HomeMy WebLinkAboutAGMT - Orange County (Coronavirus Relief Funds for Economic Support provided by City)SUBRECIPIENT AGREEMENT BETWEEN THE COUNTY OF ORANGE
AND THE CITY OF SEAL BEACH FOR CORONAVIRUS RELIEF FUNDS
FOR ECONOMIC SUPPORT PROVIDED BY THE CITY
This Subrecipient Agreement (the "Agreement") is made and entered into by and
between the County of Orange, a political subdivision of the State of California,
hereinafter referred to as "County," and the City of Seal Beach, a municipal
corporation, hereafter referred to as "Subrecipient," with the County and
Subrecipient referred to as "Party," or collectively as "Parties."
WHEREAS, on February 26, 2020, the County Health Officer declared a local
health emergency based on an imminent and proximate threat to public health from
the introduction of a novel coronavirus (named "COVID-19") in Orange County (the
"COVID-19 Emergency"); and
WHEREAS, on March 2, 2020, the Board of Supervisors adopted Resolution
No. 2020-11 ratifying the local health emergency declared by the County's Health
Officer; and
WHEREAS, on March 4, 2020, the Governor of the State of California
declared a State of Emergency to exist in California as a result of the threat of
COVID-19; and
WHEREAS, on March 13, 2020, the President of the United States issued a
Proclamation on Declaring a National Emergency Concerning the COVID-19
Outbreak; and
WHEREAS, the Coronavirus Aid, Relief, and Economic Security (CARES) Act
was passed by Congress and signed into law by the President of the United States
on March 27th, 2020; and
WHEREAS, the CARES Act established the Coronavirus Relief Fund and the
County received an allocation of funds from the Coronavirus Relief Fund under
section 601(a) of the Social Security Act, as added by section 5001 of the CARES
Act; and
WHERAS, the CARES Act provides that payments from the Coronavirus
Relief Fund may only be used to cover costs that (1) are necessary expenditures
incurred due to the public health emergency with respect to the COVID-19; (2) were
not accounted for in the budget most recently approved as of March 27, 2020 (the
Page 1 of 9
date of enactment of the CARES Act) for the State or local government; and (3) were
incurred during the period that begins on March 1, 2020, and ends on December 30,
2020; and
WHEREAS, the Department of Treasury has issued guidance that the
County may transfer funds to a unit of government within its borders 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;
and
WHEREAS, the Department of Treasury has issued guidance that eligible
expenses include costs associated with the provision of economic support in
connection with the COVID-19 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; and
WHEREAS, the Orange County Board of Supervisors has authorized the
distribution of $15 million in funds it received from the Coronavirus Relief Fund to
Orange County cities located in the Second District of the Orange County Board of
Supervisors (the "Second District") based on the 2010 population figures provided
by the United States Census Bureau for the economic support of small businesses
located in Subrecipient in the Second District; and
WHEREAS, in order to provide funds for the Subrecipient to pay necessary
expenditures it has or will incur providing economic support to small businesses in
the Second District due to the COVID-19 public health emergency, the Parties have
agreed that the County shall transfer the grant amount described herein to
Subrecipient.
NOW, THEREFORE, the Parties mutually agree as follows:
1. TERM OF AGREEMENT. The term of this Agreement begins on the
date when fully executed by the Parties, and terminates on June 30, 2021, or when
all of the Parties' obligations under this Agreement are fully satisfied, whichever
occurs earlier.
2. USE OF GRANT AMOUNT.
a. Subrecipient shall use the grant amount provided under this
Agreement to pay for Eligible Expenses that: (1) are necessary expenditures
incurred due to the public health emergency with respect to COVID-19; (2)
Page 2 of 9
were not accounted for in the budget most recently approved by Subrecipient
as of March 27, 2020; and (3) were incurred during the period that begins on
March 1, 2020, and ends on December 30, 2020.
b. The term "Eligible Expenses," as used in this Agreement, shall
mean expenses incurred and paid for by Subrecipient for the provision of
economic support to Small Businesses located in the Second District in
connection with the COVID-19 public health emergency, including
expenditures related to the provision of grants to Small Businesses to
reimburse the costs of business interruption caused by required closures and
unemployment insurance costs related to the COVID-19 public health
emergency if such costs will not otherwise be reimbursed by the federal
government.
