Public funds OK’d for Bloomington private sector impacted by COVID-19: $2M by city council, $500K by urban enterprise group

In a unanimous vote on Tuesday night, Bloomington’s city council took its final step towards making $2 million in food and beverage tax revenues available for economic relief of businesses impacted by COVID-19. That step was the enactment of an appropriation ordinance.

The money is to be distributed through a loan program with exact details yet to be determined. The idea is to set up a seven-member, mayor-appointed Rapid Response Fund Advisory Commission, that would make recommendations on which businesses will receive loans.

Membership on the commission would be drawn from the local banking, financial services, investing, and business community.

Assuming the city council’s appropriation gets approval from the state’s Department of Local Government and Finance, the money is expected to be ready to be expended by Friday, according to city controller Jeff Underwood.

At previous steps in the process councilmember Matt Flaherty had advocated for building in safeguards that ensure that the focus of the benefit is on employees. He raised the same point on Wednesday night.

Flaherty also advocated for the city council’s participation in the city’s review of the advisory commission’s recommendations.

On Wednesday, at its noon meeting, after two hours of deliberation, the board of the Bloomington Urban Enterprise Association (BUEA) met and approved $500,000 in funds. Of that half million, $150,000 would go towards arts grants, emergency scholarships and administration.

The $350,000 that makes up the biggest part of the BUEA package would go towards a loan program for businesses that are not eligible for support from food and beverage tax money.

For economic relief, one general constraint the city is applying to the use of food and beverage tax money is that the funds benefit tourism-related businesses. That constraint stems from the statutory requirement that collections from the 1-percent food and beverage tax be used “…to finance, refinance, construct, operate, or maintain a convention center, a conference center, or related tourism or economic development projects.”

Even if economic relief of businesses could be analyzed as once-removed from the convention center project, some guidance provided by Indiana’s State Board of Accounts (SBOA), in a letter dated March 31, 2020,  forms a legal basis for the city council’s decision to appropriate the funds.

In the letter, the SBOA says that as long as the governing body has received written advice of counsel that it has a legitimate government purpose, and that money from a dedicated fund has a closer connection to the purpose than general fund money, then the SBOA will not take audit exception to the expenditures.

To make clear that the council is meeting the requirement set forth in the SBOA letter, an amendment was added to the appropriation ordinance on Wednesday night:

Whereas, the memo from the City’s Corporation Counsel, which accompanies this legislation, advises that this expenditure is both appropriate and necessary, and the Council explicitly determines that expenditure from this dedicated fund source bears a closer connection to the purposes set forth in this ordinance than the City’s General Fund.

Responding to Flaherty’s concern that some weight be given to applications that prioritize workers, the city’s director of economic and sustainable development, Alex Crowley, said the loan application tries to establish the status of employees as a concern. One of the questions asks:

How will you use these funds to help your business or retain staff?

Another question asks:

Do you commit to best faith efforts to retain your staff?

City controller Jeff Underwood added that applicants would be asked what other aid they’ve applied for and if they have not applied for the federal Paycheck Protection Program (PPP), that would be a “red flag.”

During public commentary, David Debruicker, owner of the Atlas Ballroom, countered the idea that a failure to apply for the PPP should mean disqualification. He pointed out that it certain circumstances, part-time employees might be better off with unemployment benefits than to continue as an employee.

Underwood and Crowley responded to Debruicker’s comments by saying that an applicant would have a chance to provide an explanation—failure to apply for PPP wouldn’t disqualify an applicant outright.

Also offering public comment was Vauhxx Booker, who drew on a compilation of questions by councilmembers with answers from Crowley.

Booker highlighted a question from councilmember Ron Smith and the answer from Crowley:

Smith: What is the vision for the role of the City Council in the nomination and/or approval of the appointments of the Rapid Response Fund Advisory Commission?

Crowley: Currently the vision is for the ES&R Working Group to nominate and the Mayor to create the RRF Advisory Commission and appoint its members via executive order. Thus, the Council would not have a direct role in that process.

Countering Crowley’s answer, Booker urged the council to assert itself by taking a direct role in the loan review process.

Flaherty later picked up on Booker’s comment by pointing to Crowley’s answer to a different question, from councilmember Steve Volan. Crowley’s answer to Volan’s question read, in part, “The ESR working group anticipates that the city’s role will be to review the recommendations of the RRF Advisory Commission once completed and to approve those according to the guidelines provided.”

Flaherty said that the “city” includes both the administration and the city council. So he supported the idea of including a city councilmember in the review of the recommendations.

Flaherty’s remark was understood by Crowley and some others to mean he wanted a councilmember to serve on the advisory commission itself, an idea that did not find much traction. Flaherty clarified that he was advocating for participation of the council in the role of reviewing the advisory commission’s work. That’s something Volan said he would support, not by a single councilmember, but rather by the council’s four-member economic and sustainable development committee.

Volan also said at the meeting that he thinks more funding for the loan program would be needed than the $2 million that the council was appropriating that night.

After the $2 million is taken from the city’s share of the balance, that will leave about $3 million that could still be tapped, if the city council wants to use all of the food and beverage money that’s currently unexpended. Volan said he still supports the convention center expansion.

Weighing in during public commentary against the idea of continuing to pursue the convention center expansion was Randy Paul, who’s collecting petition signatures to run for county commissioner as a Green Party candidate. Paul said the tax should be abolished. Paul echoed the same sentiments contained in his press release issued earlier in the day. “[T]he Convention Center expansion makes no sense for our environment,” Paul said.

At the regular meeting of the Monroe County commissioners on Wednesday morning no update was given on the status of the $200,000 of food and beverage tax money that the commissioners have approved for distribution to businesses outside the Bloomington city limits.