Northern Michigan communities taking slow approach in spending COVID-19 relief funding

Local governments in Northern Michigan are overwhelmingly taking a slow approach when it comes to determining how to spend COVID-19 relief funding.

That seems to be in accordance with how a vast majority of cities and counties across the nation have been handling their allocations, as well. This year, the American Rescue Plan included upwards of $130 million in fiscal recovery funding to cities, counties and townships nationwide. In a sample size of 20 cities, A Brookings Institute report found that those local governments had only spent a combined 18% of their funding, based on July reporting figures.

In Northern Michigan, many have not even begun their formal discussions about what they’ll do with the money — although their constituents have no shortage of ideas.

“Since this came out, I can legitimately say I get calls every week from different organizations and the public on how we should spend this money,” said Kevin Shepard, Charlevoix County administrator. “And so do the commissioners, as well.”

So far, those interested citizens have had to wait before receiving any commitments from local government officials. In a phone interview, Shepard wouldn’t comment, even broadly, on what the county’s main priorities could include for the slightly less than $5.1 million the county will receive. But, in Charlevoix County and beyond, next year could mark the start of their substantial planning processes.

They have time.

As of May, local governments have only received half the funds allotted to them in the American Rescue Plan. They’re due to receive the rest in 2022. Then, they have until the end of 2024 to declare their plans to the U.S. Treasury Department, and the end of 2026 to carry those plans out.

Jeff Lawson, Cheboygan County administrator, said the county will use some of its $4.9 million allotment to help fund ongoing capital improvements to county buildings. The county is currently conducting a study on the HVAC system and building envelope at the county building to identify necessary improvements. Some $1.8 million in Rescue Plan money will be spent on that work.

The county will also spend $40,000 of the money to hire a classroom aid for the Probate Courts Compass Academy, which keeps adjudicated minors from falling behind on their education.

Emmet County will be receiving close to $6.5 million total. It’s tapped into that supply a few times so far this year, albeit it in relatively small amounts. In November, the county approved the use of $239,900 for hazard pay to critical infrastructure workers, and $21,984 as a 50% reimbursement for new township fire department radio equipment. And, in October, the county used $30,000 to hire Public Sector Consultants to advise them on how to use the funding.

Like Shepard, Reaves said Emmet County will begin most of its significant funding talks next year.

“Emmet County is in no rush to spend these dollars,” said Mike Reaves, Emmet County administrator, in an email. “We intend to have these dollars leveraged to maximum capacity across all of the intended budget years and make significant impacts in a variety of different ways going forward.”

For some municipal governments who don’t have a special consultant to guide their decisions, there remains some uncertainty about what specific conditions they’ll have to meet in spending their Rescue Plan dollars.

Brian Chapman, city manager for Sault Ste. Marie, said he’s still waiting for the U.S. Treasury Department to release the final rules on how their funding may be used. The department provided local jurisdictions with interim rules when the plan was first passed, and Chapman said there’s some good guidance to be found there. But there are still some questions he’d like to see answered before.

“Nobody really has a timeline on when that stuff will come out yet,” he said.

Like many communities throughout the state and nation, Sault Ste. Marie has been seen the negative impacts of the housing shortage exacerbated since the start of the pandemic. The Treasury Department has said the funds can be used for “affordable housing” projects, and that’s one of the priorities Chapman said the city would be interested in exploring.

But, so far, there hasn’t been any definition provided in the funding requirements for “affordable.”

“If you had four people in a room and you asked them all what affordable housing is, you’d probably get four different answers,” he said.

According to official figures Gaylord received $385,704 based on its population of 3,685.

“We are set to receive approximately 5% of our total budget – surrounding townships are looking at receiving 75% of their budgets,” Gaylord City Manager Kim Awrey said. “It seems a little skewed to me, as we are getting paid based off a population of roughly 3,600 people yet we provide services and maintain infrastructure for a community that grows to a population of over 10 times that on any given day.”

The city plans to use that money to offset the cost of upgrading the utility lines on Fifth Street before the upcoming completion of two major projects in the area: a new apartment building called Pines45, and a new recreational vehicle park. The utility line work is estimated at over $600,000, and will have to be completed by next September.

Petoskey has not yet discussed what it plans to do with the $602,472 in funding it will receive, city manager Al Terry said.

“Those discussions will probably happen in 2022,” he said.

The same goes for nearby Harbor Springs, which stands to receive $126,126. City manager Victor Sinadinoski said the staff is looking at possible water and sewer projects to spend that money on, although it will be up to city council members to make that decision.

Voters recently turned down a ballot proposal to remove the Headlee Amendment limitations on Harbor Springs’ tax revenues, meaning the city may have to turn to another option — including, potentially, a millage, to fund departments like parks and recreation and public safety, reducing some of the strain on the general fund.

Sinadinoski said the recovery funding from the American Rescue plan wouldn’t be enough to make a huge dent in those problems.

“If we focus the money on water/sewer infrastructure, which staff thinks is the best fit, the monies for the project would be coming from our Water/Sewer Fund,” he said in an email. “That fund is not funded by taxpayer dollars; only our General Fund and Local Street Fund are funded by taxpayer dollars, and Headlee only affects the millage rate.”

In East Jordan, City Manager Tom Cannon said the city will probably try to spread out its $242,000 proportionally across all of the city’s departments. It has not made any decisions yet.

“This is not a level that would accomplish large infrastructure projects,” he said. “Therefore, smaller projects, infrastructure related studies and equipment needs will be explored.”

For other communities, though, the money is somewhat serendipitous. Chapman said it gives communities a chance to meet their some of their immediate needs, as well as some “once-in-a-lifetime funding of projects.”

But, at the same time, that well will eventually dry up.

“There's a lot of work to do, and we only have $1.4 million,” Chapman said. “In your bank account or my bank account, that’s certainly a lot of money, but $1.4 million when you’re talking about infrastructure projects or housing upgrades, it’s really not a lot. … You’ve really got to take a step back and see what's happening and try to come up with a project or projects that best utilize that money.”

And the fact of the matter is, this type of funding effort is fairly unprecedented — as has been the pandemic itself.

"We’re still not done with it yet, so nobody can predict what’s coming up around the corner,” Chapman said. “Nobody has experience in this this.”

This article originally appeared on The Petoskey News-Review: Northern Michigan communities are in no hurry to spend COVID-19 funding