South Portland to get additional $8 million in federal pandemic aid

SOUTH PORTLAND — The city will receive an additional $8 million in federal pandemic aid after lobbying to address an administrative technicality in how the city receives Community Development Block Grant funding, municipal officials learned Monday.

That’s half the additional $16 million city officials believed South Portland was entitled to receive, but it’s a lot more than City Manager Scott Morelli was expecting to actually get.

In all, South Portland will receive $10.5 million in American Rescue Plan funding, up from $2.5 million previously allocated to Maine’s fourth-largest city.

Morelli began lobbying for additional COVID-19 relief funding last month, when South Portland learned it would receive a lot less than other Maine cities because it had relinquished its status as a CDBG entitlement community in 2006. Since then, South Portland has received federal funding for housing, community development and other anti-poverty programs through Cumberland County’s CDBG program.

Maine cities that have maintained their CDBG entitlement status are still on track to receive significant ARP funding: Portland (population 65,215), $46.3 million; Lewiston (pop. 36,225), $21 million; Bangor (pop. 32,262), $20.5 million; Auburn (pop. 23,414), $13.5 million; and Biddeford (pop. 21,504), $9.8 million.

But based on the other cities’ allocations, Morelli figured South Portland (pop. 25,532) was entitled to a total of $14 million to $18.6 million from the Coronavirus Local Fiscal Recovery Fund.

“We are being treated similarly to entitlement communities, and our allocation has increased nearly five fold,” Morelli said in an email to the City Council on Monday. “While we are still receiving less funds than Auburn for some reason, I cannot complain as I only gave us a 25 percent chance of getting any additional funds.”

Morelli said he didn’t know exactly how the ARP funding was recalculated, though it appears that South Portland was reassessed as a metropolitan city, receiving its allocation according to the CDBG program formula. It also appears that a total of $6.9 million was trimmed from ARP allocations to the other Maine cities, which are now getting less than initially projected. Portland’s allocation is down $1.9 million; Lewiston, $1.8 million; Bangor, $661,250; Auburn, $649,279; and Biddeford, $1.9 million.

Of $130.2 billion in ARP funding that’s allocated to local governments, $45.6 billion is going to metropolitan cities using the CDBG program formula, including Portland and Maine’s other CDBG entitlement communities; $19.5 billion is going to non-entitlement communities to be distributed through states; and $65.1 billion is going to counties, including Cumberland County, that will distribute funds to their members.

Cities must meet certain federal poverty and population measures to qualify as CDBG entitlement communities and receive funding directly from the U.S. Department of Housing and Urban Development for housing, infrastructure and anti-poverty programs. Other cities and towns receive CDBG funding through state or county administrators.

South Portland became a CDBG entitlement community in 2004, then gave up that status two years later so Cumberland County would have enough population among 25 communities other than Portland to establish a county CDBG program. In return, South Portland got a 2 percent increase in CDBG funding it receives through the county. The city now gets about $435,000 annually.

Maine’s congressional delegation sought help last week from U.S. Treasury Secretary Janet Yellen, asking her to fix a funding glitch that threatens to disadvantage dozens of similar municipalities across the country, from California to Michigan to Pennsylvania.

“We are concerned that this relinquishment may lead to the city of South Portland (receiving) significantly less funding per capita than other Maine cities with equal or less population,” the delegation wrote to Yellen, in a letter signed by Sens. Angus King, an independent, and Susan Collins, a Republican, and Rep. Chellie Pingree, D-1st District.

The delegation asked Yellen to intervene and ensure that equitable recovery funding be provided to South Portland and “numerous other municipalities across the country” that are eligible for entitlement status.

On Monday, Mayor Misha Pride thanked the delegation, Morelli and other city employees for their successful efforts in lobbying for more ARP funding.

“This news is the shot in the arm that South Portland needed,” Pride said. ” These funds will have a tremendous impact in supporting the city’s goals, and potentially bringing down the tax burden for residents who fear the coming revaluation.”

The infusion of ARP funding comes at a critical time because the city is wrapping up a long-delayed property revaluation during a pandemic-fueled real estate boom that promises to raise some homeowners’ tax bills 10 to 30 percent or more.

State and local governments have been waiting for clarification of spending restrictions on COVID-19 relief fund, especially as many Maine municipalities prepare fiscal 2022 budgets that start July 1.

The Biden administration provided some additional information Monday, but it’s still complicated, with directives that it can be used for “replacing lost public sector revenue” but not “to directly or indirectly offset a reduction in net tax revenue.”

In his email to councilors, Morelli said, “We will be working diligently on a plan to bring to you (on) how to use these funds, which will be doled out in two increments over the coming year.”