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HomeMy WebLinkAbout06/01/2020 - Special MeetingCITY OF NEWPORT BEACH City Council Minutes Special Meeting June 1, 2020 I. CALL MEETING TO ORDER - 12:00 p.m. II. ROLL CALL Present: Mayor Will O'Neill, Mayor Pro Tem Brad Avery, Council Member Joy Brenner (via Zoom), Council Member Diane Dixon, Council Member Jeff Herdman, Council Member Kevin Muldoon Absent: Council Member Duffy Duffield (excused) III. INVOCATION - Mayor O'Neill IV. PLEDGE OF ALLEGIANCE - Mayor Pro Tem Avery V. PUBLIC COMMENTS ON NON -AGENDA ITEMS - None VI. CURRENT BUSINESS 1. Coronavirus Relief Act Funds and Small Business Relief Grant Program (C-8625-1) [381100- 20191 Mayor O'Neill discussed the Police Department's deployments into various Orange County cities to assist with protest demonstrations and thanked Police Chief Lewis, police officers, Fire Chief Boyles, and firefighters for protecting the community. He also thanked staff for preparing for the special meeting over the weekend and stated that he attended the Orange County Board of Supervisors' meeting on Tuesday, and Supervisor Steel indicated she will be disbursing the money allocated to her directly to the cities in her district to ensure funds are distributed with transparency and accountability. Deputy City Manager Finnigan advised that the goal is to design a program that meets the needs of small businesses and meets County and Federal requirements, explained the source of the funding, confirmed that Supervisor Steel decided to divide her $15 million allotment amongst the cities in her district, emphasized the importance of documentation, recommended the City retain the Orange County Small Business Development Center (OC SBDC) as the program administrator, reviewed OC SBDC's experience, and requested Council input regarding business size, the tiered grant structure, and funding priority. Council Member Muldoon clarified that the $500 million for Orange County was dispersed from the White House through the U.S. Treasury Department, noted that County Supervisors set aside $75 million to assist small businesses, reported that each Supervisor decided how to allocate their district's money, stated the City is bringing in an administrator to ensure the program is done professionally and with oversight, and thanked staff for their hard work. Council Member Herdman suggested adding a provision within each category that a business can apply for up to the maximum category amount and adding a new provision for grant recipients to agree to an inspection in order to verify that funds were expended properly. Mayor O'Neill indicated that population was used to divide Supervisor Steel's allocation. He stated his discord with using population on a Countywide basis; however, noted the reasonableness in regards to Supervisor Steel's district. He agreed with Council Member Herdman's statements and suggested adding "up to" in front of the monetary amounts. Volume 64 - Page 416 City of Newport Beach Special Meeting June 1, 2020 Council Member Brenner inquired as to how the County plans to spend the CARES Act COVID-19 relief fund. In response to Council Member Brenner's question, Mayor O'Neill indicated that the Supervisors set aside approximately 80% of the funding for County -specific responses to COVID-19 and $26 million to reimburse cities for COVID-related expenses. City Manager Leung added that the City is tracking expenses and looking for reimbursement from the Federal Emergency Management Agency (FEMA) and then the County. Mayor O'Neill noted that reimbursement does not apply to revenue displacement. Council Member Brenner requested that staff keep Council informed on how the County spends the $425 million. City Manager Leung advised that the County Public Health Department has quite a bit of the COVID-19 expenses and the primary responsibility for handling the sheltering of the homeless. In response to Council Member Dixon's questions, City Manager Leung advised that the City has approximately $450,000 to $480,000 in Community Development Block Grant (CDBG) funds, believed that Council should look into an economic development program once staff has been given guidance, and suggested keeping that funding separate. In response to Mayor Pro Tem Avery's question, Deputy City Manager Finnigan was unsure of what the City's in-house costs would be, understood that OC SBDC has an agreement with the County to handle its entire program at a cost of about 5% of the loan amount, but anticipated reaching a lower percentage because City staff can execute some of the administration. Council Member Dixon agreed with the process and stated that Council will receive a report that is similar to the CDBG report of how funds were disbursed. There was a unanimous straw vote to use a program administrator. Regarding the proposed program parameters, Mayor O'Neill expressed concern regarding the requirement for a business to report that an employee has contracted COVID-19 while at work because of privacy issues. In response to his question, Deputy City Manager Finnigan advised that the requirement came from OC SBDC guidance, but it can be amended. Mayor