City of Rockford Planning & Development Committee met May 4.
Here is the minutes provided by the committee:
I. CALL TO ORDER
Alderman Rose called the meeting to order at 5:38 pm.
| Attendee Name | Organization | Title | Status | Arrived |
| Tim Durkee | City of Rockford | Alderman | Present | |
| Linda McNeely | City of Rockford | Alderman | Present | |
| Chad Tuneberg | City of Rockford | Alderman | Present | |
| Natavias Ervins | City of Rockford | Alderman | Present | |
| Bill Rose | City of Rockford | Alderman | Present |
A. Substantial Amendment to the City of Rockford’s 2019 Annual Action Plan due to additional CDBG-CV and ESG-CV funding under the Coronavirus Aid, Relief and Economic Security Act (CARES).
The staff report stated that the CARES Act includes $5 billion for CDBG-CV (Community Development Block Grant) and $4 billion in ESG-CV (Emergency Solutions Grant) funds. Using the existing entitlement formulas, HUD has announced that Rockford is due to receive $1,277,632 in additional CDBG funding and $636,693 in additional ESG funding.
These funds are subject to the federal program eligibility regulations, with some requirements regarding the public notice process being waived to allow for the funds to be distributed as quickly as possible. Information regarding the additional funds and proposed programs, which includes a virtual public hearing, were posted on the City’s website to allow for public comment through April 30, 2020. In addition, the City has amended its Citizen Participation Plan to allow for an abbreviated plan, due to a Major Disaster Declaration.
Staff is proposing that the CDBG-CV funds be used for microenterprise loan program. Many low to moderate income owners of microenterprises do not qualify for existing local, state, and federal financial relief programs and therefore have no resources to sustain minimum operations. This is an unmet need in the wake of COVID-19 and these businesses are at risk of permanent closure. Additionally, CDBG regulations are more flexible with microenterprise support that will allow more efficient deployment of the funds.
The City already implements a microenterprise support program as a subsection of the Rehab and Development Assistance Project in the 2019 Annual Action Plan. The CDBG-CV funds would enhance its capacity and allow for an estimated 60-70 loans. The COVID-19 Microenterprise Program proposes four- year 0% loans up to $15,000 with one year deferred payment. Eligible business will have 2-5 employees, including the owner who meets the low-to-moderate household income thresholds and has a minimum credit score of 500. Owners will be Rockford residents and businesses will be located in Rockford. Businesses must have been established prior to March 15, 2020, demonstrate negative impact related to COVID-19, and not have received other significant COVID-19 relief.
Staff anticipate opening the application portal on Monday, May 11, 2020.
Alderman McNeely asked for clarification on the item. Karl Franzen, Director of Community and Economic Development stated that this additional funding was designated to municipalities under the CARES Act and was allocated under the same formula that the City of Rockford receives the annual distribution. The additional amount is $1,277,632. The intent is to assist businesses in the relief of the Corona Virus where there are unmet needs.
In discussions with the EOC and community partners, there are businesses shut out of qualifying for the Small Business Administration products, they are proposing a microenterprise loan program, which is increasing the capacity of the existing funding with CDBG. HUD defines Microenterprise businesses as businesses with five or fewer employees including the owner. Mr. Franzen stated that the City of Rockford has been able to acquire an application portal that will allow the City to deploy the funds as soon as possible.
Alderman Rose asked Legal Director, Nick Meyer for clarification regarding reading in the resolution. Mr. Meyer stated that the resolution is for the DCEO grant and it would be read in at City Council.
Alderman Thompson-Kelly asked about the timeline for the distribution of funds. Mr. Franzen explained the process for the distribution of the funds and reported that there will be webinars in Spanish and English to help businesses. Alderman Thompson-Kelly expressed her concerns regarding businesses that have not heard of this program and stated that she would like the City of Rockford to reach out to all businesses including the minority and women owned businesses to let them know about this program. Alderman Thompson-Kelly stated she would be happy to help contact businesses.
Alderman Rose asked where businesses can direct questions regarding this funding. Mr. Franzen stated that the City of Rockford have been directing general resource guide questions to BusinessFirst@rockfordil.gov. In addition, any questions regarding working with the City of Rockford or COVID-19 to direct the questions to the team in his office. Alderman Rose also voiced his appreciation to CED.
