Royal Oak hires financial firm to help with federal recovery funds

By: Sarah Wojcik | Royal Oak Review | Published July 16, 2021

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ROYAL OAK — On June 28, the Royal Oak City Commission unanimously approved a one-year contract, with options for two additional one-year extensions, for financial consulting services from Guidehouse Inc. to help the city allocate the $28,107,502 it received under the American Rescue Plan Act.

Royal Oak Economic Development Manager Todd Fenton said staff did not request bid proposals in order to save time; the deadline for the funds to be obligated is Dec. 31, 2024, and the city’s first report on the funds is due next month. The city is using the same proposal already negotiated by Oakland County for the company’s financial consulting services, and department heads lack the capacity to do the work, he added.

The state of Michigan, Wayne County and the city of Detroit also have contracted with Guidehouse.

On June 17, Royal Oak received its first deposit of American Rescue Plan Act fiscal recovery funds in the amount of $14,053,751. Fenton said he anticipates the final expenditure deadline will be Dec. 31, 2026, but the date awaits clarification from the U.S. Department of the Treasury.

“This is a substantial amount of money, truly a once-in-a-lifetime, transformational amount of money that the city is receiving, and as such, city staff need help administering this program,” Fenton said. “Our first report is due in August, even though it’s not going to be very substantive because we’re just starting this process. … We need to get moving much faster than we have on some of the other grant money we’ve received before.”

Fenton added that Guidehouse would help conduct public engagement and engagement with the City Commission, staff and the community to identify the best practices and priorities for the city, as well as ensure the city adheres to all monitoring and compliance issues mandated by the American Rescue Plan Act.

“We think that because (Guidehouse is) aware of what’s going on with Oakland County and the state of Michigan, we’re in the best position to leverage our money to maximize every single dollar we have and to avoid duplicating any other programs or services that Oakland County or the state of Michigan may be providing,” he said.

The statute identifies four broad eligible uses for the ARPA funds: to respond to the COVID-19 public health emergency and its negative impacts; to provide premium pay for essential workers; to provide government services to the extent of the eligible governments’ revenue losses; and to make necessary water, sewer and broadband infrastructure investments.

The statute also identified two uses ineligible for the American Rescue Plan Act funds: depositing funds into any pension fund, and directly or indirectly offsetting tax cuts.

Because of the fluidity of the work and the fact that the exact scope has not yet been determined, the city approved a purchase order of approximately 1.5% of the city’s total American Rescue Plan Act allocation, or $421,612.53, to pay Guidehouse.

Jeff Bankowski, a partner at Guidehouse, said the final amount could be much less or more than the proposed sum, depending on the amount of work.

“We’re based out of D.C. with offices in Detroit,” Bankowski said. “Since we’re based outside of D.C., we’re very close to where regulatory guidance is emerging from a clarity perspective.”

Mayor Michael Fournier said the purpose of the contract is to get instruction on how to manage a large sum of money quickly that city staff does not have the capacity to do and ensure that it is spent appropriately so the city does not find itself having to pay it back due to a mistake.

Mayor Pro Tem Patricia Paruch said she felt that one of the benefits of working with Guidehouse is the ability to avoid duplication of programs and hone in on matching funds.

Bankowski said the next steps are to meet with the city leadership to determine policy and the direction it wishes to go in terms of how to spend the money.

Commissioner Sharlan Douglas said the city based its purchasing decision on another governmental agency instead of competitively bidding out the project, which it has done in the past.

“In this case, it’s a quote to Oakland County, so the pricing we are getting here is what they negotiated, and I’m sure they negotiated very hard to get a beneficial price knowing they’d be spreading services over multiple communities,” Douglas said.

Commissioner Kyle DuBuc said he felt the move was the “right course of action.”

“This isn’t money coming out of the sky,” Fournier said. “There are infrastructure needs we’ve needed help from the feds and state (on) for a long time, so this money is going to be put to good use.”

Commissioner Monica Hunt abstained from voting to avoid any potential conflict of interests, as the law firm she works for has an “ongoing venture” with financial consulting firm Pierce, Monroe & Associates, a partner that works closely with Guidehouse, she said.