Kane County Board approves reallocation of federal pandemic relief funding, as deadline to spend it nears
In 2021, the American Rescue Plan Act, commonly called ARPA, authorized the Coronavirus State and Local Fiscal Recovery Funds, which delivered $350 billion to state, territorial, local and Tribal governments, according to the United States Treasury Department. The funds were intended to help these government entities and their residents recover from the effects of the pandemic, and could be used to respond to public health and economic impacts of the pandemic, invest in water and broadband internet infrastructure, provide 'premium pay' for essential workers and more.
Kane County received just over $100 million in total, and used the money over the past few years on COVID-19 contact tracing, grants for area nonprofit organizations, public safety projects, payroll reimbursements and infrastructure projects and expenses. In July, the county issued its 2024 report with updates on the county's use of these funds.
Local entities nationwide had until the end of 2024 to allocate the ARPA funds they received, according to the Treasury Department. The funds can be spent through the end of 2026, but can only go toward projects or services authorized before Dec. 31, 2024.
Tuesday's board approval means some of the funds set to expire next year in Kane County will be transferred from one ARPA-funded project to another. Several of the reallocations were voted on at the county's Executive Committee meeting last week and were then passed unanimously during Tuesday's County Board meeting, but three of the larger sums of money were passed Tuesday in split votes.
The resolutions which passed with split votes include three separate reallocations from the Kane County Circuit Clerk's microfilm archiving project, which set out to digitize court records to improve remote access, with the money going to a kitchen and laundry area improvement project at the Kane County Justice Center for just over $300,000, the county's administrative cost projection project in the amount of $120,000 and a technology improvement project at the 16th Judicial Circuit Court for roughly $17,500.
The reallocations passed unanimously as part of Tuesday's consent agenda at the meeting included, for example, reprogramming funds between several ARPA projects in the Kane County Environmental and Water Resources department, and a transfer of just under $10,000 to a pipe improvement project at the Kane County jail from the Kane County 16th Judicial Circuit Court Services' Probation Victim Services and Alliance Against Intoxicated Motorists projects.
In all, just under $500,000 in ARPA funding was reprogrammed to various projects on Tuesday, according to figures from the meeting agenda.
At Tuesday's board meeting, District 14 County Board member Jon Gripe said he was voting against the reallocations of funding because he thought that other board members and county entities outside the county's ARPA Committee – such as the Circuit Clerk's Office – were not sufficiently involved in the discussion of these measures.
'The people that the money is being removed from, if that's the case, need to be involved before the day of the meeting where we vote on this,' Gripe said on Tuesday.
Going forward, the County Board could authorize similar reprogramming of ARPA funding before the 2026 deadline to spend the money, a county spokesperson said. But these reallocations of ARPA funding and future ones cannot go toward new projects, only those authorized before Dec. 31, 2024.
In the years since the county began receiving the federal pandemic funding, it has pursued a variety of programs and capital projects. It gave out $755,000 in grants to food-growing businesses and organizations, with a focus on small farms and those addressing food insecurity, funded HVAC replacements in the county's jail and sheriff's office and proposed the construction of a new public health building, although the latter plan ultimately was shot down by the board.
But, with no more funds to allocate and a limited amount of time to spend what's left, the county continues to face financial challenges as it anticipates using up its reserve funds by 2027 or 2028 if revenue or expenses don't change before then. The board has previously said that pandemic-era funds were used to pay for some salaries in the county, as well as other programs and projects.
The board has been holding town halls about its sales tax referendum on the April 1 ballot, which has been touted as a possible solution to the county's future budget woes.
