Evanston’s bundle of federal COVID-19 recovery funds is running down, with roughly $10 million left from the original total of approximately $43.1 million.

The YMCA was awarded $3 million in ARPA funds to revamp the men’s residence,1000 Grove St., the city’s lone single room occupancy (SRO) facility, which houses 172 residents.. Credit: Evan Girard

City officials provided an update on the funds at the Monday, Sept. 12, City Council meeting, where Council members approved two more American Recovery Plan Act supported allocations:

  • $2 million to replace the privately-owned portion of lead water-service lines, and
  • $500,000 for a Welcoming Center program for immigrant families and other new residents.

Pending approval, that would put the unaccounted balance of ARPA funds at $9.94 million, reported Sarah Flax, the city’s Interim Director of Community Development, in a presentation at the meeting.

In March 2021, Evanston officials learned the city would receive about $43.1 million in the federal funds that were earmarked to help local governments respond to the pandemic and lay a foundation for an equitable recovery.

Under federal guidelines, all funds received are to be expended or encumbered by Dec. 31, 2024.

Northlight Theatre received $2 million in ARPA funds to help build a theater complex on Church Street. (Northlight rendering)

Flax told Council members that some recent changes in the federal categories should give the city more flexibility in affordable-housing initiatives and the “replacement revenue” category.

Under these changes, officials will be able to use that category to cover the cost of salary increases that are recommended in a new Classification and Compensation study undertaken for the city, Flax said.

In discussion at the meeting, Council member Bobby Burns (5th Ward) asked Flax whether there are any other projects that staff is considering for the $9 million, “or is this just completely unencumbered?”

Flax said a workforce development project is a possibility, but as of this point, “there are always people who have other ideas on how we’re going to spend it but none that have specifically been brought forward.”

ARPA funds may close any 2023 budget gaps

In an update on the city’s budget held as part of the same conversation, Hitesh Desai, the city’s Chief Financial Officer, reminded Council members that last year the city balanced its budget by using $4.25 million from ARPA for the General Fund, which is the city’s main operations fund.

Family Focus building, formerly Foster School, received $3 million in ARPA funds for badly needed repairs.

He said this is “a big thing” to consider again this year as officials seek to balance the General Fund for 2023. 

Governments like Evanston keep reserves, or what might be called a “rainy day” fund, for unexpected situations. The city drew on that in 2020 in response to the drain of revenues because of COVID.

With a reserve amount equal to 16.66% of its annual operating expenses, Evanston still sits at the “low end” compared to other neighboring towns, Desai said in his presentation. By comparison, Schaumburg and Niles are at the top end at 40%.

Council member Devon Reid, 8th Ward, took notice of the 40%. “Do you think that’s somewhat extreme, given that we should have the taxpayers’ money not just hoarded away in city bank accounts,” he said, “but actually out working for the community? Do you think 40% might be too much?”

Forty percent might be too much, conceded Desai. But he pointed to recent history, including the 2008 recession and COVID in 2020 as reasons to support a healthy fund balance.

In 2020, for instance, faced with a sharp loss of revenue, the city had to look on the expense side to make up the difference.

Almost all our employees “took the fall over this [agreeing to a 0% increase in salary],” he pointed  out. “Skokie didn’t do that. I mean, I talked to five different finance directors [and they said]. ‘We are not taking any fall over this because we have 40% fund balance.”

The reports were updates, and the Council took no action. City staff plan to unveil the proposed 2023 budget on the city’s website Oct. 10, kicking off the process.

Bob Seidenberg is an award-winning reporter covering issues in Evanston for more than 30 years. He is a graduate of the Northwestern University Medill School of Journalism.