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CC - (1) Discussion of Various Tax and Utility Fee Waivers, Reductions and Delayed Payments for Culver City Businesses Economically Impacted by the 2019 Novel Coronavirus (COVID-19), and the Temporary Repurposing of City Streets during the COVID-19 Emergency; and (2) Direction to the City Manager as Deemed Appropriate.
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Meeting Date: March 26, 2020
Contact Person/Dept: Joe Susca, Public Works-Administration
Phone Number: 310-253-5636
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: []
Commission Action Required: Yes [] No [X] Date:
Public Notification: (E-Mail) Meetings and Agendas - City Council (03/25/2020); The Downtown Business Association (03/25/2020); the Culver City Chamber of Commerce (03/25/2020); The Arts District (03/25/2020)
Department Approval: John M. Nachbar (03/24/2020)
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RECOMMENDATION
Staff recommends the City Council (1) discuss various tax reductions, deferred payments, refunds and other utility and fee waivers requested by the Downtown Business Association, the Arts District, and the Culver City Chamber of Commerce to offset business losses sustained as a result of health and safety measures enacted through Public Orders issued by the City and other government agencies taken in response to the 2019 Novel Coronavirus (COVID-19), and the temporary repurposing of City streets during the COVID-19 emergency; and (2) provide direction to the City Manager as deemed appropriate.
BACKGROUND
California Governor Gavin Newsom has taken extraordinary measures to protect the public from undue health and safety risks associated with COVID-19, including the mandatory closure of malls, theaters, fitness centers, bowling alleys/arcades, salons, bars/lounges/nightclubs not serving food, and other non-essential businesses, and has suspended dine-in restaurant service. These necessary closures are having a dramatic impact on local businesses.
On March 18, 2020, the City Council approved a Budget Appropriation of $250,000 for related emergency response expenses. Also, on March 18, 2020, the City Council adopted an urgency ordinance confirming a Public Order issued by the Director of Emergency Services on March 16, 2020 ordering various precautionary measures to be taken across the City to protect members of the public and City Workers from undue risk of COVID-19 (March 16 Order).
On March 18, 2020 the City Council considered written testimony from the Culver City Chamber of Commerce, Culver Hotel and other stakeholders concerning measures the City could undertake to address the economic impacts of the COVID-19 pandemic is having on the local economy. During its Special Meeting on March 18, 2020, the City Council directed staff to research the matter and return with information and recommendations.
On March 20, 2020 staff received requests from the Downtown Business Association in conjunction with the Arts District (Attachment No. 1) and separately, the Culver City Chamber of Commerce (Attachment No. 2) outlining a number of measures aimed at supporting businesses that have been negatively impacted by the COVID-19 pandemic (collectively the “Request”). Unfortunately, none of the items contained in the Request are eligible for reimbursement through FEMA’s Public Assistance Program.
Further, on March 20, 2020, the City Manager, as the Director of Emergency Services, issued a First Supplement to Public Order (the “March 20 Order”). The March 16 Order and March 20 order are collectively referred to as the “Public Order.”
The March 20 Order included, among other things (1) an approximately 60-day extension, to June 1, 2020, of the deadline for submission of Culver City business taxes; (2) the waiver of outdoor dining license fees for the duration of the Public Order, until April 19, 2020; and (3) the waiver of valet parking license fees for that same time period (April 19th).
As of the writing of this staff report, the United States Congress was in the process of finalizing negotiations to enact legislation that will provide $2 trillion of assistance to those negatively impacted by the COVID-19 pandemic. If passed, the stimulus legislation will likely include $850 billion in loan and assistance programs for businesses, states and cities, and include a Rapid Respond program aimed at reducing employee layoffs, a 60-day postponement for the payment of payroll taxes, eliminating the two week delay in the payment of unemployment benefits, etc. (See Attachment No. 3).
DISCUSSION:
The City’s Public Order has partially or fully granted the following measures contained in the Request:
1. Reduce, refund or delay the payment of Business License Taxes: Business license taxes and application/renewal fees amount to approximately $14M in annual City revenues. Businesses are invoiced once annually, and their payments are due on March 31 of each year. Late fee assessments are 20% of the amount due per month, up to a maximum 100% of the principal amount. Per the Request, the Public Order has extended the deadline for the payment of business taxes by 60 days (to June 1, 2020).
