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HomeMy WebLinkAbout09698 City Clerk’s Office Item # S-1 Background Paper for Proposed Emergency Ordinance COUNCIL MEETING DATE: April 13, 2020 TO: President Dennis E. Flores and Members of City Council CC: Mayor Nicholas A. Gradisar FROM: Council Member Mark Aliff VIA: Brenda Armijo, City Clerk SUBJECT: AN EMERGENCY ORDINANCE AMENDING CHAPTER 4 OF TITLE XIV OF THE PUEBLO MUNICIPAL CODE RELATING TO AND ESTABLISHING CRITERIA, STANDARDS, RULES AND REGULATIONS FOR THE APPROPRIATION AND EXPENDITURE OF FUNDS IN THE 1992-2021 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND SUMMARY: Attached is a proposed Emergency Ordinance which establishes a “COVID-19 Emergency Project” within the 1992-2021 Sales and Use Tax Capital Improvement Projects Fund. The COVID-19 Emergency Project shall initially be funded with Five Million Dollars ($5,000,000) to be made available for grants or loans to local businesses which have been negatively impacted by the COVID-19 pandemic. Such local businesses must be located in the City or in the Pueblo Memorial Airport Industrial Park. PREVIOUS COUNCIL ACTION: The Half-Cent Sales Tax Criteria Ordinance was last amended by City Council by Ordinance No. 8801 on December 8, 2014. BACKGROUND: The 1992-2016 Sales and Use Tax Capital Improvement Project Fund (the “Fund”), commonly referred to as the “half-cent tax fund,” was established by the voters of the City years ago and has been extended several times, for the purpose of funding job-creating projects within the City. By voter-approved Ordinance 8197 (2010) City voters also delegated to City Council the authority and responsibility to initially establish and then amend, by Ordinance, appropriate criteria, standards, rules and regulations for the appropriation and expenditure of monies in the Fund. The COVID-19 pandemic and the State of Colorado’s subsequent stay-at-home public health orders have been catastrophic for many local businesses, particularly those deemed by the State of Colorado to be non-critical or non-essential. The failure of those at-risk local business and the resulting loss of jobs would cause the City and its residents irreparable harm. Under the proposed Emergency Ordinance, loans from the COVID-19 Emergency Project could be made for up to $100,000 for qualifying local businesses. Grants would be limited to $20,000 for qualifying local businesses. FINANCIAL IMPLICATIONS: The Half Cent Sales Tax Fund currently contains sufficient unobligated monies to allow the creation of the COVID-19 Emergency Project. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: Without this Ordinance, the loan or expenditure of half-cent sales tax funds in support of local businesses which have been negatively impacted by the COVID-19 pandemic would violate the Criteria Ordinance as currently enacted. RECOMMENDATION: The Pueblo Economic Development Corporation supports this proposed Ordinance. Attachments: Proposed Ordinance. ORDINANCE NO. 9698 AN EMERGENCY ORDINANCE AMENDING CHAPTER 4 OF TITLE XIV OF THE PUEBLO MUNICIPAL CODE RELATING TO AND ESTABLISHING CRITERIA, STANDARDS, RULES AND REGULATIONS FOR THE APPROPRIATION AND EXPENDITURE OF FUNDS IN THE 1992-2021 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND WHEREAS, the people of the City of Pueblo have repeatedly extended the one half percent sales and use tax rate for job-creating projects within the City and the Pueblo Memorial Airport Industrial Park; and WHEREAS, the people of Pueblo by Ordinance Number 8197 (2010) have authorized and directed the City Council to establish by Ordinance the criteria, standards, rules and regulations for the appropriation and expenditure of revenues contained within the 1992-2021 Sales and Use Tax Capital Improvement Fund (the “Fund”); and WHEREAS, the COVID-19 pandemic and the State of Colorado’s subsequent stay-at- home public health orders have been catastrophic for many local businesses, particularly those deemed by the State of Colorado to be non-critical or non-essential. The failure of those at-risk local business and the resulting loss of jobs would cause the City and its residents irreparable harm; and WHEREAS, the Half Cent Sales Tax Fund currently contains sufficient unobligated monies to allow the creation of the COVID-19 Emergency Project. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (brackets indicate matter being deleted, underscoring indicates new matter being added) SECTION 1. Chapter 4 of Title XIV of the Pueblo Municipal Code, as amended, is hereby amended to read as follows: Sec. 14-4-85.1. Sales and Use Tax Capital Improvement Project Fund; definitions. . . . (10) COVID-19 Impacted business means a business or corporation of any type, either a for-profit or not-for-profit, who can demonstrate through financial records that it has been negatively impacted by the COVID- 19 pandemic. (11) COVID – 19 Emergency Project shall mean an amount equal to Five Million Dollars ($5,000,000) made available for COVID – 19 impacted businesses. Said Project shall be available until the Project is exhausted or October 1, 2020, whichever occurs first. Sec. 14-4-85.5. - Sales and Use Tax Capital Improvement Projects Fund; special categories. (a) Subject