Alderman Tuneberg asked Mr. Franzen the number of businesses he has been in contact with. Mr. Franzen stated that the demand is huge and the City has a very efficient staff. His department has been working with several business partners such as the SBDC, EIGER Labs, private businesses, business associations such as the North End. There has been bi-weekly phone calls with them to review any updates to the Business Resource Guide. We do this to provide up-to-date and accurate information. They have been pushing the accurate information to businesses. There are dozens and dozens of businesses reaching out to his department.
Group discussed.
Alderman Hervey asked for clarification regarding the allocation of funding. She had a discussion with Mr. Franzen this afternoon and he clarified the process, but she wanted him to review this information with the group.
Mr. Franzen explained that he believes the demand is going to exceed our capacity at $1.2 million. The challenge was to provide a product for businesses who did not qualify for other programs, but structure it in a way that it is not going to be a lottery. The City of Rockford is using the microenterprise definition and limiting it to 2 to 5 employees understanding that sole proprietors will have access to the enhanced unemployment, which will be implemented in Illinois starting next Monday. The percent of awards will be much more reasonable and anticipates they will be able to award 60 to 70 awards.
Alderman Durkee thanked Deb Dorsey for the overview she gave him. He understands that there is actually two grants. One is the CDBG grant and the other is the emergency funding grant. The emergency grant will be for emergency rental assistance. The CDBG grant is for the micro loans. The micro loans is what the staff is proposing based on our sense of the businesses in Rockford. He asked several questions: What are the other things that the funds can the used for? Are these funds being used to expand businesses or keep businesses open while they are struggling with this shut down? He also asked in order to distribute these funds as broadly as possible, are we going to put a cap on the awards in order to do that? Do we have a scoring system? What is the administrative expense going to be used for?
Mr. Franzen said that Alderman Durkee was correct regarding the two grants. The CARES Act provides additional applications to two grants, Community Development Block Grant and Emergency Solutions grant. Also, HUD provided a waiver for the Emergency Solutions Grant and allowed Human Services to make a plan and submit it to City Council for approval without a virtual public meeting which was recently approved. They did that and it was recently approved by City Council.
Mr. Franzen said that in terms of other uses for the CBDG funds, even though the CBDG-CV was in the CARES Act in response to COVID-19, the City can use it for any eligible CBDG activity. He listed some of the other activities we have used CDBG in the past.
In response to the question regarding expansion or keeping businesses open, Mr. Franzen said in the City's 2019 Annual Action Plan, the CDBG that we use for economic development is divided into two programs. One program is Facade Improvement program and the other is called the Rehab and Development Assistance program. One way to qualify a business under this program is if the business is a microenterprise business that meets all the criteria. Mr. Franzen further stated that this funding would not be available to use for a business to expand. There would not be a scoring system. As for administrative costs, the CDBG program allows the City to use up to twenty percent (20%) for administrative costs and those costs will be documented.
Mr. Franzen answered the remainder of Alderman Durkee's questions at length.
Alderman Quinonez asked how they are reaching out to the Hispanic businesses to let them know about these funds. Mr. Franzen explained that they have been posting the Business Resource Guide on the COVID-19 website in both English and Spanish. Tomorrow the City is hosting a Spanish language webinar in conjunction with our partners at the State of Illinois to review all the information.
Alderman McNeely made a Motion to Lay over for one week.
Mayor McNamara stated that these funds would be used to help individuals with the recovery of COVID. The sooner the City can get these funds into their hands and businesses, the better it will be.
Alderman Ervins seconded the layover Motion. Motion failed 2-3.
Alderman Durkee made a Motion to approve the committee report and Alderman Tuneberg seconded the Motion. Motion Prevailed. 5-0
RESULT: APPROVED BY COMMITTEE [UNANIMOUS]
Next: 5/4/2020 5:35 PM
MOVER: Tim Durkee, Alderman
SECONDER: Chad Tuneberg, Alderman
AYES: Durkee, McNeely, Tuneberg, Ervins, Rose Alderman Durkee made a motion to adjourn, seconded by ] Alderman Tuneberg. Meeting adjourned at 6:08 pm.
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