for 2022-23 is developed over the next several months. The higher than
anticipated ending fund balance is good news and will be beneficial as we move
forward. However, the City faces many fiscal challenges in the years ahead which will
require strategic decision making to optimize resources. These challenges include:

· Rising employee benefit costs, particularly for Public Safety pension;
· Additional resources to adequately fund City trust accounts;
· Ongoing need to offer competitive and fair compensation packages to City
employees;
· Deferred maintenance and aging infrastructure such as vehicles, equipment, and
City facilities;
· Increases in expenses for replacing and protecting City information technology
assets;
· Demand for additional or expanded GF services;
· Ongoing operating expenses for 100 W. Washington St.;
· Potential budgetary impacts from the Department of Justice investigation of the
Police Department;
· Challenges estimating revenue collections in the current economic climate;
· Impacts to state shared revenues as a result of state income tax cuts;
· Reductions to state shared revenues due to the decrease in Phoenix's relative
population share from the 2020 Census; and
· Potential reduction in state and federal funding or new unfunded state or federal
mandates, including environmental requirements.

The items above add significant pressure to the GF operating budget and create
challenges for estimating City revenues and expenditures. Staff will be working over
the next few months to study data trends, gather updated economic information, and
complete our necessary budget development steps in order to construct both the GF
2022-23 Budget Status and the GF Five-Year Forecast.

It is important to mention that based on preliminary data from the 2020 Census, it's
anticipated Phoenix's relative population share used to calculate state shared
revenues will decrease, effective in the current fiscal year. Staff has estimated the
negative impact to GF revenue could range from $15M to $17M per year. Pension
costs will also continue for the foreseeable future based on information we received
from the Public Safety Personnel Retirement System (PSPRS) actuary. Estimates from
the most recent actuarial projection included in the GF Five-Year Forecast presented
to City Council in February 2021 suggest GF costs could increase from the 2021-22


Page 8

GF budgeted amount of $245 million, by a range of $65-$85 million through the 2025-
26 forecast horizon. Updated pension rates from the June 30, 2021 actuarial valuation
will be provided to the City in December and will be used to develop the GF 2022-23
Budget Status and Five-Year Forecast. Attachment C includes historical and
forecasted GF public safety pension costs based on the most recent estimates from
the PSPRS actuary.

Additionally, increases in other employee benefit costs including health insurance and
worker's compensation are expected. The City's health care costs are expected to
increase 7.2 percent, which will result in premium increases ranging from 4 percent to
13 percent for calendar year 2022 to active employee plans. Since the start of the
pandemic approximately $8.6 million has been paid for COVID-19 related claims.
Worker's Compensation costs continue to increase as well with the actuary
recommending a 3 percent increase in reserves this fiscal year. Since the start of the
pandemic there have been over 600 claims filed related to workplace COVID-19
exposures with an incurred cost of approximately $2.7 million.

2022-23 Budget Calendar
The City Charter and Code include legal deadlines and actions that must be followed
in adopting the budget. In cases where the deadlines conflict, the City meets the
earlier of the two dates or a date designated by the City Council. Adoption of the
budget calendar ensures compliance with the City Charter and Code, and also allows
staff to properly plan the budget development process and all legally required
advertising. Staff requests City Council approval of the 2022-23 budget calendar
reflected in Attachment D.

Responsible Department
This item is submitted by City Manager Ed Zuercher, Assistant City Manager Jeffrey
Barton, and the Budget and Research Department.




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ATTACHMENT A

Total 2020-21 GF resources were $1,613.5 million and $27.9 million more than estimated. Resources
include $121.0 million in one-time funding from the Coronavirus Relief Fund (CRF) allocated to the
GF in 2019-20 and 2020-21 to offset public safety salaries as permitted by the Federal guidelines and
approved by City Council. GF spending was $1,337.9 million and $4.9 million under the estimate. As
a result, the year-end fund balance was $275.6 million and $32.8 million more than estimated.

Actual Estimate Variance Variance
Amount Percent
GF Resources 1,613.5 1,585.6 27.9 1.8%
GF Revenues 1,488.1 1,432.1 56.0 3.9%
GF Expenditures 1,337.9 1,342.8 -4.9 -0.4%
GF Fund Balance 275.6 242.8 32.8 13.5%

2020-21 General Fund Actual Results
Millions Resources and Expenditures

$1,600
Resources were $27.9M, or 1.8% more than the
$1,500 Estimate, and include $121.0 million in one-time
funds from the CRF.
$1,400

$1,300
Spending was
$1,200 $4.9M, or 0.4%
under the
$1,100 Estimate

$1,000
Resources Expenditures
Estimate Actual

2020-21 Ending General Fund Balance
Millions
$350

$300 The GF ending balance
was $32.8M higher than
$250 the Estimate.

