To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Trish Muller, Finance Director
Title
Discussion/Direction: COVID-19 Small Business Support Grant Program
Body
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Summary of Actions to Date
At the March 30, 2020, emergency special meeting, Town Council approved two different programs to assist Castle Rock residents and businesses in response to the COVID-19 pandemic and resulting stay at home/business closure orders.
The first approved program provides the authority for Castle Rock Water to provide qualifying small businesses a $750 microloan and a $750 grant to help offset water bill costs. The microloans would be paid back over a 12-month period. Residential customers who have lost their jobs or had work hours reduced are also eligible for financial assistance and can apply for a $150 microloan and a $150 grant.
Castle Rock Water is currently not charging disconnect fees, late fees and not sufficient fund fees for all customers during the pandemic and has also suspended water shut-offs. The customer assistance program is funded through the department’s Rate Revenue Stabilization Reserves. More information will be available soon at CRgov.com/CRWaterCares.
The second program approved, which will be run by the Castle Rock Economic Development Council, is the Castle Rock COVID-19 KIVA Community Loan Program. This program encourages businesses to seek crowdsourcing funding through KIVA, a nonprofit lending platform.
Up to 100 local businesses will be supported through the program. The program will allow businesses to pursue loans of up to $15,000 at 0% interest for 3 years, with $1,000 of the loan funded through the Town’s Economic Development Fund. An additional $1,000 grant will also be provided to eligible businesses through the fund, requiring businesses to raise up to $13,000 from supporters. More information about how the process works is online at kiva.org/about/how.
The Castle Rock EDC has continued to evaluate appropriate business support offerings during this time and in Attachment A is requesting a modification to the KIVA loan program, as well as approval of a second loan program, proposed to be offered via Colorado Lending Source.
Additional information about State and federal loan and grant programs for businesses is available at CastleRockEDC.com.
Town Council at the March 30 meeting directed staff to analyze what other municipalities are doing to respond to small business and resident financial needs during the pandemic, with an emphasis on getting grant funds into the hands of Castle Rock small businesses as quickly as possible. Staff in its research found a grant program being offered by the City of Englewood - one of few local municipalities offering small business grants. Staff believes Englewood’s program could be modified to help Castle Rock businesses as further described below. Additional information about what Colorado communities are doing to help small businesses, which has been previously shared with Council, is in Attachment B.
Possible Local Grant Program
Staff offers for Council’s consideration the possibility making one-time grants of up to $5,000 available to small businesses with a physical non-home-based location within the Town of Castle Rock. Like in the Englewood program, priority is proposed to be given to small businesses that have frequent and/or close customer contacts, and whose business has been negatively and significantly impacted by stay-at-home orders required by the pandemic. Categories of priority businesses include storefront retail, restaurants/food shops, and personal care small businesses (barbers, hair and nail salons, etc.).
Other small businesses - defined as those having fewer than 25 employees - would be considered for grants as funds are available, with lesser priority, as long as they comply with the criteria. Businesses suggested to be ineligible for the program include chain or franchise businesses; liquor stores; auto- and construction-related businesses; regional businesses with more than five locations in Colorado; professional service businesses; and nonprofit organizations.
To qualify, a business must have been operating in Castle Rock for a minimum of one year prior to making application. Preference would be given to businesses that collected and remitted Town sales tax during 2019. Following is a list of additional proposed program criteria:
• The business must have a physical and publicly accessible location in the Town of Castle Rock that is not based in a residence or coworking space.
• Eligible businesses must provide a statement or other evidence that the business has suffered economic harm (e.g. loss of revenue or income, employee lay-off, etc.) between March 1, 2020, and the date of the application that can be attributed to the COVID-19 pandemic and/or the subsequent State of Colorado public health orders mandating restricted or closed business practices.
• Businesses would be required to provide information, via an online application as included in Attachment C, on how granted funds would be used.
• To be eligible, a business must be in good standing with the Town in regard to Town business licensure and sales tax and use tax returns. The business must further be operating in accordance with applicable laws and registered with the Colorado Secretary of State’s Office.
• The business must meet all established program criteria and agree to provide financial records to support its application upon the Town’s request.
A grant review committee, which would include Town, EDC and Chamber staff as available, would review grant applications. If one or two Town Councilmembers desire to serve on the grant review committee, Council can designate representatives.
Staff recommends a short timeframe for grant applications (total seven to 10 days). Applications would be reviewed in the order received, with grant awards proceeding as approved until appropriated funds are exhausted.
Staff proposes funding the program at $600,000, consisting of $300,000 from the Town’s Economic Development Fund and $300,000 from the General Fund (economic opportunity reserve account). Staff does not recommend additional use of funds from the General Fund, as this fund will likely see a substantial reduction in sales tax revenue in at least the second quarter of 2020, and essential Town services depend upon General Fund resources including sales tax revenue.
Additional Considerations
As recognized during discussions at the March 30 Town Council meeting, small businesses contribute greatly to Castle Rock’s cherished character. The proposed grant program aims to recognize those contributions, and to as immediately as possible get funds flowing into local small businesses - as Council requested - in attempt to support the greatest likelihood of their continued success as the community moves into economic recovery from the pandemic.
The proposed program will, admittedly, involve discretionary decisions regarding the amount of the grants given to small businesses. Staff will seek to balance perspectives on the grant review committee and will employ all possible tactics to ensure the committee acts with as much impartiality as possible. Staff recommends that decisions made by the committee be considered final.
Staff further recognizes that small businesses are not the only businesses in Town suffering losses due to the pandemic and that may require assistance in recovering from the unprecedented event. Staff intends to reach out to leadership from the Outlets at Castle Rock and other key sales-tax-generating businesses that have been shut down by State orders in attempt to assess what assistance the Town might be able to offer in returning the local economy to the prosperity it enjoyed prior to the arrival of the pandemic.
Staff is prepared to devote the needed resources to make the proposed grant program a success, should Council determine proceeding with small business grants is in the community’s best interest.
Attachments
Attachment A: Castle Rock EDC Loan Requests
Attachment B: Small Business Assistance Summary
Attachment C: COVID-19 Small Business Support Grant Application