The city of Gainesville reallocated select portions of its $32 million in American Rescue Act Plan (ARPA) funds on Thursday as it approaches the first federal deadline concerning the financing that came as COVID-19 relief for local governments.  

The reallocation included unused funds sent to nonprofits along with $1.7 million set aside for a 51-unit housing project called the Oakview Apartments that would cater to elderly residents. 

The City Commission discussed options to keep the housing project financed as Alachua County “is researching alternatives, including the use of Infrastructure Sales Tax dollars towards land purchase” to help the project.  

But commissioners decided to pull the funds for Oakview instead of risking losing the money. The first federal deadline is Dec. 31, and funds not assigned to a particular project by then will return to the federal government.  

“I don’t want to send a dime back. I want to spend every bit of it right here,” Mayor Harvey Ward said in a Friday interview.  

He said the city has lost confidence that the project would secure all the financing it needs to finish. The project uses a combination of private, county and city funds. When issues crop up with one funding source, Ward said it often creates ripples through the other sources.  

The city offered the project $1.7 million as a grant. But negotiations earlier this year failed to earn a signature as the applicant, JE Properties, asked if the grant could be converted into a forgivable loan instead.  

On Thursday, commissioners opposed the idea of changing the grant into a loan—relying on input from its city attorney and an outside firm. The initial request for proposals was sent as a grant, and commissioners felt it would be unfair to other potential applicants to then change the funding mechanism.  

“It’s easy to, from my side, think ‘well, we promised you nearly $1.8 million. Isn’t that great. Go build your stuff.’ And it’s not always that easy. Matter of fact, it’s never that easy,” Ward said. 

A motion by Commissioner Bryan Eastman to extend the contract with JE Properties for 90 days, giving Alachua County time to potentially find funding, was voted down. 

The commissioners were left split on their rationale for not keeping the money on the table for the Oakview Apartments.  

Commissioner Ed Book said the city fulfilled its promise and offered the $1.7 million grant in a contract that never got signed earlier this year. He said the applicant essentially forfeited the funds, not that the city withheld them.  

Commissioner Casey Willits offered another view. He said the applicant is now willing to sign the contract for the grant instead of a loan—not wanting to risk the funds—but now the city lacks confidence that the rest of the funding will come through, including a $3 million gap.  

Willits said staff recommends not moving forward because of that lack of confidence. And if the housing development fell through after this year, the city would have no opportunity to shift the money to a new project.  

In Friday’s interview, Ward said he’s proud of how the city has handled its $32 million batch of ARPA funds. The commission voted to put most of the money into housing and nonprofit programs.  

He also pointed to UF Health’s new Eastside urgent care clinic that will open in August off Hawthorne Road. 

“In a few weeks, people will be able to get their football injury from practice at Eastside High School x-rayed at the UF Health Clinic because this ARPA money flowed that way,” Ward said.  

The city allocated $6.9 million in direct aid to nonprofits, and dozens of local nonprofits applied and received some level of funding.  

In addition, another $1.36 million was sent to Grace Marketplace for homelessness services.    

On Thursday, staff said that not all the nonprofits were able to spend their portion of funds by the May 31, 2024, deadline given by the city. Just over $750,000 will flow back to the city because of that and be reallocated to other projects.  

The city also had extra funds from projects that cost less than anticipated. The city saved $215,000 from the funds set aside to hire an outside company to administer the ARPA funds. A feasibility study for a cultural arts center also ended $74,000 under the projection.  

The city manager will have recommendations for how to use those savings, along with the $1.7 million from the Oakview Apartments, at a September meeting.  

The commission did pass one reallocation on Thursday, though, putting $1.1 million into revenue replacement for fiscal year 2025.  

The commission set the ceiling for next year’s millage rate on Thursday, and even if the commission approved the maximum rate, equal to this year’s rate, the city still has a projected shortfall in the budget.  

Ward said it’s not unusual to see a shortfall at this stage in the budget season. He said the budget will get righted in August through cuts or the new revenue replacement.  

Looking back on the last year and a half, Ward said it might have been nice to have more ARPA funds put into revenue replacement to help with losses faced from issues with Gainesville Regional Utilities (GRU).  

But he said Gainesville, in particular the city manager’s office, has handled the changes with resiliency and kept the city on track, allowing more ARPA funds to community groups. 

“The Feds put a gave us the opportunity to spend our tax money,” Ward said. “The money gets generated here with all of us, and it flows back in for us to do good things for the community. That’s the way it ought to work.”