$200

$150

$100

$50

$0
Estimate Actual

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ATTACHMENT B
2020-21 COMPARISON OF GENERAL FUND OPERATING EXPENDITURES
REVISED ESTIMATE TO PRE-AUDIT ACTUALS
(In Thousands of Dollars)


Variance
Program Estimate Pre-Audit Actuals Amount Percentage

General Government
Mayor $ 2,244 $ 2,006 $ (238) -10.6%
City Manager 6,146 2,926 (3,220) -52.4%
Government Relations 1,270 1,235 (35) -2.8%
Communications Office 2,684 2,713 29 1.1%
City Auditor 2,912 2,655 (257) -8.8%
Equal Opportunity 2,470 2,345 (125) -5.1%
Human Resources 13,588 12,768 (820) -6.0%
Phoenix Employment Relations Board 140 96 (44) -31.4%
Regional Wireless Cooperative - - - -
Retirement Systems - 48 48 100.0%
Law 6,018 6,295 277 4.6%
Information Technology 51,753 52,333 580 1.1%
City Clerk and Elections 6,336 5,519 (817) -12.9%
Finance 24,365 21,833 (2,532) -10.4%
Budget and Research 3,823 3,597 (226) -5.9%

Total General Government $ 129,147 $ 120,531 $ (8,616) -6.7%

Public Safety
Police $ 569,252 $ 574,045 $ 4,793 0.8%
Fire 351,479 351,832 353 0.1%
Emergency Management 91 43 (48) -52.7%

Total Public Safety $ 920,822 $ 925,920 $ 5,098 0.6%

Criminal Justice
Municipal Court $ 31,310 $ 31,102 $ (208) -0.7%
City Prosecutor 18,420 17,645 (775) -4.2%
Public Defender 5,373 5,060 (313) -5.8%

Total Criminal Justice $ 55,103 $ 53,807 $ (1,296) -2.4%

Transportation
Street Transportation $ 18,967 $ 18,596 $ (371) -2.0%
Aviation - - - -
Public Transit 1,089 418 (671) -61.6%

Total Transportation $ 20,056 $ 19,014 $ (1,042) -5.2%




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ATTACHMENT B
2020-21 COMPARISON OF GENERAL FUND OPERATING EXPENDITURES
REVISED ESTIMATE TO PRE-AUDIT ACTUALS
(In Thousands of Dollars)


Variance
Program Estimate Pre-Audit Actuals Amount Percentage

Community Development
Planning and Development Services $ 4,349 $ 4,238 $ (111) -2.6%
Housing 295 578 283 95.9%
Community and Economic Development 5,856 5,720 (136) -2.3%
Neighborhood Services 14,445 13,467 (978) -6.8%

Total Community Development $ 24,945 $ 24,003 $ (942) -3.8%

Community Enrichment
Parks and Recreation $ 95,701 $ 93,833 $ (1,868) -2.0%
Library 40,027 38,838 (1,189) -3.0%
Phoenix Convention Center 2,386 2,006 (380) -15.9%
Human Services 19,735 19,363 (372) -1.9%
Office of Arts and Culture 3,947 3,882 (65) -1.6%

Total Community Enrichment $ 161,796 $ 157,922 $ (3,874) -2.4%

Environmental Services
Water $ - $ - $ - -
Solid Waste Management - - - -
Public Works 17,507 16,892 (615) -3.5%
Environmental Programs 734 726 (8) -1.1%
Office of Sustainability 429 440 11 2.6%

Total Environmental Services $ 18,670 $ 18,058 $ (612) -3.3%

Non-Departmental Operating
Contingencies $ - $ - $ - -
Unassigned Vacancy Savings (8,677) 8,677 -100.0%
Total Non-Departmental Operating $ (8,677) $ - $ 8,677 -100.0%

GRAND TOTAL $ 1,321,862 $ 1,319,255 $ (2,607) -0.2%




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ATTACHMENT C
The below chart illustrates the rise in General Fund (GF) costs for public safety pension. The
forecast for fiscal years 2022-23 through 2025-26 is based on information from the Public
Safety Personnel Retirement System (PSPRS) Actuary based on the valuation dated June 30,
2020, and included in the most recent GF Five-Year Forecast presented to City Council on
February 23, 2021. Projected amounts account for changes made by the PSPRS Board to
lower the payroll growth assumption from 3.5% to 2.0% by a factor of 0.5% each fiscal year,
which causes upward pressure on employer contribution rates. Actual amounts may differ from
the forecast. The forecast will be updated and based on the June 30, 2021 valuation to be
issued in December 2021 and will be included in the 2022-23 GF Budget Status and Five-Year
Forecast scheduled to be presented to City Council on February 22, 2022.



