C3 Community Assistance

Programs – Helping to reduce

the impacts of COVID-19

April 20, 2020

Overview and Key Points

• Severe economic impacts continue to mount

• Recovery is still months away

• State and federal aid is leaving gaps in our community

• To date, city government has received no direct financial aid from either

the state or federal government

• Despite city revenue losses, city funding of local aid programs is critical

now

• Planned total expenditures of $1M to help the community can be funded by

cutting expenses, delaying expenses and using reserve funds

• Planning $50K in immediate direct funding to city’s food banks

Current Economic Conditions

• No one was prepared for the Covid-19 pandemic

• The worldwide crisis has likely put the U.S. in a

recession

• Businesses are struggling to survive

• Unemployment is rapidly rising

• Federal assistance programs are not meeting all

the needs and communities are turning to local

governments for help

• City won’t start to see revenue impacts until next

month

• City initiatives aimed at:

– Keeping people employed

– Preventing businesses and non-profits from

closing

– Supporting individuals/families facing

financial difficulties

– Protecting the city’s long term revenue

sources that fund city services

C3 Community Assistance Program(s)

C3 Community Assistance Program

Two Areas of Focus – Small Businesses and residents

• Covid-19 Relief Microloan Program (Businesses)

• Property Taxes (Businesses and residents)

– Governor’s Executive Order (Waiver)

– Rebate of personal property tax program

• Grant Programs

– Business relief grant program (Businesses)

– Nonprofit assistance grant program (Residents)

– Additional CDBG Funding $246,587 - staff working to develop

specific programs that target direct benefit to residents (Residents)

Covid-19 Relief Microloan Program

• City Council authorized $200,000 seed funding towards a

“county-wide” Covid-19 relief microloan program

managed by Colorado Enterprise Fund.

• Loan attributes:

– Loans of up to $25,000

– Quick turn around on applications

– 3.5% interest rate for a 5-6 year term

– No origination fees charged to borrowers

– 6 months of interest only payments

• City Council could authorize more seed funding to

increase the total amount in the loan pool.

• Staff Recommendation –Add an additional $200,000

Covid-19 Property Tax Relief

• Current programs offers some property tax relief to seniors

• Business Personal Property Taxes– County has waived some interest and has offered

payment plans

– Personal property taxes are generally very small

– City cannot waive our portion – only rebate paid taxes

• Real Property Taxes– County has waived some interest

• Total city real and personal property taxes are about $3M annually

Response to Property Tax Questions

• In August of each year, the Assessor certifies the total assessed value of all

properties located within the boundaries of each taxing authority. Assessed values

are calculated by multiplying the actual value by 29% for all property except

residential. The residential assessment percentage is subject to change by the

Colorado Legislature each odd numbered year. The assessment rate is currently

7.15% on residential property.

• Each year county commissioners, city councils, school boards, and special districts

(known as “taxing authorities”) determine the revenue needed and allowed under

the law to provide services for the following year. They calculate a tax rate based

on the revenue needed from property tax and the total assessed value of real and

personal property located within the entity’s boundaries. Authorities determine their

individual mill levies, which are then submitted to the Board of County

Commissioners for review by December 15th. The mill levies are approved by the

Board of County Commissioners and certified to the Assessor by December 22nd.

Upon the receipt of the certified mill levies from the commissioners, the Assessor

enters the mill levies, extends the calculations against the individual assessed values

and forwards the resulting tax warrant to the Treasurer by January 10th for

collection.

Response to Property Tax Questions Con’t• Real Property Tax – Land/Building

• Personal Property Tax –Defined as any movable property that is not attached to a home or building. Includes movable man-made objects that have a physical form and can be seen and touched.

• Property Tax collected for 2019 $3,082,565 (3.126 % of G/F Revenues)

• Commerce City mill levy is 3.28 mills, however there was a required tabor refund which lowered the mill levy certificate to 3.104 mills for 2020. City Council authorized the mill levy in November 2019 for the 2020 collection year.