C. The term "Small Business," as used in this Agreement, shall
mean an independently owned and operated business that is not dominant in
its field of operation, the principal office of which is located within the
jurisdictional boundaries of Subrecipient, the officers of which are domiciled
in Orange County, California, and which, together with affiliates, has 100 or
fewer employees, and average annual gross receipts of fifteen million dollars
($15,000,000) or less over the previous three years, or is a manufacturer with
100 or fewer employees.
d. The following is a nonexclusive list of expenditures that shall
not constitute Eligible Expenses payable from the grant amount:
(1) Damages covered by insurance.
(2) Payroll or benefits expenses for employees whose work
duties are not substantially dedicated to mitigating or responding to
the COVID-19 public health emergency.
(3) 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.
(4) Reimbursement to donors for donated items or services.
(5) Workforce bonuses other than hazard pay or overtime.
(6) Severance pay.
Page 3 of 9
(7) Legal settlements.
e. Subrecipient must utilize the grant amount in accordance with
all Federal and State laws, including but not limited to 42 U.S.C. § 801,
subsection (d), and all applicable regulations and guidelines, including
guidance issued by the Department of Treasury regarding costs that are
payable from Coronavirus Relief Funds, which includes but is not limited to
Guidance for State, Territorial, Local, and Tribal Governments dated April
22, 2020 (Exhibit A) and Coronavirus Relief Fund Frequently Asked
Questions Updated as of May 4, 2020 (Exhibit B).
3. PAYMENT OF GRANT AMOUNT
a. The County shall pay Subrecipient a grant amount of
$562,802.94 within 10 business days of the full execution of this Agreement.
All of Subrecipient's expenditures of the grant amount must be for costs as
described in Paragraph 2 of this Agreement. The grant amount represents
the amount allocated to Subrecipient based on population pursuant to the
authority delegated by the Board of Supervisors to the County Executive
Officer on May 26, 2020.
b. It is understood that the County makes no commitment to fund
this Agreement beyond the terms set forth herein.
C. If Subrecipient has not spent any portion of the grant amount it
has received under this Agreement to cover Eligible Expenses by December
30, 2020, Subrecipient shall return to the County by February 1, 2021 the
amount remaining unspent as of December 30, 2020.
4. STATUTES AND REGULATIONS APPLICABLE TO GRANT.
Subrecipient must comply with all applicable requirements of State, Federal, and
County of Orange laws, executive orders, regulations, program and administrative
requirements, policies and any other requirements governing this Agreement.
Subrecipient must comply with applicable State and Federal laws and regulations
pertaining to labor, wages, hours, and other conditions of employment. Subrecipient
must comply with new, amended, or revised laws, regulations, and/or procedures
that apply to the performance of this Agreement. These requirements include, but
are not limited to:
a. Office of Management and Budget (OMB) Circulars.
Subrecipient must comply with OMB Circulars, as applicable: OMB Circular
Page 4 of 9
A-21 (Cost Principles for Educational Institutions); OMB Circular A-87 (Cost
Principles for State, Local, and Indian Tribal Governments); OMB Circular
A-102 (Grants and Cooperative Agreements with State and Local
Governments); Common Rule, Subpart C for public agencies or OMB Circular
A-110 (Uniform Administrative Requirements for Grants and Other
Agreements with Institutions of Higher Education, Hospitals and Other Non -
Profit Organizations); OMB Circular A-122 (Cost Principles for Non -Profit
Organizations); OMB Circular A-133 (Audits of States, Local Governments,
and Non -Profit Organizations.
b. Single Audit Act. Since Federal funds are used in the
performance of this Agreement, Subrecipient must, as applicable, adhere to
the rules and regulations of the Single Audit Act (31 USC Sec. 7501 et seq.),
OMB Circular A-133 and any administrative regulation or field memoranda
implementing the Act.