GF PUBLIC SAFETY PENSION COSTS
200,000,000

180,000,000

160,000,000

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

-
15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26
Actuals Actuals Actuals Actuals Actuals Actuals Budget Forecast Forecast Forecast Forecast

GF Fire GF Police




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ATTACHMENT D

2022-23 BUDGET ADOPTION CALENDAR

Date Budget Items
November 2021 FundPHX (available to the public)
February 4, 2022 2022-23 Inventory of Programs

Preliminary 2022-23 Budget Status and 5-Year General Fund
February 22, 2022
Forecast
March 15, 2022 City Manager’s Trial Budget and Preliminary CIP
April 2022 Community Budget Hearings (tentative)
May 3, 2022 City Manager’s Proposed Budget
May 17, 2022 Council Budget Decision
June 1, 2022 2022-23 Tentative Budget Ordinance Adoption
June 15, 2022 2022-23 Funding Plan and Final Budget Ordinance Adoption
July 1, 2022 2022-23 Property Tax Levy Ordinance Adoption




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Report

American Rescue Plan Act Strategic Plan Update

On June 8, 2021 City Council approved the proposed $196 million American Rescue
Plan Act (ARPA) Strategic Plan. This report provides City Council with an update on
the ARPA Strategic Plan and includes additional information about several programs
that City Council wanted to discuss in more detail.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
As referenced above, City Council approved the ARPA Strategic Plan on June 8, 2021
but requested staff to return with additional information about several programs before
commencing operations. One of those programs, the $10 million Utility and Rental
Assistance Program, was discussed on Sept. 7, 2021 and City Council approved
staff's recommendation to allocate $4 million to enhance the existing Emergency
Rental Assistance Program, $5 million to initiate the Deferred Payment Arrangement
Recovery Program, and $1 million for the Landlord Incentive Program.

The remaining programs that City Council requested additional information included
the following:

· Workforce Wraparound Tuition/Apprentice Program
· Homelessness and Mental Health Program
· Financial Assistance for Phoenix Families Program

This report also includes a program proposal for the Airport Childcare Facility, an
update about the COVID-19 community testing and vaccination health events as part
of the Better Health Outcomes and Community Testing and Vaccines Program, and an
update regarding the City Operations Investment projects.

After City Council approval of the ARPA Strategic Plan, departments began advancing
their respective programs. As of Aug. 31, 2021, ARPA expenditures total $943,663.
Programs with expenditures include administrative oversight, Phoenix Resilient Food
System programs, Office of Arts and Culture programs, transit summer heat respite,



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community COVID-19 testing, and the Summer Heat Respite Program.

All ARPA programs are set to move forward by early next year. Several departments
will be returning to City Council this fall for contract authority or additional spending
authority. Staff will return to City Council before the end of the calendar year to provide
an additional ARPA update.

ARPA Website and Recovery Plan Performance Report
To provide transparency to the public about the City's ARPA programs, staff created a
website that will serve as the main source of ARPA data and updates. As spending
continues this year, performance measures will be added to the website. Users can
visit www.phoenix.gov during the week of Sept. 20 to view the website.

Website pages follow the City's ARPA Strategic Plan where users can easily navigate
from one ARPA program to another. All program information, including summary
details, budget and actuals, key performance indicator data, other program data, and
additional corresponding website links will be available. Data will be updated monthly
at a minimum.

Per US Treasury reporting guidelines, the Recovery Plan Performance Report must be
updated and posted annually on the City's website. The first report was submitted on
Aug. 31, 2021 and is available online on the City's ARPA website. This report is
required for each jurisdiction larger than 250,000 residents and contains project
performance data, including information on efforts to improve equity and engage
communities. Staff also submitted the first and only Interim Report to the US Treasury
in August that included program expenditures as of July 31, 2021.