Business Personal Property Tax: (Response from Adams County)

• Statutory in nature – cannot be waived by City or County level of government

• Treasurer can waive interest, but has no authority to abrogate (everything else statutorily based)

• Treasurer can offer payment plan to businesses interested in this option

– Business owner can contact County Treasurer at treasurer@adcogov.org or 720-523-6160

Property Tax: (Response from Adams County)

• Treasurer granted authority by Governor’s Executive Order D2020 031 to waive interest if first half payment made by 4/20

• Governor’s Executive Order based on Federal State of Emergency

• If Federal State of Emergency status removed, cannot guarantee same ability to waive interest for second half payments in June

Business Property Tax Bill Example

Entity Mill Levy Annual Amount Monthly Amount Percent of Total Notes Entity Contact

Rangeview Library 3.677 $ 151.16 $ 12.60 1.76%Funds library operations 303-288-2001

City of Commerce City 3.104 $ 127.61 $ 10.63 1.49%Covers City operations, second lowest municipal rate in the County 303-289-3600

Fire District 4 14.750 $ 606.37 $ 50.53 7.06%Funds Fire District Operations 303-288-0835

General 22.793 $ 937.01 $ 78.08 10.91%Goes to County General Fund 720-523-6038

Retirement 0.314 $ 12.91 $ 1.08 0.15%Contributes to Adams County Retirement Fund 720-523-6038

Road/Bridge 1.300 $ 53.44 $ 4.45 0.62%Funds Adams County road and bridge work 720-523-6038

Developmentally Disabled 0.257 $ 10.57 $ 0.88 0.12%Goes to Adams County Developmentally Disabled Fund 720-523-6038

SD27 Bond 22.069 $ 907.26 $ 75.61 10.56%Result of 2015 ballot question approving bond issue for school construction 303-655-2900

SD 27 General 26.741 $ 1,099.32 $ 91.61 12.79%General operating fund for School District 27J 303-655-2900

SACWSD 2.449 $ 100.68 $ 8.39 1.17%Operations for the Water District 303-288-2646

Urban Drainage South Platte 0.097 $ 3.99 $ 0.33 0.05%Special fund for South Platte River projects 303-455-6277

Urban Drainage & Flood Control 0.900 $ 37.00 $ 3.08 0.43%Contributes to UDFC general fund 303-455-6277

Social Services 2.253 $ 92.62 $ 7.72 1.08%Adams County Social Services Fund 720-523-6038

NIGID 20.000 $ 822.20 $ 68.52 9.57%Infrastructure for North Range Developments 303-289-3600

North Range Metro District 1 88.305 $ 3,630.22 $ 302.52 42.25%Repays debt incurred in private infrastructure development 303-779-5710

Total 209.009 $ 8,592.36 $ 716.03 100.00%

Taxes are collected in current year for previous year

2020 Property Tax collection is based on 2019 Valuations If COVID-19 impacts valuations, those taxes will not be collected until 2021/2022Each tax entity sets its own mill levy

Current Program - Senior Property Tax Rebate

Senior citizens 62 and older are eligible for a $36 yearly refund. If more than $36 was paid to Commerce City for the previous year, 100 percent of the paid amount may be refunded. Senior citizen renters may apply for a $30 refund.

Eligibility Requirements:• Must be 62 years of age or older by November 1 of the current year

• Must have lived in a home or an apartment within the city limits during the previous year

• Must provide a copy of Adams County Real Property Tax Notice for the current tax year to receive the 100% refund of city property tax:– Only the amount paid to the City of Commerce City is refundable

– No more than one refund will be given per address

– 2018 – 493 Applications $26,982.61

– 2019 – 468 Applications $35,002.68

– Cost – Staff time (3 days/1 person) plus $1,000 for the mailings

C3 Community Assistance Program

• Council discussed a Personal Property Tax Waiver: • Waiving or suspending the personal property tax

payment is not within the Council’s authority.

• While the Personal Property Tax paid to Commerce City could be rebated, staff does not recommend that actiono The total amount of revenue the City receives in personal

property taxes annually is currently unavailable from the County Treasure, however all property tax collections for Commerce City are about $3 Million

o The City’s normal mill levy is 3.28 mills. This means that for every $100,000 of personal property a small business has, they owe $95.12 annually to the city in personal property tax per year.

o Provides limited benefit to a business; in the example provided in previous slide, if the business closure lasted 3 months, the rebate amount would be $31.91

COVID-19 Small Business Support

• The proposed $400,000 program is intended to provide qualified

businesses in the City emergency grants of up to $5,000 for

emergency expenses until other funding sources can be secured

through loans and federal relief programs.