O'Neill suggested removing that requirement. He also suggested changing the requirement relative to showing a decrease in sales by comparing sales to the same three months in 2019 or the three months prior to February 15, 2020. Council Member Herdman agreed with deleting the provision to report whether an employee has contracted COVID-19 because of Health Insurance Portability and Accountability Act (HIPAA) requirements. Council Member Muldoon spoke in support of keeping the provision because it is broad and allows flexibility. Council Member Dixon believed Governor Newsom has already established that workers' compensation companies are required to pay regardless of where an employee contracted the virus. Mayor O'Neill indicated Council Member Muldoon's point is fair and believed the provision should remain. Regarding the tiered grant structure, Mayor O'Neill concurred with adding "up to" to the tiered amounts. In response to Council Member Muldoon's questions, City Manager Leung indicated that staff has generally seen the tiers separated by the number of employees, but noted there is flexibility to define the number of employees and staff can work with the administrator to make the determinant. Mayor O'Neill suggested increasing the to a maximum of 30 employees. In response to Council Member Dixon's questions, Deputy City Manager Finnigan indicated a business' receipt of other funds may not preclude the business from receiving these funds because the funds may have covered only some of its costs, but added that the administrator will take that into consideration. Council Member Dixon recommended staff come up with a formula for full-time and part-time employees. Volume 64 - Page 417 City of Newport Beach Special Meeting June 1, 2020 Mayor O'Neill believed restaurants have more employees, and it is reasonable to set a 30 -employee maximum. In response to Council Member Brenner's questions regarding the terms and conditions, Deputy City Manager Finnigan stated that the City could include nonprofits, but indicated that most cities have not. She noted that staff's focus is on businesses that were forced to close and the employees could not work from home. In response to Council Member Dixon's question, Community Development Director Jurjis explained that CDBG is an economic development program and is income -restricted, but staff will research the program further. Council Member Muldoon suggested requiring that the majority of the businesses' officers should live in Orange County. Deputy City Manager Finnigan advised that the County agreement requires all board members to reside in Orange County. Mayor O'Neill believed a business should have a business license for six months prior to applying for a grant and have 30 employees, and added that the definition of "good standing" should include "business license fees and business improvement district assessments." Council Member Muldoon disagreed because Business Improvement Districts (BIDs) are voluntary. Mayor Pro Tem Avery proposed including Marine Activities Permits (MAP). With Council Member Brenner disagreeing, there was a 5-1 straw vote to include for-profit businesses only. With only Council Member Brenner agreeing, there was a 1-5 straw vote to include nonprofits and for -profits. There was a unanimous straw vote to include "Marine Activities Permit, if applicable," in the definition of "good standing." With Council Member Muldoon disagreeing, there was a 5-1 straw vote to change "or" to "and" and to add "if applicable" in the definition of "good standing." With only Council Member Muldoon agreeing, there was a 1-5 straw vote to keep "or" and to add "if applicable" in the definition of "good standing." In response to Council Member Brenner's question, Council Member Herdman stated the requirement to follow re -opening guidance is why he suggested allowing an inspection, but he did not know what the consequence would be. Council Member Muldoon believed an inspection would take an enormous amount of resources, interpreted this as a limitation of liability, and supported the language as written. In response to Council Member Dixon's question, Community Development Director Jurjis explained the temporary permit program and reported that code enforcement officers physically inspect the expansion to ensure it matches the plan staff approved. In response to Mayor O'Neill's question, City Manager Leung reported that staff has considered providing half of the funds upfront, reviewing documentation, and then releasing the second half, and added that staff can inspect and pull permits, if needed, and withhold the second half of funding on a case-by-case basis. Mayor Pro Tem Avery stated that many businesses are not following the guidelines and believed code enforcement should respond to complaints. Mayor O'Neill understood the temporary permit program would be a self -representation on the front-end. Volume 64 - Page 418 City of Newport Beach Special Meeting June 1, 2020 Deputy City Manager Finnigan noted the additional requirement for the principal office to be located in the City. There was a unanimous straw vote to adopt the remaining terms and