to the requirements of this Section, City Council may authorize expenditure of monies in the Fund for the following items: . . . (6) For payment of loans or grants through the COVID – 19 Emergency Project. Said grants or loans may be approved through the Office of the Mayor provided the grant or loan is in compliance with the following requirements: a. Any funds, whether as a grant or loan, shall only be used for those capital costs that are directly related to the ability of a company or business to recover from the COVID – 19 pandemic. For the purpose of the COVID -19 Emergency Project, grant funds or loan proceeds can be used for capital needs to include a project or improvement of a permanent or fixed nature and includes the acquisition of both real property (through purchase or lease) and tangible personal property, including inventory or property held for sale to customers in the ordinary course of business, the construction, extension, remodeling or rehabilitation of buildings or structures within which individuals are customarily employed or which are customarily used to house machinery or equipment and the installation or extension of streets, sanitary sewer, water or other utilities required to serve a project. b. If the application is for a loan of funds, (i) the loan may be at such interest rate as the Mayor shall determine and may be unsecured as recommended by the Mayor (ii) the term of the loan shall not exceed ten (10) years, and (iii) the total amount of any loan per an applicant shall not exceed One Hundred Thousand Dollars ($100,000). Applicant must provide subsequent documentation that it used the funds in accordance with the application. Failure to use the funds as requested or provide documentation of use shall result in the immediate acceleration of the loan upon such terms agreed to in the Loan Agreement. c. If the application is for a grant (i) the grant shall not be in excess of Twenty Thousand Dollars ($20,000) and shall be for only those capital costs as described in paragraph (a) above. Any Applicant for a grant shall only be allowed to apply for one (1) grant. An Applicant is considered any person or entity that owns or owned a majority of a company or business as of March 15, 2020. Applicant must provide documentation that it used the funds in accordance with the application. Failure to use the funds as requested or provide documentation of use shall result in the immediate default in the grant and the entire grant shall be paid back to the City of Pueblo as required in the Grant Agreement. d. An applicant may apply for a combination loan and grant provided the applicant is in compliance with (a) – (c) above. e. Loans or grants applied for or received under this Section shall not duplicate funds applied for or received under any state or federal program created in response to the COVID-19 pandemic. Any requests for funds may not be used for any expenses an applicant received money for pursuant to any federal or state program. All applicants shall disclose any funding they have previously applied for or received from any source to offset losses incurred as a result of the COVID-19 pandemic. An applicant shall provide any and all financial records requested by the City of Pueblo either in connection with the loan or grant application or during the duration of the loan or grant. Failure of an applicant to comply with this Subsection (e) shall cause the applicant’s application to be rejected or, as applicable, shall result in the immediate acceleration of the loan upon such terms agreed to in the Loan Agreement or shall result in the immediate default in the grant and the entire grant shall be paid back to the City of Pueblo as required in the Grant Agreement. f. In administering the COVID-19 Emergency Project, the Mayor shall appoint a three (3) member committee of advisors, consisting of persons experienced in banking and business, who shall review the applications for loans or grants and make recommendations to the Mayor. (b) The provisions of Paragraphs 14-4-85.3(b)(1) through (b)(3) and (b)(7) shall not apply to the expenditure of funds authorized by this Section. SECTION 2. The officers and staff of the City are authorized and directed to perform any and all acts consistent with this Ordinance to effectuate the policies and procedures described herein. SECTION 3. Savings Clause: The COVID-19 pandemic has been declared an emergency disaster by the Mayor, the Governor of Colorado and the President of the United States. The immediate enactment of this Ordinance is necessary in order to preserve and protect the health, safety and welfare of the residents of the City. Pursuant to Sec. 3-20 of the City Charter, this Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on April 13, 2020 . Final adoption of Ordinance by City Council on April 13, 2020 . President of City Council Action by the Mayor: ☒ Approved on April 14, 2020 . ☐ Disapproved on based on the following objections: Mayor Action by City Council After Disapproval by the Mayor: ☐ Council did not act to override the Mayor's veto. ☐ Ordinance re-adopted on a vote of , on ☐ Council action on __________________failed to override the Mayor’s veto. President of City Council ATTEST City Clerk