– Program funding would occur in two rounds, 30 days apart, in an effort to

ensure broad participation. Each round of funding would be capped at

$200,000. Businesses could apply in both rounds, however, priority given to

those who did not receive funds in the first round.

Eligibility Requirements:

– For profit, independently-owned local businesses

– 50 or less employees

– Non-residential, physical address located within City boundaries

– Active Commerce City business license and in good standing with

the City as of March 1, 2020

– Business must have been in operation at least six months prior to the

application date

COVID-19 Non-Profit Support and

Assistance Grant Program

• The proposed program capped at $200,000 in total funding is intended to

provide qualified non-profits in the City emergency grants of up to

$5,000 for emergency or “assistance” funds until other sources can be

secured.

– Program funding would occur in two rounds, 30 days apart, in an effort to ensure broad

participation. First round funding would be capped at $150,000 and round two capped at

$50,000. Non-profits could apply in both rounds, however, priority given to those who

did not receive funds in the first round.

Eligibility Requirements:

– Organizations must be a 501(c)3 non-profit in good standing with state and federal

regulations

– Have a physical address located within City boundaries

– Must demonstrate primarily serve Commerce City residents

– Must provide services in alignment with City Councils stated goals

– Must demonstrate need based upon COVID-19 pandemic

• Possible need for additional funding, depending on the effectiveness of

county, state and federal aid aimed at residents – too early to tell

• Proceeding to distribute up to $50K to city food banks now

C3 COMMUNITY ASSISTANCE

PROGRAM(S) SUMMARY

Program Program Cost Individual Awards Impact

COVID-19 Relief Microloan Program-Phase I

$200,000(already funded)

Up to $25,000 8 to 20 loans

COVID-19 Relief Microloan Program-Phase II

$200,000(general fund)

Up to $25,000 8 to 20 loans

Small Business Support and Recovery Grants

$400,000(general fund)

Up to $5,000 per round

Up to 80 grants

Non-Profit Support and Assistance Grant

Up to $200,000(general fund)

Up to $5,000 per round

Up to 40 grants

Food Bank Donation $50,000 $50,000 Residents in need

TOTAL $1,050,000

*$200,000 in line #1 above already funded by City Council, current delta is $800,000 to fully fund recommended programs.

Covid-19 Current Budget Impacts

• Not enough data to accurately project revenue

impact

• We are developing several scenarios based

upon different revenue reduction estimates

• Current estimate 24% revenue loss over the

whole year ($23M)

Financial Data – Revenues

Budgeted General

Fund Revenue 2020 Budget10% Reduction 20% Reduction 30% Reduction 40% Reduction

Taxes 77,491,286 69,742,157 61,993,029 54,243,900 46,494,772

Licenses and Permits 3,428,230 3,085,407 2,742,584 2,399,761 2,056,938

Intergovernmental 3,044,575 2,740,118 2,435,660 2,131,203 1,826,745

Charges for Services 9,353,618 8,418,256 7,482,894 6,547,533 5,612,171

Fines and Forfeitures 1,508,118 1,357,306 1,206,494 1,055,683 904,871

Miscellaneous 894,224 804,802 715,379 625,957 536,534

General Revenues 95,720,051 86,148,046 76,576,041 67,004,036 57,432,031

Total Reduction 9,572,005 19,144,010 28,716,015 38,288,020

* Four scenarios above based on budgeted general fund revenues

Projection from Actuals

Total Revenues 72,678,407 24% Reduction as of revenues posted through 4/14/2020

* This doesn't include all sales/use tax revenues for March as taxpayers had until April 10 to remit, Finance is still posting transactions

* The total revenue number above takes multiple things into consideration. (Some revenues are as of March, some April numbers are included,

and other lines are based on an average of total numbers for three prior years) Best answer we can project at this stage of the game.