2. Waive Outdoor Dining Permit Fees: An average of 50 restaurants currently pay an annual outdoor dining permit fee for use of the public right-of-way. The annual revenue amounts to approximately $186,500 and restaurants may pay the fee either monthly or annually. Currently, half of them pay annually and the other half monthly. Per the Request, this fee has been waived for the duration of the Public Order.
3. Waive Metered Parking Fees: To encourage food delivery and customer pickup of takeout food from City restaurants, the first 15 minutes of metered parking is now free for the duration of the Public Order.
4. Temporary Parking in Loading Zones: To encourage food delivery and customer pickup of takeout food from City restaurants, temporary parking in loading zones and rideshare pickup zones is permitted for the duration of the Public Order.
5. Waive Valet Parking Fees: The City’s valet parking fees have been waived for the duration of the Public Order.
6. Waive Sandwich Board and Banner Prohibitions: Currently, the placement of portable signs known as “Sandwich Boards” and banners in the public right-of-way to promote business is prohibited. This prohibition has been lifted for the duration of the Public Order.
Other items contained in the Request the Public Order does not address:
1. City business loans from $5,000 to $20,000: The City of Los Angeles set aside $11M for short-term (6-12 month) no-interest loans to carry over businesses through the COVID-19 pandemic. The Request asks the City to consider adopting a similar loan program.
2. Reduce, defer or suspend Solid Waste Collection Fees: For those businesses that have either reduced activity or have shut down entirely, they may choose to suspend or reduce the frequency of their trash collection services. Any business may ask the City to perform an audit of the frequency of their trash collection services to determine their actual need.
3. BID payment advance: Currently, Business Improvement District members remit payment of their district fees once annually to the City. They are due to the City by March 31. The City then remits the revenue collected to the district. In anticipation of reduced or delayed district payments as a result of the COVID-19 pandemic, the Arts District has requested $40,000 and the Downtown Business Association $198,000 in advance to cover their operating costs.
4. Suspend or eliminate employee parking fees: The Request includes a waiver of monthly employee parking fees (currently $120/month) during the Public Order period and for 90 days thereafter to foster a robust recovery.
5. Suspend or Delay Payment of Sewer Fees. Sewer fees appear on the annual property tax bill. The County Assessor’s Office collects the sewer fees on the City’s behalf and then they remit what they receive to the City every six months.
6. Donation Drive: City to create a donation drive to support small businesses.
7. Small Business Development: City to host webinars focused on providing the tools necessary for businesses to survive and recover from the COVID-19 pandemic.
8. Business License Ballot Measure: Delay discussions of the Business License Tax increase ballot measure for 90-120 days following expiration of the Public Order.
Suggested additional measures the City Council could consider include:
1. Transient Occupancy Taxes (TOT): Defer hotel/motel remittances of TOT to the City.
2. Reduce or Waive Building Permit Fees: Reduce or waive some building permit fees after businesses reopen and during the recovery period.
3. Repurpose City Streets: Temporarily repurpose some travel lanes to allow greater mobility for biking and other alternative transit during the Public Order and recovery period due to the reduced need for streets to accommodate automobile traffic.
If the City Council provides direction to pursue additional measures, (1) the City Manager will issue a supplemental public order consistent with such direction; and (2) staff will return with an urgency ordinance at the next City Council meeting confirming the City Manager’s orders.
FISCAL ANALYSIS
Currently, the City maintains a $38M reserve dedicated to responding to various disasters, including pandemics (and another $13.7M in undesignated reserves, which may be used to respond to this emergency) for a total of $51.7M. The City anticipates it will sustain $26M-$35M in lost revenue from impacts associated with the COVID-19 pandemic ($10M-$15M in FY 2019/2020 and another $16M-$20M in FY 2020/2021).
After receiving direction from the City Council this evening, staff will further analyze the financial and operational impacts of implementing the measures the City Council determines to pursue. With regard to the fee waivers that have already been implemented, a budget amendment is needed, as set forth in Agenda Item A-1.
ATTACHMENTS
1. 2020-03-26_ATT 3-20-20 Culver City Chamber of Commerce Request
2. 2020-03-26_ATT 3-20-20 Downtown Business Association and Arts District Request
3. 2020-03-26_ATT Summary of Pending Federal Stimulus Bill
MOTIONS
That the City Council:
1. Discuss various financial measures to assist City businesses in connection with the COVID-19 pandemic, and the temporary repurposing of City streets during the COVID-19 emergency; and
2. Direct the City Manager as deemed appropriate.