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HomeMy WebLinkAboutD-1 Staff Report - Small Business Grant ProgramSCHEDULED ITEM D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: NICO DE ANDA-SCAIA, DEPUTY CITY MANAGER DATE: APRIL 4, 2022 SUBJECT: CONSIDERATION AND ADOPTION OF A RESOLUTION ESTABLISHING A SMALL BUSINESS SUPPORT GRANT PROGRAM FOR LOCAL BUSINESSES IMPACTED BY THE COVID-19 PANDEMIC AND AMENDING THE FISCAL YEAR 2021-22 BUDGET IN THE AMOUNT OF $500,000. BACKGROUND: On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA), which provides fiscal relief funds to State and Local Governments aimed at mitigating the continuing effects of the COVID-19 Pandemic. The City of Azusa was awarded a total allocation of $11,954,843, with the first disbursement of approximately half that amount taking place in July, 2021. The U.S. Department of the Treasury issued the Final Rules for appropriate use and reporting of these funds in January 2022. These rules officially become effective on April 1, 2022. At their meeting of February 22, 2022, and in accordance with the U.S. Department of the Treasury’s Final Rules, the Azusa City Council adopted a resolution obligating the use of ARPA funds to cover costs related to qualifying government services, and to address impacts related to the local unsheltered population. By doing so, excess general fund reserves became available to fund projects, programs, and services that provide alternative community benefits. At this meeting, Council expressed interest in allocating a portion of non-ARPA excess general fund reserves toward business assistance grants for small businesses impacted by COVID-19, and requested that staff begin looking into options for the implementation of such a program. The City Council has scheduled a goals and priority-setting exercise for April 25, 2022 to affirm the obligation of excess general fund reserves across various capital improvement projects and other community benefit program areas. This agenda item has been prepared in advance of the April study session. APPROVED CITY COUNCIL 4/4/2022 Small Business Support Grant Program April 4, 2022 Page 2 RECOMMENDATIONS: Staff recommends that the City Council take the following actions: 1) Consider and provide direction regarding a proposed scope for the establishment of a Small Business Support Grant Program; 2) Adopt Resolution No. 2022-C27, establishing an Azusa Small Business Support Grant Program and authorizing staff to proceed with its implementation; and 3) Approve an amendment to the Fiscal Year 2021-22 Budget for a total not-to-exceed amount of $500,000 from General Fund reserves to the Small Business Grant Program. ANALYSIS: In response to the harsh economic impact that the Covid-19 pandemic has had on local businesses, the City is proposing to develop a Small Business Support Grant Program (“Program”) that will offer one-time grants to qualifying Azusa businesses. It is proposed that funds for the Program be drawn from undesignated excess General Fund reserves for a total not-to-exceed program budget of $500,000. Through the Program, eligible small businesses operating in the City of Azusa will have the opportunity to apply for cash assistance for a list of approved uses aimed at supporting business recovery and longer-term resiliency. Whereas other federal, state and local resources have been centered primarily on mitigating urgent and explicit Covid-19 impacts, the intent of this program is to more broadly encourage private-sector reinvestment in current facilities and infrastructure, public-facing enhancements and amenities, as well as critical technology and business systems that may have been deferred due to impacts of the pandemic. Individual grants shall range between $5,000 - $20,000 commensurate with fiscal impact to the business and justifiable need. Program Scope In order to be eligible to apply for the Azusa Small Business Support Grant Program, a business must meet certain guidelines and criteria set forth by the City. The following draft program guidelines have been developed drawing upon examples from other business grant programs, in an attempt to ensure broad community benefit and equitable distribution of funds. Small Business Criteria* • Applicant must be a commercial business located and licensed in Azusa. • Business must be in good standing with the City (i.e. proper and current licensing; no outstanding violations or balance with the City; in full compliance with the Azusa Municipal Code). • Business was operational as of March 1, 2020, is still in business at the time of application submittal, and intends to remain open indefinitely. • Business must be located in a commercial space. • Business employed 20 full-time equivalent (FTE) employees or less as of March 1, 2020. Small Business Support Grant Program April 4, 2022 Page 3 • Business entity earned $3 million in gross annual revenue or less in calendar year 2019. • Business must have experienced mandatory shutdown or substantial (and demonstrable) change in business operations due to the Covid-19 pandemic. • Business experienced a net revenue loss (gross revenue net of operating expenses) of at least 25% for the calendar year 2020 OR calendar year 2021 compared to calendar year 2019. A business cannot receive more in grant funding than total revenue loss. • The Program is open to all industries, available to franchises and affiliate businesses. • For businesses with multiple locations, only employment and revenue figures for the Azusa location(s) can be used to qualify for a grant under this program. Multiple locations within Azusa operating under a single business entity will be considered one business for purposes of the Program. • Business is not restricted (limited) to patrons over the age of 18. • Businesses in the hardest hit sectors including: restaurant/dining, retail, hospitality, arts and entertainment, and other service sector businesses may be prioritized for funding. • Passive businesses are not eligible. These include rental properties or any business in which the owner does not actively participate. • Businesses which have previously received alternative sources of funding in the form of the Economic Injury Disaster Loan (EIDL), Paycheck Protection Program (PPP) Loan, or Covid-19 Emergency Rental Assistance are ineligible to apply. Priority consideration shall be given to businesses that have not received other Covid-19 related assistance. • City employees, elected and appointed officials are not eligible to participate in this program. • The Program does not include non-profits at this time. Eligible Use of Funds* (non-exhaustive list) • Building Façade Improvements (outdoor public facing, may require property owner and/or City approval). • Expenses to enhance outdoor operations, such as outdoor dining or for other public/consumer gathering areas (may require property owner and/or City approval). • Exterior and interior