C. Political Activity Prohibited. None of the funds, materials,
property or services provided directly or indirectly under this Agreement may
be used for any partisan political activity, or to further the election or defeat
of any candidate for public office. Funds provided under this Agreement may
not be used for any purpose designed to support or defeat any pending
legislation or administrative regulation.
5. COMPLIANCE WITH GRANT REQUIREMENTS. To obtain the grant
funds, the Department of the Treasury required an authorized representative of the
County to agree to certain promises regarding the way the grant funds would be
spent. This certification is attached hereto as Exhibit C. By signing this
certification, the County made material representations to the Department of
Treasury in order to receive payments from the Department of Treasury pursuant
to section 601(b) of the Social Security Act, as added by section 5001 of the
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, div. A,
Title V (Mar. 27, 2020). In accordance with Paragraph 11, Subrecipient agrees to
indemnify, defend, and hold harmless the County of Orange for any sums the State
or Federal government contends or determines Subrecipient used in violation of the
certification. Subrecipient shall immediately return to the County any funds the
County or any responsible State or Federal agency, including the Department of
Treasury, determines the Subrecipient has used in a manner that is inconsistent
with Paragraph 2 of this Agreement. The provisions of this paragraph shall survive
termination of this Agreement.
Page 5 of 9
6. REPORTS.
a. Progress Report. On October 1, 2020, Subrecipient shall provide
a report to the County that shall: (1) identify the Eligible Expenses paid from
the grant amount; (2) identify the name and location of each Small Business
receiving economic support funded by the grant amount and the amounts
paid to each Small Business; (3) demonstrate how Subrecipient used the
grant amount consistent with the use requirements of Paragraph 2; and (4)
identify the balance of the grant amount that Subrecipient has not spent.
b. Final Report. Upon the earlier of Subrecipient's expenditure of
the balance of the grant amount or January 15, 2021, Subrecipient shall
provide a report to the County that shall: (1) identify the Eligible Expenses
paid from the grant amount; (2) identify the name and location of each Small
Business receiving economic support funded by the grant amount and the
amounts paid to each Small Business; (3) demonstrate how Subrecipient used
the grant amount consistent with the use requirements of Paragraph 2; and
(3) identify the balance of the grant amount that Subrecipient has not spent,
if any.
C. The Subrecipient shall provide a certification signed by its chief
executive officer with each report required under this Paragraph 6 that the
statements contained in the report are true and that the expenditures
described in the report comply with the uses permitted under Paragraph 2.
d. Subrecipient shall maintain supporting documentation for the
reports required by this Paragraph 6 consistent with the requirements of
Paragraph 7.
7. RECORDS MAINTENANCE. Records, in their original form, must be
maintained in accordance with requirements prescribed by the County with respect
to all matters specified in this Agreement. Original forms are to be maintained on
file for all documents specified in this Agreement. Such records must be retained for
a period four (4) years after termination of this Agreement and after final
disposition of all pending matters. "Pending matters" include, but are not limited to,
an audit, litigation or other actions involving records. Records, in their original form
pertaining to matters covered by this Agreement, must at all times be retained
within the County of Orange unless authorization to remove them is granted in
writing by the County.
Page 6 of 9
8. RECORDS INSPECTION. At any time during normal business hours
and as often as either the County, Inspector General acting pursuant to the
Inspector General Act of 1978, or the Auditor General of the State of California may
deem necessary, Subrecipient must make available for examination all of its records
with respect to all matters covered by this Agreement. The County, Inspector
General, and the Auditor General of the State of California each have the authority
to audit, examine and make excerpts or transcripts from records, including all
Subrecipient's invoices, materials, payrolls, records of personnel, conditions of
employment and other data relating to all matters covered by this Agreement.
Subrecipient agrees to provide any reports requested by the County regarding
performance of this Agreement. With respect to inspection of Subrecipient's
records, the County may require that Subrecipient provide supporting
documentation to substantiate Subrecipient's expenses with respect to the
Subrecipient's use or expenditure of the grant amount.
9. INDEPENDENT CONTRACTOR. The Subrecipient shall be
considered an independent contractor and neither the Subrecipient, its employees,
nor anyone working under the Subrecipient shall be considered an agent or an
employee of County. Neither the Subrecipient, its employees nor anyone working
under the Subrecipient shall qualify for workers' compensation or other fringe
benefits of any kind through County.