include a requirement for the principal office to be located in the City. Regarding funding priority, Mayor O'Neill believed that a lottery system would be used if the number of applications exceed the grant total. Deputy City Manager Finnigan explained that OC SBDC waitlists approximately 50-100 applications should those chosen in the lottery system become disqualified. Mayor O'Neill clarified that priority applications would be funded, and the remaining applications would be put in a lottery for any remaining grants. In response to Council Member Herdman's questions, Mayor O'Neill reported that the City will be receiving the funds tomorrow. Deputy City Manager Finnigan advised that money will be distributed in three to four weeks. In response to Council Member Muldoon's questions, Deputy City Manager Finnigan indicated there are over 20,000 business licenses in Newport Beach and reported on the number of businesses with less than 10 employees, less than 5 employees, and sole proprietors. Mayor Pro Tem Avery emphasized that the City is relying on OC SBDC to ensure grants make an impact. In response to Council questions, Deputy City Manager Finnigan advised that there is a question as to whether an independent contractor could apply independent of a salon owner. Council Member Dixon recalled the business license tax system changed to account for real estate brokers and believed there will be many different business descriptions. Mayor O'Neill related that real estate brokers would not receive priority because they have been open, and they need to justify the request for the money. Mayor O'Neill agreed that the priority needs to be businesses that were shut down due to the State's orders. There was a unanimous straw vote to adopt staff's recommendation. Jim Mosher indicated this is an important program, stated concerns regarding adequate notice to the business community of the special meeting, believed staff should bring back the final program for Council approval, noted that Exhibit A which list the uses of funds was missing, stated various concerns pertaining to issues related to nail salons and small business compensation, and questioned the impact on the short-term lodging businesses of the requirement for a business to be located in a commercial or industrial area. Steve Rosansky, President of the Newport Beach Chamber of Commerce, proposed the first 25% be set aside for microbusinesses and, if grants are not used, they could be repurposed for larger businesses, believed anyone who applies for a grant should be eligible to receive funding, suggested that if the program is oversubscribed, each applicant should get money on a pro rata basis or the Council should prioritize, in the order stated, businesses that have received no government funding, Economic Injury Disaster Loan (EIDL) recipients, and Paycheck Protection Program (PPP) recipients, noted this prioritization creates fairness for businesses that have not been able to access funding, and thanked Council Member Brenner for speaking up for nonprofits since very little money is available for small nonprofit organizations. City Manager Leung reported that staff does not have a breakdown of business licenses by employee, but there are approximately 500 businesses in the restaurant/hotel category and about 2,500 in general consumer/retailers. Council Member Dixon noted staff has a way to segregate data by the Volume 64 - Page 419 City of Newport Beach Special Meeting June 1, 2020 amount businesses pay for business licenses. City Manager Leung indicated staff can gather that data. Council Member Dixon believed the majority of business licenses are paid by small businesses. Mayor O'Neill suggested four priority levels: 1) the staff recommendation and groups/businesses that have not received Federal funding, 2) the staff recommendation and businesses that have received an EIDL, 3) the staff recommendation and businesses that have received PPP funding, and 4) any other business that meets the eligibility requirements. There was a unanimous straw vote to adopt the four priority levels. With the incorporation of the previous straw votes, motion by Mayor O'Neill, seconded by Council Member Muldoon, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) authorize the City of Newport Beach to participate in the Coronavirus Aid Relief and Economic Security (CARES) Act Grant Program as a subrecipient of the County of Orange; and c) authorize the City Manager to take any and all action necessary to develop and administer a Small Business Relief Grant Program, funded with the $2,123,426.69 in coronavirus relief funds, in accordance with the Grant Agreement between the City of Newport Beach and County of Orange. The motion carried unanimously. Mayor O'Neill announced that Council Member Dixon will receive the City's check from the County tomorrow. VII. ADJOURNMENT — 1:25 p.m. The special meeting agenda was posted on the City's website and on the City Hall electronic bulletin board located in the entrance of the City Council Chambers at 100 Civic Center Drive on May 30, 2020, at 6:15 p.m. Leilani I. Brown City Clerk Will O'Neill Mayor Volume 64 - Page 420