In March 2021, President Joe Biden signed the American Rescue Plan Act, which designated billions in federal funding to municipalities across the country to support the recovery from the COVID-19 pandemic.
The City of Buffalo received $331 million – the biggest one-time investment from the federal government the city has ever seen.
$11 million of that cash was earmarked for a water bill debt-forgiveness program and allocated to the Buffalo Water Board.
But the program never happened and the money was spent elsewhere, according to a letter penned by Buffalo's Acting Mayor, Christopher Scanlon, to the Buffalo Common Council.
It was a discovery he was "incredibly disheartened" to make.
In a statement to WBFO, Scanlon said the finding was a result of an independent audit of the city's American Rescue Plan (ARP) spending, undertaken at his direction.
The revelation was likely a shock because just two months ago, outgoing Buffalo Water Board Chair, OJ McFoy, told the common council that all $11 million of ARP funding had been spent on the water bill debt-forgiveness program for which it was allocated.
McFoy even went as far to explain how the cash had been applied to qualifying customers.
“That went directly into people’s accounts,” he told the council’s finance committee on Oct. 22.
In his letter to the council dated Dec. 13, Scanlon confirms that the $11 million had indeed been spent, but on water infrastructure projects instead.
But the discovery comes as no surprise to Executive Director of the Partnership for the Public Good, Andrea Ó Súilleabháin. Her organization has been tracking the city’s use of the ARP dollars.
“We never saw a big launch of that program or an announcement from the city that they were launching that level of debt forgiveness so it wouldn’t surprise me that it hasn’t happened,” Ó Súilleabháin said.
The deadline for municipalities to allocate the ARP money is Dec. 31. and any cash left on the table by that date must be returned to the federal government, which explains why the city is scrambling.
Using the federal dollars on water infrastructure projects is an eligible use of the cash according to the U.S. Department of the Treasury. But that doesn’t negate the fact the common council had previously allocated it for the debt-forgiveness program, and so the council must retroactively sign off on the actual use of the funds if the city is to comply with federal rules.
In an email sent to WBFO through a spokesperson, McFoy confirmed that “significant reallocation has occurred for these funds,” and went on to state that “All American Rescue Plan funds have been spent in full compliance with federal guidelines.”
When asked why he told the council the ARP cash was spent on debt forgiveness when it was not (according to Scanlon), McFoy did not directly address the question and instead pointed to separate water bill assistance initiatives for low-income homeowners which were not funded by ARP cash.
In July 2021, city officials said qualified households would include low-income families and customers who fell behind on bills due to COVID illness. At the time McFoy said customers would be automatically enrolled.
Ó Súilleabháin thinks that there’s still a chance the $11 million could go toward water bill debt-forgiveness because the city would only need to pay itself to write-off customer debt.
“The city could use the rescue plan money, take $11 million, assign it to those water bills and that then becomes city revenue. Then they could spend it on the capital project, or then they could move it to general revenue loss replacement,” Ó Súilleabháin said.
“It doesn't require extra money to forgive the water debt. It just requires really getting that customer debt off the book,” she added.
In a statement to WBFO Scanlon said:
“As previously outlined in my communication filed with the Buffalo Common Council, I am deeply disappointed to have discovered through an independent audit review undertaken at my direction that ARPA funds allocated to the Buffalo Water Board were redirected from their intended purpose.
“These funds, approved by the Common Council in the Fifth Amendment submitted on July 19, 2024, by the prior administration, were designated by the Buffalo Water Board to forgive outstanding residential water bills but were instead redirected by the Buffalo Water Board to be used toward infrastructure improvements.”
Scanlon has asked the council to amend the city’s ARP spending plan for the sixth time before the Dec. 31 deadline. The amendment also collapses a further $19.2 million previously allocated for other initiatives to plug city budget gaps instead.
The common council is scheduled to discuss the ARP funds in Monday’s meeting.