10. PERMITS, LICENSES, APPROVALS, AND LEGAL OBLIGATIONS.
Subrecipient shall be responsible for obtaining any and all permits, licenses, and
approvals required for performing any work under this Agreement. Subrecipient
shall be responsible for observing and complying with any applicable Federal, State,
or local laws, or rules or regulations affecting any such work. Subrecipient shall
provide copies of permits and approvals to the County upon request.
11. INDEMNITY. The Subrecipient agrees to indemnify, defend with
counsel approved in writing by County, and hold County, its elected and appointed
officials, officers, employees and agents and those special districts and agencies
which County's Board of Supervisors acts as the governing Board harmless from
any claims, demands or liability of any kind or nature, including but not limited to
personal injury or property damage, arising from or related to the Subrecipient's
receipt of the grant amount under this Agreement, including any claims that the
grant amount paid by the County under this Agreement were not used consistent
with the restrictions on the use of Coronavirus Relief Funds (42 U.S.C. § 801) and
the regulations and guidance issued by the Department of Treasury regarding the
use of such funds. The provisions of this paragraph shall survive the termination of
this Agreement.
Page 7 of 9
12. NOTICES. Any and all notices, requests, demands and other
communications contemplated, called for, permitted, or required to be given
hereunder shall be in writing. Any written communications shall be deemed to
have been duly given upon actual in-person delivery, if delivery is by direct hand, or
upon delivery on the actual day of receipt or no greater than four (4) calendar days
after being mailed by US certified or registered mail, return receipt requested,
postage prepaid, whichever occurs first. The date of mailing shall count as the first
day. All communications shall be addressed to the appropriate party at the address
stated herein or such other address as the parties hereto may designate by written
notice from time to time in the manner aforesaid.
Subrecipient:
Jill R. Ingram, City Manager
CITY OF SEAL BEACH
211 Eighth Street
Seal Beach, CA 90740
County:
Arie Dana, Chief of Staff
Office of Supervisor Michelle Steel
Orange County Board of Supervisors
10 Civic Center Plaza
Santa Ana, CA 92701
13. DEFAULTS. Should either Party fail for any reason to comply with the
contractual obligations of this Agreement within the time specified by this
Agreement, the non -breaching Party reserves the right to terminate the Agreement,
reserving all rights under State and Federal law.
14. ATTORNEY FEES. In any action or proceeding to enforce or interpret
any provision of this Agreement, each Party shall bear its own attorney's fees, costs,
and expenses.
15. ENTIRE CONTRACT: This Agreement contains the entire contract
between the Parties with respect to the matters herein, and there are no
restrictions, promises, warranties or undertakings other than those set forth herein
or referred to herein. No exceptions, alternatives, substitutes or revisions are valid
or binding on the parties unless authorized by the Parties in writing.
Page 8 of 9
16. AMENDMENTS. No alteration or variation of the terms of this
Agreement shall be valid unless made in writing and signed by the parties; no oral
understanding or agreement not incorporated herein shall be binding on either of
the Parties; and no exceptions, alternatives, substitutes or revisions are valid or
binding on County unless authorized by County in writing.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the day and year dated below.
CITY OF SEAL BEACH
A California Municipal Corporation
r �h r
p:A►I0.� �.:!
ATTEST
By:
Robin Stieler
Clerk of the Board of Supervisors
County of Orange, California
APPROVED AS TO RM:
By:
City Attorney
Date: May 29, 2020
COUNTY OF ORANGE
A political subdivision of the State of
California
By:
chelle Steel, C oman
Date: C 1 a
By:
Deputy County Counsel
Date: —_ � 9111:9 0
Page 9 of 9
EXHIBIT A
Coronavirus Relief Fund
Guidance for State, Territorial, Local, and Tribal Governments
April 22, 2020
The purpose of this document is to provide guidance to recipients of the funding available under section
601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act"). The CARES Act established the Coronavirus Relief Fund (the "Fund")
and appropriated $150 billion to the Fund. Under the CARES Act, the Fund is to be used to make
payments for specified uses to States and certain local governments; the District of Columbia and U.S.
