TO: Mayor and Members of City Council
THRU: Douglas J. Hewett, ICMA-CM, City Manager
FROM: Jeffery Yates, ICMA-CM, Assistant City Manager
DATE: November 24, 2025
RE:Title
Approve Use of ARPA Interest Funds for Electric Buses, Maker’s Space, and Grant Matches
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COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
GOAL 2: Responsive city government supporting a diverse & viable economy
2.1: To ensure a diverse City tax base
2.2: To invest in community places to ensure revitalization and increase quality of life
GOAL 4: Desirable place to live, work, & recreate
4.4: To provide a clean and beautiful community with increased green spaces
4.5: To ensure a place for people to live in great neighborhoods
GOAL 5: Financially sound city providing exemplary city services
5.1: To ensure strong financial management with fiduciary accountability and plan for future resource sustainability by aligning resources with City priorities
Executive Summary:
The City of Fayetteville earned $2.9 million in interest from the investment of its $40.4 million in ARPA funds, and after earlier FY 2025 allocations to the Microgrant Program and a transit grant match, the remaining one-time dollars are now available for reinvestment in the community. Because these funds are one-time in nature, staff recommend allocating them to one-time projects that deliver lasting benefits: providing the City’s required match for a pending federal electric bus grant, completing the build-out of the new Maker’s Space facility, and establishing a reserve to match future grants. Together, these investments continue the transformational impact of ARPA by strengthening transit, supporting local innovation, and positioning the City to bring additional external funding into Fayetteville.
Background:
The City of Fayetteville received $40.4 million in American Rescue Plan Act (ARPA) funding to help our community recover from the impacts of the pandemic. Because the money was provided as a lump sum, the City was able to invest it while working to spend the funds on approved projects. Thanks to careful financial management, those investments earned an additional $2.9 million in interest - extra dollars that can now be reinvested back into the community.
Earlier in FY 2025, the City Council used a portion of those earnings to support two community needs: $130,000 for the Microgrant Program, which directly supports small community-led projects, and $102,838 as a local match for a grant to improve transit services. Now that the ARPA program is nearing completion, interest earnings have slowed, and the total remaining amount is known. Because this is one-time money, it should be used for one-time projects that make a lasting impact for residents.
With this in mind, City staff recommend using the remaining interest earnings to continue the positive momentum of ARPA by supporting three high-impact initiatives: the local match for an electric bus grant ($1,666,366), the build-out of the Maker’s Space facility ($800,000), and the creation of a reserve to match future grants ($222,998).
Earlier, the City Council passed a resolution supporting an $8.3 million federal grant that would allow the City to purchase additional electric buses. If awarded, the grant would expand clean, reliable transit options for Fayetteville residents but requires a local match of about $1.67 million. Setting aside these funds now ensures the City is ready when the award is finalized.
The City’s new Maker’s Space - located at the highly visible intersection of Murchison Road, Rowan Street, and Bragg Boulevard - is designed to be a shared workshop where residents, makers, artists, and entrepreneurs can learn, create, and bring their ideas to life. To fully prepare the building for public use, improvements such as floodproofing, ADA accessibility, electrical and plumbing upgrades, and other needed renovations are required. These improvements are estimated at $900,000, and with additional work included, the total project cost is about $1.6 million. An additional $800,000 will complete the funding needed to finish the project and open it to the community.
Throughout the year, the City learns about many grant opportunities that could benefit residents - but many of them require matching funds to secure the award. By setting aside the remaining $222,998 as a grant match reserve, the City will be better positioned to bring more outside funding into Fayetteville without pulling from other community priorities.
Issues/Analysis:
See background
Budget Impact:
See background
Options:
1. Approve the Capital Projects Ordinance to allocate the ARPA interest earnings to the community projects as recommended.
2. Not approve the allocation and provide additional guidance to staff on alternative uses or priorities.
3. Take no action at this time and consider allocation of the funds during the upcoming budget process.
Recommended Action::Recommended Action
City staff recommend that the City Council approve the Capital Projects Ordinance allocating the remaining ARPA interest earnings to the electric bus grant match, the Maker’s Space build-out, and the grant match reserve. This approach aligns with the one-time nature of the funds, advances key Council priorities, and positions the City to maximize external funding opportunities for the benefit of Fayetteville residents.
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Attachments:
CPO 2026-35