Las Cruces reallocates $1.3m in ARPA water and sewer funds after contractor termination

Las Cruces reallocates $1.3m in ARPA water and sewer funds after contractor terminationFacing a federal deadline, the city has shifted $1.3 million from the stalled Casa Linda Acres reconstruction project to Cortez Drive improvements to preserve its pandemic relief funding.

The city originally budgeted $2.2 million in ARPA funds for the Casa Linda Acres water and sewer project.

The Casa Linda construction contract was terminated prior to completion, leaving $1.3 million unspent.

Funds will be shifted to the Cortez Drive improvements project, which also qualifies under ARPA's water and sewer infrastructure category.

The city is waiting on the terminated contractor's bonding company to determine next steps for the Casa Linda project.

The Las Cruces City Council has approved the reallocation of $1.3 million in American Rescue Plan Act (ARPA) funding from the Casa Linda Acres reconstruction project to the Cortez Drive improvements project. The shift ensures the city will spend the federal funds before the December 31, 2026, deadline, avoiding a required return of the money to the U.S. Treasury. Accounting Manager Liam Beasley explained that the city originally allocated $2.2 million of its ARPA distribution to the Casa Linda project, which falls under the federal program's water and sewer infrastructure category. While a construction contract was executed in October 2024, it was terminated prior to completion. To date, only $902,000 of the allocated funds have been spent. To preserve the remaining $1.3 million, the city will apply the ARPA funds to the Cortez Drive project, which also meets the requirements for water and sewer infrastructure. Interim Public Works Director Kyle Orange expressed disappointment with the terminated contractor's performance. He noted the city is currently waiting on the contractor's bonding company to outline its obligations for finishing the project, with a formal response expected by July 10. "Switching those funds over to the Cortez Drive projects allows us to complete the ARPA project, and the funds that were used for Cortez Drive can now be applied to Casa Linda," Orange told the council. He added that the swap buys the city time to onboard a new contractor without the strict federal ARPA timeline. Councilor Johana Bencomo, who represents the affected Casa Linda neighborhood, highlighted resident frustrations over the stalled work and alleged property damage caused by the previous contractor, calling for better vetting of outside contractors moving forward.