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That said, from a qualitative standpoint, LVMH maintains a formidable competitive moat, underpinned by its industry-leading position and revenue diversification that outpaces its peers—factors that arguably support a premium valuation. As the company enters the second half of 2025, navigating a cautious recovery and aiming to reassure shareholders of its long-term growth potential while carefully managing pricing to preserve margins, the current cyclical downturn could offer a compelling entry point for long-term investors. With that in mind, I am maintaining a Buy rating on LVMUY. A Luxury Empire Beyond Louis Vuitton When investing in a company like LVMH, the bet is not on a single brand or product, but on a well-managed luxury suite that leverages diversification (from fashion and jewelry to cosmetics) and smart acquisitions (such as Tiffany & Co. and Dior) to generate returns that exceed the risk-free rate. From a bottom-up perspective, LVMH clearly possesses a wide economic moat as the global leader in the luxury sector. Its portfolio is anchored by some of the world's most iconic brands, supported by strong corporate governance. The Arnault family's control of approximately 48% of voting rights ensures aligned incentives, reinforcing a long-term focus on profitable growth across the organization. Luxury is naturally a cyclical segment, but with a twist: the ultra-wealthy continue to spend even during downturns, which makes the business model surprisingly resilient and gives it a degree of recurring demand. What truly sets LVMH apart from its peers, in my view, is the breadth and balance of its brand portfolio. Competitors like Kering (PPRUY), which heavily relies on Gucci, and Richemont (CFRUY), with its reliance on Cartier, derive nearly half of their revenues and about two-thirds of their operating profit from a single brand. In contrast, Louis Vuitton contributes only around a quarter of LVMH's total revenue and approximately half of its operating profit. This diversification makes LVMH structurally more resilient than its peers during downturns—as demonstrated during the COVID-19 shock in 2020 and the market volatility of 2022. Luxury's Cyclical Dip and a Slower Path Ahead As mentioned earlier, regarding the cyclicality of the luxury industry, LVMH's ADR is down more than 45% since reaching its all-time high in mid-2023. Over the last five years, LVMH grew its revenue by 34% in 2021, driven by post-COVID 'revenge spending,' with its share price riding the rebound. In 2022, revenue growth settled at 16%, and optimism carried into 2023 as markets bet big on a vast, sustained boost from China's reopening. But that surge never fully materialized. Chinese consumers proved to be more cautious than expected, weighed down by a real estate crisis and weak domestic confidence. At the same time, 'aspirational' buyers (middle-class) in Europe and the U.S. pulled back, resulting in only 12% revenue growth for LVMH in 2023, clearly marking a slowdown. Higher interest rates in 2023 and 2024 didn't help either. Premium- growth stocks like LVMH took a hit as the environment that once justified paying 35x earnings quickly faded. The result is now LVMH's ADR trading at more depressed levels, especially after revenue shrank by 7.8% in 2024. Looking ahead, the outlook is for growth to pick back up as early as 2025, with consensus expecting revenue to increase about 8.15% from last year and to average around 5% per year through 2026 and 2027. Still, this pace is far from the boom of the previous five years, and the bottom line is following suit, with operating margins down from a peak of 27% in 2023 to 23% today. Watching Margins and Valuation as Earnings Approach Unlike U.S. companies that report full profit and loss (P&L) statements every quarter, LVMH, like many big European firms, provides quarterly revenue updates but only discloses full profit details twice a year. The upcoming semi-annual earnings release is expected on July 24th. Based on hints from management during the company's Q1 earnings call, it has become clear that price hikes won't be used to drive top-line growth this time. Instead, for Q2, they've focused on pushing a sales mix with higher-ticket items. In my view, revenues will likely remain soft, but protecting margins remains a top priority. It's also worth noting that LVMH has tended to miss EPS expectations lately, having fallen short for five consecutive reporting periods. Lastly, considering valuations, LVMH currently trades at approximately 20.5x earnings—a slight premium to the industry average of 17x, but roughly 6.3% below its own historical average. This gap highlights the market's current caution regarding the company's growth story. Even so, LVMH is still delivering a return on invested capital of around 14%, although that's well below the 20.5% peak in 2023. In theory, with a reasonable WACC of 8–9%, considerable value is still being created despite these more typical returns. Still, the discounted multiple clearly shows that investors are pricing in this slower ROIC trajectory. Is LVMUY a Good Stock to Buy Now? As things stand, LVMH trades under two distinct tickers. One in the U.S. is listed as 'LVMUY' via over-the-counter (OTC) trading. However, most analysts are looking at LVMH's French stock listing when providing their period ratings, under the stock ticker ' MC '. LVMH stock carries a Moderate Buy consensus rating based on nine bullish and nine neutral ratings over the past three months. Not a single analyst is currently bearish on LVMH stock. Currently, LVMH's average stock price target stands at €570.92, implying ~22% upside from the latest share price. Cyclical Headwinds Indicate Value Creation Ahead for LVMH LVMH's recent weak performance fully reflects the cyclical nature of the luxury market, which has faced strong headwinds since 2023, mainly due to softer demand from Chinese consumers, only partially offset by steady but mature demand in Europe. Overall, luxury spending remains well below the levels seen during the post-COVID rebound. Looking ahead, LVMH still commands premium pricing power, and the group's moat as a diversified fashion and luxury conglomerate remains strong. I also expect margins to hold up reasonably well in the second half of this year, although they may come under some pressure from input costs and currency factors. 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