Territories (consisting of the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam,
American Samoa, and the Commonwealth of the Northern Mariana Islands); and Tribal governments.
The CARES Act provides that payments from the Fund may only be used to cover costs that—
are
hat
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 March 27, 2020 (the
date of enactment of the CARES Act) for the State or government; and
3. were incurred during the period that begins on March 1, 2020, and ends on December 30,
2020.'
The guidance that follows sets forth the Department of the Treasury's interpretation of these limitations
on the permissible use of Fund payments.
Necessary expenditures incurred due to the public health emergency
The requirement that expenditures be incurred "due to" the public health emergency means that
expenditures must be used for actions taken to respond to the public health emergency. These may
include expenditures incurred to allow the State, territorial, local, or Tribal government to respond
directly to the emergency, such as by addressing medical or public health needs, as well as expenditures
incurred to respond to second -order effects of the emergency, such as by providing economic support to
those suffering from employment or business interruptions due to COVID-19-related business closures.
Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not
otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is
not a permissible use of Fund payments.
The statute also specifies that expenditures using Fund payments must be "necessary." The Department
of the Treasury understands this term broadly to mean that the expenditure is reasonably necessary for its
intended use in the reasonable judgment of the government officials responsible for spending Fund
payments.
Costs not accounted for in the budget most recently approved as of March 27, 2020
The CARES Act also requires that payments be used only to cover costs that were not accounted for in
the budget most recently approved as of March 27, 2020. A cost meets this requirement if either (a) the
cost cannot lawfully be funded using a line item, allotment, or allocation within that budget or (b) the cost
1 See Section 601(d) of the Social Security Act, as added by section 5001 of the CARES Act.
is for a substantially different use from any expected use of funds in such a line item, allotment, or
allocation.
The "most recently approved" budget refers to the enacted budget for the relevant fiscal period for the
particular government, without taking into account subsequent supplemental appropriations enacted or
other budgetary adjustments made by that government in response to the COVID-19 public health
emergency. A cost is not considered to have been accounted for in a budget merely because it could be
met using a budgetary stabilization fund, rainy day fund, or similar reserve account.
Costs incurred during the period that begins on March 1, 2020, and ends on December 30, 2020
A cost is "incurred" when the responsible unit of government has expended funds to cover the cost.
Nonexclusive examples of eligible expenditures
Eligible expenditures include, but are not limited to, payment for:
1. Medical expenses such as:
• COVID-19-related expenses of public hospitals, clinics, and similar facilities.
• Expenses of establishing temporary public medical facilities and other measures to increase
COVID-19 treatment capacity, including related construction costs.
• Costs of providing COVID-19 testing, including serological testing.
• Emergency medical response expenses, including emergency medical transportation, related
to COVID-19.
• Expenses for establishing and operating public telemedicine capabilities for COVID-19-
related treatment.
2. Public health expenses such as:
• Expenses for communication and enforcement by State, territorial, local, and Tribal
governments of public health orders related to COVID-19.
• Expenses for acquisition and distribution of medical and protective supplies, including
sanitizing products and personal protective equipment, for medical personnel, police officers,
social workers, child protection services, and child welfare officers, direct service providers
for older adults and individuals with disabilities in community settings, and other public
health or safety workers in connection with the COVID-19 public health emergency.
• Expenses for disinfection of public areas and other facilities, e.g., nursing homes, in response
to the COVID-19 public health emergency.
• Expenses for technical assistance to local authorities or other entities on mitigation of
COVID-19-related threats to public health and safety.
• Expenses for public safety measures undertaken in response to COVID-19.
• Expenses for quarantining individuals.
3. 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.
2
4. Expenses of actions to facilitate compliance with COVID-19-related public health measures, such
as:
• Expenses for food delivery to residents, including, for example, senior citizens and other
vulnerable populations, to enable compliance with COVID-19 public health precautions.
• Expenses to facilitate distance learning, including technological improvements, in connection
with school closings to enable compliance with COVID-19 precautions.