ARPA Programs Requiring Additional Council Input

Workforce Wraparound Tuition/Apprentice Program Proposal
Program to be brought back with further discussion outlining the proposed program
and its implementation. Staff recommends utilizing $8.5 million to offer free training
and education to residents who have been impacted by the pandemic in the hardest-
hit industries of hospitality, food service, retail, and families with young children.
Referred to as the Two-Generation approach, the program targets low-income families
and children from the same households and combines parent and child interventions
that improve economic mobility. For families with young children and participants who
are not enrolled at a Maricopa County Community College, staff recommends
allocating $1.5 million of program funds to partner with a community-based
organization to expand the existing suite of workforce services.


Page 16


The program will leverage existing City workforce resources as identified in the City of
Phoenix Local Workforce Development Area Plan by offering short-term and long-term
training in industries and occupations. The current list includes bioscience and
healthcare, financial services/customer contact centers, information
technology/cybersecurity, manufacturing, and construction. Tuition assistance will be
provided to participants enrolled at a Maricopa County Community College or other
identified training providers. As well, the program will offer skill and career
assessments, high school equivalency preparation, English language learning
programs, and education and workforce navigation services, such as case
management and work readiness training and referrals to specialized services and
assistance.

Staff has identified additional industries and certifications/credentials for City Council
consideration: early childhood education, community health services (peer support
specialist), electric vehicle technician/technology, entrepreneurship, and small
business, and hospitality and tourism. Staff recommends providing a monthly stipend
of $1,000 for up to 26 weeks to eligible participants to assist with transportation and
other personal expenses that will enable participants to complete the program.
Families with young children will receive an additional $500 per month to cover
childcare expenses. Once approved, staff will return to City Council to approve an
intergovernmental agreement with the Maricopa County Community College District
Workforce and Economic Development Office to provide navigation services to
program participants enrolled at a Maricopa County Community College.

Homelessness and Mental Health Program Proposal
brought back with further information outlining proposed implementation. The City
received feedback at the previous budget hearings for the need of more mental health
services in the community. Leveraging ARPA funds to increase access to mental health
services is important as the number of people experiencing mental health challenges
has grown significantly since the start of the pandemic.

Many jurisdictions plan to use ARPA funding to contract with local nonprofits to expand
or offer new mental health services to residents. An example is Indianapolis, Indiana,
which will use $30 million to fund mental health resources, including in-school
services, support at the juvenile detention center, and training for behavioral health
clinicians. Another example is San Antonio, Texas which plans to use ARPA funding to
extend its Human Services Financial Empowerment Benefits Navigation program that
connects residents to financial counseling, safety net, mental health, domestic
violence, and job training resources.


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Staff recommends allocating $9 million to contract with local healthcare providers for
outreach teams that will connect residents throughout the city (based on heat maps)
with mental health and substance abuse services, and physical health services.
Contractors will screen individuals for Arizona Health Care Cost Containment System
(AHCCSS) eligibility and assist in applying for public benefits.

Staff also recommends allocating the remaining $1.5 million to contract with local
nonprofits to start a pilot outreach project to offer and provide services for those
experiencing homelessness along the Salt River Project (SRP) canals and surrounding
areas. Additionally, funds will be used to partner with an agency to create a pilot
Phoenix Works program which will train and pay individuals experiencing
homelessness to conduct beautification projects and landscaping duties. This pilot
program will focus on cleanups on the SRP canals and surrounding areas.

Staff will return to City Council for contract approval for each program.

Financial Assistance for Phoenix Families Program Proposal
Across the country, the pandemic exacerbated structural inequities and
disproportionately impacted low-income communities and people of color. Many cities
are planning to use ARPA funding to provide a fixed monthly amount to qualified
residents to provide a greater financial stability and improve quality of life in their
communities.

A few examples of jurisdictions using ARPA funds include Los Angeles County and
Chicago, IL. In Phase 1 of its ARPA plan, Los Angeles County has allocated $16.3
million to programs and in May approved a guaranteed income pilot program for a
minimum of 1,000 residents up to $1,000 a month for three years. The County
continues discussions of different programs to date. Chicago proposed a program for
5,000 residents to receive $500 for a year.

Phoenix Families program as part of the City’s ARPA Strategic Plan. Based on
extensive research, staff recommends the following:

· Provide 1,000 - 2,000 households a $500 - $1,000 stipend for 12 months, beginning
January 2022, if not sooner.
· Households must be at or below 80 percent Area Median Income, which for a family
of four is $63,200 (this is considered gross income, or also known as pretax
income). Households that have applied to the Emergency Rental Assistance


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Program and/or residents of City-owned public housing properties, including
residents with Section 8 vouchers, will be chosen via a lottery system.
· Participants will receive monthly funds via a debit card and will be able to purchase
items with a few limitations, such as no alcohol, tobacco, or lottery ticket purchases.
The card will be declined for such purchases.
· Participants must agree to allow general purchasing information to be shared with
the City to track and report on the progress of the program, as encouraged by the
US Treasury.
· The City is requesting a contract be executed with a firm that has experience
administering similar programs. The City is currently exploring options with vendors
as well as with Chase to use the City's Master Custodian Agreement and review
whether it is possible for Chase to administer the program.

