Agenda

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City Council Regular Meeting

Meeting Date:

05/05/2020

BACKGROUND

SEDC Permitted Uses of Funds

Schertz Economic Development Corporation (SEDC) expenditures must be tied back to what the Texas Local Government Code Chapters 501 Subchapter C and 505 Subchapter D define as qualified projects. Qualified projects create/retain Primary Jobs or are infrastructure improvements.

The SEDC typically deploys these funds as development incentives in the form of grants, annual reimbursements, or loans. All SEDC incentives must be formalized through a performance agreement and approved by the SEDC Board of Directors and City Council. Under a performance agreement, companies must commit to payroll, job creation, and capital investment. Additionally, performance agreements include recapture provisions that outline the terms of repayment if a company does not meet its performance requirements.

Although the specific amount of an incentive varies by project, the Schertz Incentive Policy (Resolution No. 17-R-30) provides additional consideration for existing Schertz businesses, small businesses, and those that make a significant investment within Schertz.

Validating Use of Funds During COVID-19 Pandemic

At the onset of the COVID-19 Pandemic and the Governor’s initial declarations, the SEDC asked the City Attorney to provide an opinion regarding whether the Governor’s declaration relaxed the mandates imposed by Chapter 501 and 505 of the Texas Local Government Code. The City Attorney’s response was that it did not. The SEDC staff also consulted with the State of Texas Office of Economic Development and Tourism. They also indicated that it was unlikely that their office would call for changing the legislative intent of said chapters to provide flexibility to fund retail or other non-Primary Job employer programs.

SEDC Response and Recovery Actions

Once the mandate to focus on Primary Employers was reaffirmed, the SEDC took the following actions in response to the COVID-19 Pandemic:

Established direct contact (phone/email) to assess the needs of local Primary Job employers.
Planned response in coordination with regional partners including the Chamber of Commerce, regional EDC partners, and the Governor’s Office of Economic Development and Tourism.
Launched a resource page (www.schertzedc.com/coronavirus) for Primary Employers and provided technical assistance, including virtual business roundtables and local sourcing of Personal Protective Equipment (PPE).
Promoted positive stories of Schertz’ companies under the hashtag: #schertzshines on their responses to the pandemic, including Rainbeau Curves’ donation of PPE to City of Schertz first responders.

Primary Employer Feedback

Through contact with Primary Employers, staff received requests for assistance from smaller employers having trouble accessing federal assistance programs such as the Small Business Administration (SBA) Paycheck Protection Program (PPP).

SEDC Business Retention Grant Criteria

In response to Primary Employer feedback, the SEDC briefed the SEDC Board of Directors regarding the COVID-19 Business Retention Grant Evaluation Criteria (Attachment A) on April 23, 2020. The SEDC is looking at allocating up to $500,000 in available budget dollars for this program in FY20. Surplus dollars are available in the FY20 SEDC Budget because not all project incentive payments will be needed.

COMMUNITY BENEFIT

The mission of the SEDC is to grow the Schertz economy through projects that support Primary Jobs and Infrastructure investment. Through establishing direct contact, providing technical assistance, and evaluating Primary Employer Business Retention Performance grants under the approved incentive program, the SEDC is helping local companies remain strong through the COVID-19 Pandemic.

FISCAL IMPACT
The SEDC FY2019-2020 Approved Budget contains $100,000 allocated for Small Business Grants and a budget surplus of over $400,000 in economic development incentives as of April 30, 2020. Grant payments of $50,000 or more would need council approval.

ATTACHMENTS
Attachment A: Schertz EDC COVID-19 Business Retention Grant Evaluation Criteria

Attachments
SEDC COVID-19 Exhibit A