$29M in new money may spur help for Chandler businesses The Chandler Arizonan

$29M in new money may spur help for Chandler businesses

$29M in new money may spur help for Chandler businesses
City News

By Kevin Reagan
Arizonan Staff Writer

Chandler’s Industrial Development Authority is exploring the possibility of providing economic resources for local businesses hurt by the COVID-19 pandemic.

And the governor’s release of more than $29 million in federal pandemic relief funds may boost hopes for that help.

The nonprofit entity has up to $1 million in revenue it has been collecting over the years by helping businesses obtain tax-exempt financing and is pondering whether to give some of that money back to the business community.

During a meeting on May 12, the authority’s board of commissioners discussed the feasibility of allowing small businesses to apply for a grant or loan – similar to what IDA’s in other cities have begun implementing in order to stave off any economic hardship caused by the pandemic.

Phoenix’s Industrial Development Authority is handing out $10,000-grants to small businesses that need help paying rent or utilities to stay afloat.

But one major advantage Phoenix has over the Valley’s smaller cities is having access to direct financial support from the federal government.

Phoenix received $293 million through the Coronavirus Aid, Relief and Economic Security Act. Phoenix City Council recently approved fiving $5 million to its IDA for grants up to $10,000 to businesses.

Last week, Gov. Doug Ducey announced the allocation to cities of $441 million, a quarter of the more than $1.9 billion Arizona  is getting in coronavirus relief dollars. Most of the rest, he said, will be set aside for future needs of the state, including the possibility of replenishing the state’s unemployment insurance trust fund if it runs dry.

Matt Burdick, a city spokesman, said Chandler is in the process of evaluating how it might spend its allotment and will be getting feedback from City Council in the coming weeks.

At least two council members – Mark Stewart and Jeremy McClymonds have indicated they’d be open to using federal aid for assisting local businesses hurt by the pandemic.

The governor’s office issued a press release on the distribution of the money that quoted Chandler Mayor Kevin Hartke saying, “Families, individuals and businesses throughout Chandler are in need of support amid this pandemic. Governor Ducey has worked with our communities to ensure they get the help they need to overcome these difficulties.”

During a political forum this month, Stewart and McClymonds both approved of handing out federal dollars in the form of grants for the business community – similar to what Phoenix and Mesa have done with their CARES Act allotments.

Before Ducey’s announcement, Chandler had only received about $900,000 in funding from the CARES Act that was earmarked to support the city’s airport and local nonprofits.

Even before the city received the CARES Act funds, the Phoenix IDA had been making grants from a $5 million reserve fund but ran out of money, leaving more than 200 applicants high and dry.

Phoenix also has set up other programs to provide $6 million in utility assistance to businesses, $1 million for businesses at Phoenix Sky Harbor Airport, $1 million to help restaurants start up their business again and $6 million for “microenterprises.”

The CARES Act gave cities and counties with more than 500,000 people direct assistance.

CARES Act recipients must spend their allotment by Dec. 31.

Prior to Ducey’s announcement, Dawn Lang, the city’s management services director, had raised the IDA as one potential source of financial relief.

The authority, a separate entity from the city, previously used its accumulated revenue for economic development purposes. 

“They have some leeway with those dollars,” Lang said.

The IDA earns these fees by serving as a liaison between a private business and third-party institution like a bank. It recently served as a conduit for Intel to obtain capital bonds to improve its plants in Chandler.

It’s generally rare for the IDA to receive applications for use of its fee revenue — only two requests have been submitted over the last couple years.

The Chandler Chamber of Commerce recently submitted a request to utilize the IDA money for its programs that service local businesses.

At least 30 Chandler businesses have closed in recent weeks, according to Chamber President Terri Kimble, so the Chamber is looking to offer as many resources as possible during this tumultuous time.

During the authority’s meeting May 12, board members delayed deciding whether to grant the Chamber’s request until it had more information.

Lang said the board reviews each request carefully with lots of deliberation, since its revenue source for grant requests is limited.

When the authority has used that money in the past, Lang said it’s been for a specific purpose that will significantly enrich the local economy.

“We typically don’t just receive random requests from businesses,” she said. “Those are typically directed to a bank.”

Chandler’s IDA board discussed possibly handing out grants for small businesses to cover the purchases of any protective equipment they’ve made, but made no decision.   

Though Chandler has not received the same level of financial support from the CARES Act as other cities, it did receive nearly $850,000 from the U.S. Housing and Urban Development Department to assist residents impacted by COVID-19.

HUD annually gives out money to states and cities for them to disperse in the form of community-development block grants.

Federal laws restrict how this HUD money can be spent, so local nonprofits most often apply for these grants in order to provide some sort of social service to the city.

Once the pandemic hit, Congress gave HUD another $5 billion for cities to use as part of their grant programs.

Earlier this month, the Chandler City Council authorized awarding those extra HUD dollars to AZCEND, a local nonprofit, for its food bank and rental assistance program.

Not long after the pandemic hit in March, AZCEND reported seeing a 30-percent spike in the number of people coming to them for food boxes.

Most of the remaining HUD allotment will be used by the city to help Chandler’s homeless population navigate resources.

Ducey released the CARES Act funds after Pinal County threatened to sue to get the money.

The law requires that CARES funds be spent by Dec. 31 and that it cannot be used to plug revenue shortfalls in their governments’ current budgets that have been created by plummeting sales tax revenue.

Ducey said Chandler and other local governments will have considerable flexibility in spending their allotment – which works out to $114.80 per resident.

Some of Chandler’s elected officials have criticized the disparities in the way CARES funding was distributed to cities and counties.

Stewart said Mesa’s ability to award grants to its local businesses gives that city an economic advantage that could end up hurting Chandler’s businesses.

Locals may start flocking to Mesa because commodities there could suddenly become cheaper, he noted.

“That isn’t fair,” Stewart said. “That’s unacceptable.”

Mesa officials said that fewer businesses than expected applied for grants from $20 million they had set aside and ow they are planning to divert the money to other uses.

But they also said many small businesses have applied for technical assistance, also funded with CARES Act money, that will help them improve largely outdated websites and help them attract customers

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