Based on the first year of results, staff would recommend to continue this program,
along with any necessary program changes, with the second allocation of ARPA funds
in calendar year 2023.

Other ARPA Program Information and Updates

Airport Childcare Facility Program
As part of the ARPA Strategic Plan, City Council approved the allocation of $5 million
to fund childcare options for workers at Sky Harbor International Airport. The Aviation
Department surveyed companies operating at the airport and at least 21 companies
had more than 600 employees interested in affordable childcare. In response to this
survey, staff conducted a review of peer airports and found that Los Angeles
International Airport (LAX) has used contractors to provide on-premises childcare since
1998, and that additional peer airports had operated childcare services for employees
through third-party providers in the past but had discontinued services due to the
COVID-19 pandemic and related challenges.

Staff is working to identify a possible on-property location that could be used to pilot a
childcare option. Currently, the Aviation Annex at 3420 E. Sky Harbor Boulevard in
Terminal 3 is being reviewed to determine if it could be modified to meet state licensing
requirements to function as a childcare facility. If it is determined that a building can be
modified to meet necessary standards, staff is requesting to issue a procurement for
childcare services to be provided at the facility by a third-party contractor.

Given the potential length of time for building approval and modifications and to
conduct the procurement, staff recommends using a majority of allocated funds to
provide vouchers to airport employees for use at childcare facilities. To expedite this



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process, staff is seeking to identify a nonprofit or governmental partner to administer
the voucher program and conduct necessary income verification and coordination.

City Operations Investment - Stormwater Projects and 27th Avenue Materials
Recovery Facility Replacement Project
The two sections below provide updates to the City Operations Investment section of
the ARPA Strategic Plan. On June 8, City Council approved $23 million for
infrastructure, technology, and capital needs, including stormwater projects and the
rehabilitation of the 27th Avenue Materials Recovery Facility (MRF), a facility that
separates and prepares the City’s recycling materials to be sold to end buyers.

Stormwater Projects
According to the Federal Emergency Management Agency (FEMA), floods occur in
every region of the country and include inland flooding, flash floods and flooding from
seasonal storms. Ninety percent of natural disasters in the US involve some type of
flooding. At a local level, Salt River Project and Maricopa County joined the City of
Phoenix to encourage State of Arizona lawmakers to enact legislation in 1959 to create
flood control districts. In the past twenty years, the Flood Control District of Maricopa
County and the City of Phoenix have collaborated to construct flood control
improvements estimated at $300 million. Despite those investments, continued
urbanization and insufficient capital investment funding has resulted in a projected
$1.75 billion worth of additional flood control investment needs. This was most recently
highlighted in 2014 when severe flooding caused significant local property damage.

ARPA provides an opportunity to invest federal funding and leverage additional money
from the Flood Control District of Maricopa County to complete several priority
projects. The City is coordinating with the Flood Control District of Maricopa County to
develop an investment strategy focused on completing a projected $26 million dollars
of stormwater flood protection projects in Phoenix. The strategy would utilize $13
million dollars in ARPA funds to leverage an additional $13 million in Flood Control
District funds. Staff will return to City Council later this year for consideration of specific
projects recommended for capital investment. If passed by Congress, the
Infrastructure Investment and Jobs Act could provide additional funding to address
more stormwater and flood mitigation projects. Staff will continue to monitor this bill
and keep Council updated regularly.

27th Avenue Materials Recovery Facility Replacement Project
The 27th Avenue MRF has needed equipment and facility updates for several years.
As a result of the pandemic, recycling tonnage increased up to 20 percent, causing
City facilities to operate beyond maximum levels. The 27th Avenue MRF closed in
January of this year due to equipment and facility needs and the North Gateway


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Transfer Station continues to operate at full capacity, furthering heightening the
demand for the facility replacement.

