ACTION REQUESTED:
Title
Communication from the City Manager and Director of Community Development with a Request to APPROVE the CDBG SMALL BUSINESS ASSISTANCE PROGRAM.
Body
BACKGROUND: On an annual basis, the City of Peoria receives Community Development Block Grant (CDBG) funds from the US Department of Housing and Urban Development (HUD). In addition to the annual allocation, the City of Peoria was awarded an additional $1,087,562.00 through the CARES Act to prevent, prepare for, and respond to COVID-19.
The City Council approved a CDBG outline on April 28th which included over a million dollars dedicated to economic recovery grants to help small businesses in the City of Peoria recover from the devastating economic impact of the COVID-19 pandemic.
To be eligible, businesses must meet the following criteria:
• Be located within the corporate boundaries of the City of Peoria
• Have 1 to 50 total employees (including owners)
• Be operational as of January 1, 2019
• Be a going concern as on March 1, 2020
• Show a demonstrated loss of revenue due to COVID-19
• Have applied for other financial assistance
• Be locally owned (including franchises)
• If designated as non-essential, have complied with the Governor’s executive order to cease operations
• Not owe any fees, fines, or taxes to the City of Peoria
• Income qualify via one of three methods:
o Option A: Be located in and serve a qualified low-income area
§ Option for businesses of 2-50 employees
o Option B: 51% of employees at or below 80% area median income (AMI)
§ Option for businesses of 2-50 employees
§ Employees must complete income self-certification form
o Option C: Business owner at or below 80% area median income (AMI)
§ Option for businesses of 2-5 employees
§ Required for businesses with 1 employee
§ Business owner must provide personal income documentation
Ineligible Businesses:
• Non-profits
• Home-based businesses (unless a Schedule C was filed in 2019 and separate books were kept in 2020)
• Chain businesses (franchises are eligible if they meet all other requirements)
• Businesses that involve the use of cannabis for medical and/or recreational purposes
• Private clubs or businesses that limit membership for reasons other than capacity
• Businesses that make over 33% of their revenue from gambling
• Businesses involved in the manufacturing or sale at wholesale of tobacco products, vaping, liquor, sexually explicit materials, or the manufacturing or sale of firearms at wholesale
• Retail liquor stores, adult bookstores, non-therapeutic massage parlors, strip clubs, or nightclubs
• Pawn shops, payday loan businesses, title loan businesses, etc.
• Storage facilities, trailer-storage yards, or junk yards
• Businesses in which a majority owner or member of the immediate family is an elected official of the City of Peoria
• Businesses that did not comply with the Governor’s executive order to cease operations
• Franchises that allowed locations outside of the City of Peoria to remain open in violation of the Governor’s executive order to cease operations
• Businesses that owe the City any fees, fines, or taxes or unpaid real estate taxes to Peoria County
• Businesses that have not applied for other financial assistance
• Businesses that are deemed ineligible by the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, or any other governmental agency
Program Details:
• The program will provide up to three months of assistance for specific fixed operating expenses, such as rent, mortgage, utility payments, internet service, garbage service, insurance, and other fixed debt service.
• Payment is primarily reimbursement-based with limited option of pre-payment for a fixed cost.
• CDBG funds cannot be used as a substitute for other available private debt, cash equity, or assistance.
• Currently operating businesses must commit to retain permanent positions from the point of assistance and for at least 30 days after the final grant payment.
• Currently closed businesses must commit to reopening within 12 months of assistance, creating at least one new job, and retaining all new jobs for at least 30 days.
• Businesses receiving grant funding must sign a participation agreement with the City of Peoria. This agreement will require documentation of the project’s impact (i.e. jobs created/retained) as well as repayment of any misspent funds.
The application will be available for one week in both electronic and paper formats. After the application deadline, a lottery will be held to select fifty businesses to receive grant assistance. Restaurants with 6-50 employees are eligible for up to $15,000 in assistance. All other eligible businesses can receive up to $7,500 in assistance.
Required Documents:
• Completed grant application
• 2019 business tax returns, including IRS Form 1040 Schedule C
• 2020 year-to-date financial statements showing profit/loss
• Current bank statement(s)
• Any other documentation that demonstrates the lack of permanent working capital in support of operating expenses (i.e. shutoff utility notices, delinquent bills, denied loan applications, etc.)
• If applying through Option B: Completed Income Self-Certification Forms for each low/moderate income employee
• If applying through Option C: Most recent two years of business owner’s personal tax returns
Please note, we are still awaiting further CDBG guidance from HUD. If any waivers are issued by HUD to modify/reduce requirements, programmatic adjustments will be made to lessen the burden on businesses whenever possible.
FINANCIAL IMPACT: $1,000,199.06 of CDBG funding will be disbursed to small businesses in the City of Peoria that have been affected by the COVID-19 pandemic.
NEIGHBORHOOD CONCERNS: Per HUD requirements, a virtual public comment period was held from May 26, 2020 to May 30, 2020.
IMPACT IF APPROVED: Fifty small businesses in the City of Peoria will receive up to three months of financial assistance for specific fixed operating expenses, such as rent, mortgage, utility payments, internet service, garbage service, insurance, and other fixed debt service.
IMPACT IF DENIED: Small businesses in the City of Peoria will not receive CDBG assistance.
ALTERNATIVES: None identified at this time.
EEO CERTIFICATION NUMBER: All awarded businesses will be required to have valid EEO numbers.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria
2. Financially Sound City
3. Choose an item.
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
2. Support sustainability.
3. Reinvest in neighborhoods.
DEPARTMENT: Community Development