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Council approves $15M for vital businesses

Friday, October 2, 2020 by Ryan Thornton

City Council unanimously approved a revised version of the Save Austin’s Vital Economic Sectors (SAVES) relief effort on Thursday to provide financial assistance to some of the city’s most vulnerable music and arts venues, child care providers, and restaurants and bars.

The modified plan will draw a total of $15 million from city sales taxes, dollars set aside for the Human Capital Management System replacement project and the Fiscal Year 2021 Capital Rehabilitation Fund. As proposed by the city this week, the assistance will be divided equally among three funds: a music venue preservation fund, a legacy business relief grant and a child care provider relief grant.

While the city has not yet identified appropriate sources that could expand the effort beyond $15 million and provide relief for many more businesses that have suffered financially since mid-March, Council urged the city to continue exploring additional options while developing SAVES over the coming weeks.

“I’m looking forward to … continuing to work in the coming meetings to add more money and to provide more help, because it is really important for us to save these iconic places,” Council Member Greg Casar said.

With dedicated funds for child care providers and music venues, Council Member Leslie Pool said that restaurants and bars could be at a disadvantage when applying for the relief dollars. The concern was that music venues could apply for the legacy business relief grant in addition to the music venue preservation fund, while restaurants and bars would be restricted to the legacy business fund. Pool brought an amendment to instead divide the $15 million evenly among the three industry sectors, but it was voted down.

Greg Koury, president and CEO of Manuel’s Restaurant, specifically called for the immediate creation of a dedicated restaurant fund. With his two eatery locations pulling in less than half the amount of pre-Covid-19 sales, Koury said the $5 million for the legacy business grant is a “step in the right direction but … critically inadequate.”

In objection to Pool’s amendment, Mayor Steve Adler said the city’s three funds were a “really eloquent solution” to Council’s original request to prioritize businesses that are most at risk of closure and that would be the most difficult to replace on the other side of the pandemic. Due to their “unique value,” Adler said he supported providing music venues their own fund of at least $5 million while also keeping the legacy business grant open to music and arts venues.

“I’d like to see us doing everything we can to help restaurants,” said Adler. “The scale of that challenge is enormous; it dwarfs the kind of dollars that we’re talking about here. The SAVES resolution was not one that was intended to – because it couldn’t – provide relief to restaurants across the city.”

Despite concerns by the city, Council voted to direct $8.5 million in sales taxes to SAVES in the place of $4.8 million from the Pay for Success fund and another $3.7 million from temporary use of right-of-way fees. While sales taxes have not recovered to pre-pandemic levels, they have exceeded the city’s budgeted expectations by about $11.8 million.

Ed Van Eenoo, the city’s deputy chief financial officer, told Council Tuesday it would benefit the city to add that money to the city’s reserves, in part to increase the city’s funded reserves from 12 to 14 percent, encouraging Moody’s Investors Service to restore the city’s bond rating to Aaa after being downgraded to Aa1 last month. Van Eenoo also recommended caution over committing the sales taxes, considering that the pandemic is lasting longer than initially expected.

Nonetheless, Council directed the city manager to prepare an ordinance freeing up the $8.5 million in sales taxes for the Oct. 15 meeting agenda, continuing with the programmatic elements of using the entire $15 million in the meantime.

By the same date, Pool plans to present any results from an effort to analyze the city’s responsibility to make property tax payments to major corporations under existing Chapter 380 agreements. In the coming weeks, Pool plans to work with Van Eenoo to determine if any of those companies have failed to meet their end of the contractual deal, thereby allowing the city to put property tax payments into SAVES.

“We’ve talked many times in the last two to three years that we want to revisit how much money we are giving to corporations,” Pool said. “I think in this instance, considering the crisis circumstances and the financial situation we’re in, this is one time when I would even ask those corporations voluntarily to stand up and say, ‘Yes, we won’t take it this year: Add those years onto the back end and we can recoup them when times are better, because we recognize that the need is really great for our music venues and our restaurants in Austin.'”

In contrast, Adler and Mayor Pro Tem Delia Garza expressed strong objection to any effort that would suggest the city had plans to abandon any of the financial commitments made to companies under a 380 agreement.

Council also approved amendments for the city to explore using non-Hotel Occupancy Tax revenue from the convention center for SAVES. The city is also directed to bring an item on Oct. 15 reallocating a portion of temporary use of right-of-way fees and revenue from encroachment agreements into a business preservation fund.

Photo made available through a Creative Commons license.

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