Staff has spent the last year preparing this replacement project. A contractor has been
selected to begin demolition on Oct. 4 of the outdated equipment. A second contractor
has been selected to perform an assessment and design building improvements, such
as fire-life safety, HVAC, and electrical updates. An RFP is currently open to select the
MRF equipment vendor with bids due on Oct. 6. Finally, a professional MRF facility
design and engineering services consultant has been secured to provide a technical
analysis of the bid proposals. This report will be provided to the selection panel to
assist with the final award recommendation. Staff estimates the total project will cost
approximately $20 million and of that, $10 million will be paid with ARPA funding.

Better Health Outcomes and Community Testing and Vaccines Update
The ARPA Strategic Plan included $5 million to continue COVID-19 community testing
and vaccine distribution. Since then, Phoenix Fire and Public Works staff, in
collaboration with multiple City departments, have assisted community partners with
organizing and promoting testing services at no cost to residents in underserved areas
disproportionately impacted by COVID-19. Since last year, the City has expended $7.6
in CARES Act funding and approximately $105,000 in ARPA funding to advance
community testing and vaccine efforts.

In May 2020, the Public Works Department led an effort to provide stationary site
testing, known as Blitz Testing, events for residents. This included partnerships with
certified health providers who set up testing clinics at City parks, neighborhood
schools, or churches and coordinated all aspects of the testing services which included
publicizing events, coordinating with City staff, collecting, and analyzing samples and
notifying residents of results. To date, Public Works staff has coordinated 220 Blitz
Testing events across the City, while partnering with eight health care providers to
provide approximately 42,000 tests. Blitz Testing events expanded in August 2021 to
include vaccination services.

The City led many citywide efforts to help stop the spread of the virus during the
pandemic. Phoenix was the first Arizona municipal organization to provide COVID-19
mobile testing vans to underserved communities. The Public Works Department, in
partnership with two local health care providers, launched two COVID-19 mobile
testing vans that provide easy, accessible, rapid testing using an innovative solution to
testing. The first mobile van was implemented in August 2020, and the second was
deployed in February 2021. The vans operate up to five days a week at locations
across the City including parks, community centers, schools, grocery stores, libraries,
and churches. The mobile vans prioritize underserved communities and areas of high
transmission.

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Benchmarking reports provided by the Maricopa County Department of Public Health
are essential to identify underserved communities with the greatest risk of COVID-19
transmission with percentage positivity rates. Mobile vans help address equity issues
and eliminate barriers by providing a direct mobile solution to communities that may
lack access to testing services and public transportation. To date, the Public Works
Department has provided approximately 146,000 COVID-19 tests through the mobile
testing vans at nearly 360 events throughout the Phoenix community. Testing events
were expanded in August 2021 with both mobile vans to include vaccination services.

Phoenix Fire Department, with the help of community partners, assisted with nearly
200 clinics in under-served areas disproportionately impacted by COVID-19. Events
included two-dose vaccinations and testing at city-owned housing communities, parks,
and libraries. In January 2021, the Fire Department began using the existing Baby
Shots Program to assist in providing COVID-19 testing and vaccine services.
Established in 1994 to promote health to the public through information and
vaccinations, the Baby Shots Program has provided tens of thousands of vaccines to
the underserved (uninsured & underinsured) community. Since the addition of COVID-
19 vaccinations and testing, the Baby Shots program and pop-up vaccination clinics
have administered over 200,000 COVID-19 vaccinations and provided nearly 50,000
COVID-19 tests.

As COVID-19 continues to surge on a local and national level, it remains clear that
testing and vaccination services are needed to reduce the spread within the
community. To enhance resident vaccine participation, staff recommends a pilot
Vaccination Incentive Program. The Vaccination Incentive Program would offer
incentives to residents to increase vaccination rates in underserved communities. The
City would partner with current health care clinical partners to distribute up to 1,000
$100 gift cards and donated items such as food boxes or backpacks to support the
Incentive Program. Residents who get fully vaccinated would have an opportunity to
receive a gift card from a local grocery store, food chain, or gas station. If the program
has a significant impact on vaccine distribution rates, staff will return to City Council to
request continuing the program beyond the pilot program.

Recommendations
Staff seeks approval to implement the Workforce Wraparound Tuition/Apprentice,
Homelessness and Mental Health, and Financial Assistance for Phoenix Families
ARPA programs as described above. Staff also seeks approval to use ARPA funding to
provide up to 1,000 $100 gift cards to residents who receive the COVID-19 vaccine.



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Staff will present additional information for ARPA programs as necessary to City
Council later this fall.

Concurrence/Previous Council Action
The City Council approved the ARPA Strategic Plan on June 8, 2021, by a vote of 7-2.

Responsible Department
This item is submitted by Assistant City Manager Jeffrey Barton.




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