With the fourth quarter of 2024 just around the corner, local governments – including the City of Traverse City and Grand Traverse County – face a ticking clock to obligate their American Rescue Plan Act (ARPA) funds by the end of December or risk losing them entirely. Both city and county commissioners recently checked in on where their dollars are headed – with city commissioners likely to vote soon on how to spend nearly $300,000 remaining, the bulk of which could go to completing the new Traverse City Senior Center.

Local governments are required under federal guidelines to obligate their ARPA funds by the end of December, meaning they must have committed to where those dollars are going and have contracts in place to that effect. Once the deadline has passed, governments can’t reallocate those funds (with few exceptions) – and any unallocated funds must be returned to the U.S. Department of Treasury. ARPA money must then all be spent on the designated projects by the end of 2026, with any unspent funds also required to be returned.

The City of Traverse City has nearly $1.7 million in ARPA funds to spend, including accumulated interest. About half of those funds have already been spent, including $500,000 for the Senior Center construction, more than $166,000 in tree plantings across the city, nearly $111,000 in pandemic employee appreciation bonuses, and $40,000 for a grant match for Jubilee House.

As of June, a balance of over $864,000 was remaining – though a significant portion has been committed. That includes about $33,000 left for additional tree plantings over the next two years, $250,000 for sanitary sewer inflow and infiltration upgrades, and $150,000 for the Traverse City Fire Department. The TCFD dollars were originally intended to be used for new gender-neutral restrooms, but that project is now on hold while the department assesses long-term needs. Some or all of that funding could be recommended to instead go to HVAC repairs at the fire station, according to City Manager Liz Vogel. City commissioners also recently committed $80,000 to support local day shelter services – $40,000 annually for the next two years – and over $58,000 to secure grant-writing services with the goal of pursuing Inflation Reduction Act (IRA) grants and bringing more funding to Traverse City.

That leaves just over $292,000 in unallocated ARPA funds in the city. Vogel plans to present commissioners with multiple options for spending those dollars at an upcoming meeting. “Probably a lot of that will go to the Senior Center,” she says. The new Senior Center (pictured), which is on track to be completed in December, has an estimated budget deficit of just under $562,000 to close out the project. The city could put some ARPA funds toward covering that deficit and could use other sources – such as the city’s fund balance or an internal loan from its economic development fund – to cover the rest. Some ARPA dollars could also go to Safe Harbor for safety improvements as the nonprofit prepares to expand to year-round operations, Vogel says.

Grand Traverse County has a more complex task ahead because it received far more in ARPA funding – approximately $18 million. The county spent $3 million recently to purchase Camp Greilick, with the remaining $15 million allocated to more than two dozen projects across the region. County commissioners have received regular status updates on those projects and raised concerns last week that seven projects have spent zero percent of their funding so far, despite the awards being announced at the end of 2022. While the county has funding agreements in place with all the project entities – fulfilling the contract requirement before the December deadline – commissioners worried the lack of progress on some projects could be an in indicator that funds won’t ultimately be spent. If entities can’t carry out their project commitments and spend their funds in the next two years, those dollars would be lost.

“We stand to lose potentially millions of dollars,” pointed out Commissioner TJ Andrews. She said the county should prepare a “Plan B” and be ready to reallocate funds before the end of the year if it seems unlikely an organization will be able to fulfill its commitment. Andrews said numerous other groups could use the money and would be ready to spend it within the required timeframe. Commissioner Darryl Nelson acknowledged the risk, but also said he didn’t want to make organizations panic that the county was going to yank their funding. “Let’s go forward with a positive attitude,” he said, suggesting commissioners communicate that they just wanted to help awardees “get across the line” and complete their projects.

Commissioners voted unanimously to have staff send a letter to all ARPA recipients who haven’t spent 100 percent of their funds, requesting a status update and a reaffirmation of their commitment to spend funds within the required timeframe. The seven recipients who have spent zero percent so far include: East Bay Township – Sanitary Sewer Force Main Replacement/Pump Station 1 ($2 million), Goodwill Northern Michigan – Annika Place 2 Affordable Housing ($400,000), Grant Township – Zue Road Project ($150,000), Whitewater Township – Lossie Natural Trail Wetlands Mitigation and Improvement ($95,917),  Fife Lake Township – Emergency Services Roof Replacement Project ($75,000), Traverse City Area Public Schools – Peer-to-Peer Programming for Youth Mental Health ($10,000), and Slabtown Neighborhood Association – Neighborhood Park Signage ($3,000).

County Administrator Nate Alger said he’s received updates on several of those projects and expects they’ll be able to spend their funds. East Bay Township is lining up several other funding sources as part of its major sewer project with Acme Township; Alger said he expected funds to start being spent on that project in early 2025. Whitewater Township is about to have an entire board turnover and is waiting until after the election to confirm its plans, Nelson said, while Zue Road is expected to close out soon and Slabtown Neighborhood Association had delays due to troubles finding a bank to process the grant. Alger tells The Ticker the ARPA letter is going out this week to recipients with unspent funds, with a reply requested by October 15.