facility built-improvements and amenities aimed at enhancing business operations, the customer experience, and/or public health measures. • Business systems, such as point-of-sale software and other technology needs. • Safety and security measures (e.g. security cameras, alarm systems, IT cybersecurity software). • Improvements to business parking, open spaces and plazas. • Business signage and design (e.g. branding). • Exterior cleanliness and beautification, such as professional cleaning and landscaping services. • Training, workforce development, and technical assistance with business planning needs. *Staff may revise eligibility criteria and guidelines in concurrence with Council direction and as necessary prior to implementation of the application process. The applicant may be required to submit a report, including invoices, canceled checks or bank statements demonstrating that the funds were spent in compliance with the eligible expense. In the Small Business Support Grant Program April 4, 2022 Page 4 event a business does not expend the funds in the manner consistent with program guidelines or does not expend the entire grant amount, the business may be required to return funds to the City. Application and Review Process Following Council direction, city staff will work to establish a comprehensive grant program application and review process consistent with the guidelines and criteria outlined above. The Program will be coordinated through a collaborative effort across the departments of Economic and Community Development, Administrative Services/Finance, and the City Manager’s Office. To ensure all businesses have an equal opportunity to apply, outreach efforts will be as robust and wide-ranging as possible and will occur both before and after the application period opens. It is the expectation of staff that a 30-day application period be opened commencing as soon as administratively possible and after outreach and marketing efforts are well under way. Should additional support be needed for program administration such as online portal support, application review and verification, or translation services, these costs would be drawn down from the overall program budget. Participation in the program will be based on availability of funds and submission of an application and supporting documentation which meet the program guidelines. Applying is not a guarantee of funding. Grants shall be awarded on a competitive basis commensurate with fiscal impact to the business and justifiable need. The City Manager or his designee will be authorized to make all final decisions on Program eligibility, business categorization, grant amounts, and any related interpretations or decisions necessary to make a grant decision. Selection of applicants for grant receipt shall be based upon the recommendations of the Program Administrators under the City Manager’s discretion. Due to the uncertainty of the number of qualified applications that may be received, it is possible that the Program could be over-subscribed or under-subscribed. If over-subscribed, there may not be funding available for all eligible businesses to receive a grant. If under-subscribed, there may be funds left over. If over-subscribed, a discretionary review process may be used. If under- subscribed at the end of the initial application period, staff may opt to reopen the application period for a subsequent application round. Staff will provide City Council consistent updates on program performance and progress. The actual number of grants and dollar amounts will vary based on the number of eligible businesses that apply. FISCAL IMPACT: Pending Council authorization, staff recommends the City fund the Small Business Support Grant Program using undesignated General Fund excess reserves. A not-to-exceed total amount of $500,000 is recommended for this Program and other possible program add-ons, including undetermined implementation and administrative costs. A budget amendment to the Fiscal Year 2021-22 Budget would be required for this amount. Any undisbursed by Fiscal Year End 2021- 22, will be carried forward into Fiscal Year 2022-23. Small Business Support Grant Program April 4, 2022 Page 5 Prepared by: Reviewed by: Nico De Anda-Scaia Matt Marquez Deputy City Manager Economic & Community Development Director Fiscal Review by: Reviewed and Approved by: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachments: 1) Draft Resolution No. 2022-C27 Attachment 1 RESOLUTION NO. 2022-C27 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, ESTABLISHING A SMALL BUSINESS SUPPORT GRANT PROGRAM AND APPROVING AN AMENDMENT TO THE FISCAL YEAR 2021-22 BUDGET WHEREAS, on June 21, 2021, the City Council adopted the Budget for the City of Azusa for Fiscal Year 2021-22; and WHEREAS, subsequent to adoption of the Budget, the City of Azusa received funding from the American Rescue Plan Act (ARPA) and Council adopted Mid-Year 2021-22 budget adjustments on March 1, 2022, resulting in additional excess General Fund reserves that are now available for alternative community benefits; and WHEREAS, the City Council has determined that it is in the best interest of the citizens of the City of Azusa to provide additional aid to small businesses which have been negatively impacted economically by the COVID-19 pandemic; and WHEREAS, a Small Business Support Grant Program, application process, and review and award procedures will be developed by staff within guiding parameters established by the Azusa City Council; and WHEREAS, local businesses will be required to submit an application and supporting documentatioin to the City to determine whether they are eligible for the Small Business Support Grant Program; NOW THEREFORE BE IT RESOLVED that the City Council of the City of Azusa does hereby find, determine and declare as follows: SECTION 1. The City Council of the City of Azusa does hereby approve a Small Business Support Grant Program to assist local businesses in the City, and authorizes staff to implement and execute such a program within the guiding parameters set by Council. SECTION 2. The City Council of the City of Azusa does hereby approve an amendment to the Fiscal Year 2021-22 Budget as provided below: Appropriation: $500,000 Fund: General Fund Department: Economic and Community Development SECTION 3. The City Council of the City of Azusa does hereby authorize the City Manager or his designee to execute all documents necessary to effectuate the intent of this resolution. PASSED, APPROVED and ADOPTED this 4th day of April, 2022. Attachment 1 Robert Gonzales Mayor ATTEST: Jeffrey Lawrence Cornejo, Jr. City Clerk Attachment 1 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2022-C27 was duly adopted by the City Council of the City of Azusa, at a meeting thereof held on the 4th day of April 2022, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: Marco Martinez City Attorney Best Best & Krieger LLP