Flint, MI– The Flint City Council is still considering hiring a compliance firm to help spend American Rescue Plan Act funds–but the contract may undergo some changes.
In March, the city learned that it would be receiving $94.7 million dollars in COVID-19 relief as part of a $1.9 trillion economic stimulus package intended to aid the country in recovering from the pandemic.
The money has specific eligible uses, and the guidelines have not yet been finalized. But if the money is spent incorrectly, the city will have to pay it back. To prevent that, the administration has been adamant about hiring an outside compliance firm to ensure the money is spent properly.
While most council members agree the city needs a compliance firm to spend the funds correctly, they have voiced concerns about the cost.
The administration’s proposal is a five-year contract with Ernst & Young not to exceed $3,994,074, which is about 4.2% of the total ARPA funds the city is receiving.
During the finance committee meeting on Jan. 5, Councilman Dennis Pfeiffer called it a “Cadillac proposal,” for a city with an “MTA budget.”
The council has debated and postponed hiring the firm for multiple meetings, but at their most recent meeting on Jan. 5, some council members suggested amending the contract to one year with options of renewal.
“I am all for compliance, but to spend out $4 million on a firm for compliance, to me, would be ridiculous … I think we can do better. I think we can cut the costs. And I was in agreement with, let’s do, maybe, one year and see how this works,” Councilwoman Jerri Winfrey-Carter said.
Councilwoman Ladel Lewis asked the city’s Chief Financial Officer Robert Widigan if amending the current proposed contract to a one-year contract, with options to renew it year by year.
Widigan said that at this point, the administration just wants to get moving with the firm.
“If council decides to recommend a one-year contract, let’s do it,” he said.
Widigan also told the council that there was a possibility the cost for the compliance firm would end up lower than the $3.9 million in the proposed contract.
“I mean your biggest costs and your biggest hill to climb is year one. You know, we’re making sure we get this set up, public input and all that,” he said. “And then, theoretically, years three, four, five, it’s going to be more just compliance, and ensuring we’re in compliance.”
Council President Eric Mays said they “might be getting somewhere” after the notion of a shorter contract was introduced, and asked if that would work for Ernst & Young.
Widigan said that he texted someone from the firm asking if they would accept a one-year contract, and the response was that it would be “completely fine.”
Pfeiffer asked Widigan if the firm would need to stay on until the funds were exhausted, and the programs and projects were fulfilled.
Widigan said it may depend on how the city decides to spend the money, and what will be needed at the time.
“Let’s say we do a two-year contract with them, and it comes to year three, and it’s simple compliance reports that we can handle, just a matter of filing with the feds for the deadlines, I don’t see why we would need to keep them on to submit paperwork,” Widigan said.
But he said if they have to continue monitoring how a company is spending the money, and conduct annual audits, then the city may continue to need the firm for that.
The council voted 5 to 3 to send the contract to the next city council meeting, with a request for an amendment to the contract. Lewis, Councilwoman Judy Priestley, Councilwoman Allie Herkenroder, Councilwoman Eva Worthing, and Councilman Quincy Murphy voted yes. Pfeiffer, Mays, and Winfrey-Carter voted no.
Widigan said it would “not take long” to work with the legal department to get the contract amended.
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