• Expenses to improve telework capabilities for public employees to enable compliance with
COVID-19 public health precautions.
• Expenses of providing paid sick and paid family and medical leave to public employees to
enable compliance with COVID-19 public health precautions.
• COVID-19-related expenses of maintaining state prisons and county jails, including as relates
to sanitation and improvement of social distancing measures, to enable compliance with
COVID-19 public health precautions.
• Expenses for care for homeless populations provided to mitigate COVID-19 effects and
enable compliance with COVID-19 public health precautions.
5. Expenses associated with the provision of economic support in connection with the COVID-19
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.
• Expenditures related to a State, territorial, local, or Tribal government payroll support
program.
• Unemployment insurance costs 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.
6. Any other COVID-19-related expenses reasonably necessary to the function of government that
satisfy the Fund's eligibility criteria.
Nonexclusive examples of ineligible expenditures2
The following is a list of examples of costs that would not be eligible expenditures of payments from the
Fund.
1. Expenses for the State share of Medicaid.3
2. Damages covered by insurance.
3. Payroll or benefits expenses for employees whose work duties are not substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
z In addition, pursuant to section 5001(b) of the CARES Act, payments from the Fund may not be expended for an
elective abortion or on research in which a human embryo is destroyed, discarded, or knowingly subjected to risk of
injury or death. The prohibition on payment for abortions does not apply to an abortion if the pregnancy is the result
of an act of rape or incest; or in the case where a woman suffers from a physical disorder, physical injury, or
physical illness, including a life -endangering physical condition caused by or arising from the pregnancy itself, that
would, as certified by a physician, place the woman in danger of death unless an abortion is performed.
Furthermore, no government which receives payments from the Fund may discriminate against a health care entity
on the basis that the entity does not provide, pay for, provide coverage of, or refer for abortions.
'See 42 C.F.R. § 433.51 and 45 C.F.R. § 75.306.
4. 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.
5. Reimbursement to donors for donated items or services.
6. Workforce bonuses other than hazard pay or overtime.
7. Severance pay.
8. Legal settlements.
4
0011:11
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 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
' The Guidance is available at https://hometreasga.goy&ystem/files/I36/Coronavirus-Relief-Fund-Guidance-for-
State-Territorial-Local-and-Tribal-Governments.pdf.
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 COM -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
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-l9 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.
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-l9 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.
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?
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 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
6
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.
County of Orange
April 13, 2020
I, Frank Kim, am the chief executive of the County of Orange, and I certify that:
EXHIBIT C
County Executive Office
1. 1 have the authority on behalf of the County of Orange to request direct payment from the
Department of the Treasury ('Treasury') pursuant to section 601(b) of the Social Security Act, as
added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-
136, div. A, Title V (Mar. 27, 2020).
2. 1 understand that Treasury will rely on this certification as a material representation in making a
direct payment to the County of Orange.
3. The County of Orange's proposed uses of the funds provided as direct payment under section
601(b) of the Social Security Act will be used only to cover those costs that -
a. are necessary expenditures incurred due to the public health emergency with
respect to the Coronavirus Disease 2019 (COVID-19);
b. were not accounted for in the budget most recently approved as of March 27, 2020,
for [insert name of local government entity]; and
c. were incurred during the period that begins on March 1, 2020, and ends on
December 30, 2020.
By: Frank Kim /
Signature:
Iffisw•.t1Y • • tY
Date: 4/13/20
PAPERWORK REDUCTION ACT NOTICE
The information collected will be used for the U.S. Government to process requests for support. The
estimated burden associated with this collection of information is two hour per response. Comments
concerning the accuracy of this burden estimate and suggestions for reducing this burden should be
directed to the Office of Privacy, Transparency and Records, Department of the Treasury, 1500
Pennsylvania Ave., N.W., Washington, D.C. 20220. DO NOT send the form to this address. An agency may
not conduct or sponsor, and a person is not required to respond to, a collection of information unless it
displays a valid control number assigned by OMB.
333 W. Santa Ana Blvd., 3^' Floor, Santa Ana CA 927014062 • Phone (714) 834-6201 • Fax(714)834-3018 • VMtW, 8UL=