Financial Data – Expenditures

• Staff is developing several different budget reduction alternatives to fill the gap and lessen the

impact on current fund balances while maintaining levels of services to residents wherever

possible. I will be sharing actions taken, additional plans and recommendations with the City

Council in May

Budgeted Expenditures 2020 Budget 10% Reduction Amended 2020 Budget

Primary Government

Administration 5,994,854 599,485 5,395,369

Human Resources 1,175,311 117,531 1,057,780

Finance 13,067,523 1,306,752 11,760,771

Community Development 4,241,929 424,193 3,817,736

Public Safety 20,264,387 2,026,439 18,237,948

Public Works 16,749,028 1,674,903 15,074,125

Parks, Recreation & Golf 13,434,108 1,343,411 12,090,697

Total General Fund 74,927,139 7,492,714 67,434,425

*Projection based on 2020 adopted budget

*Desired approach is to develop informed, thoughtful budget cuts that have the least impact to residents

*This type of cut would be more significant to some departments than others, could mean change to services

Other Possible Budget Adjustments

– Suspending Council Policy requiring the transfer

of General Fund money to CIPP (2020= $2.1

million)

– Gathering data on facility closure and canceled

event savings ($500K to $1 million)

– Delaying approved capital projects

– Using fund balance and internal service fund

balances to support operations and services

Council Actions

• Discussion

• Actions:

– Approve an Emergency Ordinance to provide funding

and authorize the City Manager to implement the

Community Assistance Program.

– Authorize the use of $50,000 from the Contingency

Account within the 2020 General Fund Budget, to be

used as a donation for the food bank(s) serving

Commerce City Residents; and authorize the City

Manager to execute the donation(s).

Additional Information related to

Sales and Use Tax - Examples

April 20, 2020

Response to Use Tax Questions

• Sales tax is a transaction tax that applies to the price of every sale or purchase of any tangible personal property or services deemed taxable by the City code.

• Use tax is the same thing as sales tax, however it is paid directly to the City by the purchaser when the seller does not charge and remit the sales tax.

• There is very little consistency in the amount of use tax owed by any business because it is dependent on their purchasing habits and the vendors they purchase from.

• Some businesses are required to report and pay more use tax than others because the vendors they purchase from do not collect and remit city sales tax. Other businesses pay little use tax because they purchase from vendors that collect the sales tax. As a result, refunding use tax would not be equitable to all businesses.

Response to Use Tax Questions Con’t

• Because sales and use tax are the same tax they apply equally to anything deemed taxable by code.

• Use tax is designed to ensure that governments collect tax on all taxable purchases. The vast majority of home rule municipalities in Colorado have a use tax provision.

USE TAXABLE PURCHASES BY INDUSTRY

• Taxable purchases made by most businesses include: Utilities, computers, software, furniture, fixtures, equipment, supplies, automobiles, food.

• Medical Industry: X-ray equipment and supplies, medical gases, non-prescription medicines, testing equipment, consumable supplies, medical journals.

– EXAMPLE: ABC Medical Clinic purchases x-ray supplies and testing kits from a medical supplier in Cincinnati. The online order is shipped to ABC’s Commerce City clinic. The cost of these supplies is $990 + $10 shipping, for total of $1,000. The invoice includes $40 of sales tax (4.0%), which is 2.9% Colorado + 1.1% RTD and Cultural District taxes. ABC owes Commerce City $45.00 (4.5%) of use tax. The purchase was made in April and ABC is set up on a quarterly filing frequency, so the use taxes are required to be reported and paid by the 20th day of the month following quarter end, July 20th.

Response to Use Tax Questions Con’t

• Restaurants/Bars: Complementary food and drinks given to employees or customers, signage, POS systems, uniforms, linen services.

• Transportation: Dyed diesel fuel, vehicle tires, parts, fluids, forklifts, propane, pallets, security systems, GPS tracking devices.– EXAMPLE: Supreme Transportation, located in the City, sends a driver to pick up some

tractor repair parts at NAPA Auto parts, which is located outside the City in unincorporated Adams County. The cost of the parts is $200, plus (4.75%) sales tax of $9.50 (2.9% CO + 1.1% RTD/CD + 0.75% Adams County). Because the parts are brought back into Commerce City and installed on a tractor based at Supremes’ hub, use tax of $9.00 (4.5%) is owed to Commerce City. The purchase was made in March and Supreme is set up on a monthly filing frequency, so the use taxes are required to be reported and paid by April 20th.

• Personal Services: Promotional swag, advertising flyers & newspaper inserts, magazine subscriptions

• Manufacturing / Construction: Chemicals, solutions, production equipment, maintenance agreements, lifts, tools, construction equipment, off-road fuels, mitigation supplies, rental of modular offices and restrooms.

• The Tax Division is happy to discuss the particular implications of use tax with any business. The Tax Division is available to answer any specific questions City Council has regarding sales or use taxes.