Title
Contracts to Implement Small Business Grants Program (Ordinance S-47816)
Description
Request to authorize the City Manager, or his designee, to enter into a contract with the Arizona Community Foundation (ACF) for small business grant administration services, to amend contracts with one or more temporary staffing companies to add funds for assistance with the City's review of grant applications, to fund two temporary City staff positions, and to implement this grant program. Further request authorization for the City Treasurer to accept, and the City Controller to disburse, funds related to this request. Funding for this grant program will not exceed $8 million. There is no impact to the General Fund. Funding is available through the City’s allocation of American Rescue Plan Act (ARPA) from the federal government and is under the City's Micro and Small Business Assistance Programs category of the strategic plan.
Report
Summary
In April 2020, the City partnered with the Phoenix IDA and ACF on the first round of the Small Business Relief Grants and awarded up to $10,000 each to more than 200 Phoenix small businesses. Starting in May 2020, the City began a second round of Small Business Relief Grants as well as a first round of Microbusiness Resiliency Grants and Restaurant Restart Grants with $11 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act funding allocated by City Council. Through the remainder of calendar year 2020, the City awarded:
- 722 Small Business Relief Grants ranging from $3,000 to $10,000 to businesses with 25 or fewer employees and annual gross sales less than $3 million.
- 1,639 Microbusiness Resiliency Grants ranging from $3,000 to $5,000 to businesses with five or fewer employees and annual gross sales less than $1 million.
- 103 Restaurant Restart Grants ranging from $5,000 to $10,000 to restaurants, caterers, or food truck operators for expenses to restart their businesses.
ACF is a nonprofit organization with a mission to lead, serve and collaborate to mobilize enduring philanthropy for a better Arizona. If approved, the City will contract with ACF to provide grant administration services, including hosting the website for grant application submittals, providing customer service in English and Spanish, verifying applicants' taxpayer identification information, submitting applicant information to the City for review, notifying applicants of grant application status, distributing funds to awardees, and issuing Internal Revenue Service 1099 tax forms to grant recipients.
ACF was selected through a Special Circumstance - Without Competition due to the unusual nature of these services and ACF's previous experience administering the City's various small business grants, its existing grant administration infrastructure and its long-standing reputation in community for financial stewardship and integrity. The City will release the grant funds to ACF on a rolling basis as needed to fund grants approved for award by the City. This funding allocation will include ACF's fees to administer the programs, which are 3.25 percent of the grant funding to be awarded plus a flat fee of $10,000 to prepare and distribute Internal Revenue Service 1099 tax forms.
To assist with the implementation of this program, this request includes authorization to fund two temporary full-time City staff positions and approximately five temporary staff utilizing the City's contracted employment services providers. The temporary contracted individuals will assist with the City's review of applications vetted by ACF and will conduct research to document each applicant's eligibility and other related duties.
Many of the City's small businesses are still struggling to stay open due to the COVID-19 pandemic. ARPA funds will provide resources that Phoenix businesses need to stay open, pay employees, and cover other operational costs due to the downturn in business.
2021 Small Business Grants Program
A single application form will be offered in English and Spanish. Eligibility requirements will remain that each business must: 1) currently operate in Phoenix and have been operating in Phoenix for at least 12 months prior to grant approval; 2) have suffered a loss in sales, at least 25 percent due to COVID-19, when comparing 2021 to 2020 for any month since March; 3) employ 25 or fewer individuals; and 4) generate less than $3 million in annual sales. Grant awards will be based on the applicant's number of employees and the City will request documentation as needed to ensure grant awards are helping to retain jobs in Phoenix. Eligible businesses located immediately adjacent to light rail construction may receive additional funding to offset the economic impact of this construction.
Staff intends to open the grant application upon filling the temporary City staff positions, contracting with ACF, and completing all start-up efforts. Business owners who submitted eligible but unfunded grant applications in 2020 will have exclusive access to the new grant application for one week. These businesses, as well as businesses that received grants in 2020, will be permitted to apply for additional assistance once the grant application is available to all businesses.
Contract Term
The City's grant funding agreement with ACF will begin as soon as possible and have an initial term of one year with two, one-year extensions, pending future City Council approval of ARPA funding.
Financial Impact
Total funding for this grants program will not exceed $8 million. There is no impact to the General Fund. Funding is available through the City’s allocation of ARPA funds received from the federal government.
Concurrence/Previous Council Action
City Council approved the use of ARPA funds for Phoenix Arts, Business and Employee Assistance at its June 8, 2021 City Council Policy meeting. Previously, City Council approved CARES Act funding for the Small Business Relief Grants ($5 million) on April 30, 2020 and for the Microbusiness Resiliency Grants ($6 million) and Restaurant Restart Grants ($1 million) on May 5, 2020. On Aug. 26, 2020 and Oct. 21, 2020, City Council approved changes to the eligibility requirements for these grant programs to assist more small businesses and an additional $1,087,000 in small business grant funding was approved by City Council on Dec. 16, 2020.
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.