City Council to debate Small Business Grant Tuesday in special meeting
With a pivotal budget vote potentially hanging in the balance, Craig City Council will convene for a special meeting Tuesday to discuss one major sticking point.
The hurdle is what to do with $85,000 that, for each of the past two years, some council members say have been distributed in violation of the city charter and the state constitution.
The Small Business Grant, a program that has been used over the last couple years to inject money into small businesses in town for, among other things, facade improvements and general beautification projects, appears in the opinion of the current city attorney to have existed illegally.
In Article 7, Section 15, the Craig City Charter says that “no appropriation shall be made for any charitable, industrial, educational or benevolent purposes to any person, corporation, or organization not under the absolute control of the City, nor to any denominational or sectarian institution or association, except, when participating with the county, state or federal government, or any agency thereof, in a project beneficial to the City.”
But, says councilman Chris Nichols, the council didn’t go into this grant program intentionally — or even accidentally — flouting their own charter.
“We were advised by (legal) counsel that this fit the charter,” Nichols said by phone Monday. “Then when our new city attorney, Heather Cannon, took over from our previous one, she said there were some issues. We were advised on how to adjust it and we believe we’ve done so.”
Nichols is adamant that this program, which he sees as valuable or even critical to the future of Craig, was done with the best of intentions and according to the best legal advice they had available. While Cannon’s legal opinion is surely a valid one, Nichols said he requested that city manager Peter Brixius seek another opinion to ensure the city acted wisely.
“He reached out to counsel from the Colorado Municipal League, and that’s what’s going to be presented at (Tuesday’s) meeting,” Nichols said.
The city had planned to right the potential wrong by diverting this money starting next year into the newly formed Craig Urban Renewal Authority, which would then have the option of creating its own similar grant with the money. The CURA board is made up of a majority of Craig city councilmembers.
But this doesn’t sit right with at least one councilmember and possibly more. Councilman Ryan Hess, who is also the mayor-elect and will be sworn in as the mayor later this month, says that there are reasons this sort of program, which can and does direct money into private businesses, was made illegal by the state and the writers of the city charter.
“Why would legislature, or why would people who created our charter, put this provision in?” Hess asked in a phone interview Monday afternoon. “What was its purpose? Well, we’re talking about a time when there was a lot of fear of what you could call the ‘Chicago Model’ of politics, where businesses and governments weren’t so separate. The government could and did pick and choose which businesses survived and which didn’t. There was fear there — fear that government would get so involved and get to the point of nepotism and corruption. I’m not saying we’re corrupt, but provide a mechanism for that to flourish, and it will happen eventually.”
Nichols, who has made a point of how loath he is to create a public back-and-forth with this new council, yet sees it a little differently.
“I did say (at the last council meeting) that I didn’t like restrictive documents in government,” Nichols said Monday. “What I should have perhaps said is that I think that a document created in the 1950s might need to be updated for today. If we can’t do any of this legally, then we couldn’t have secured Open Heart Advocates or the Human Resource Council. Those are charitable organizations. Under this reading, that’s not allowed either.”
Hess pointed out that, especially in a small community like Craig, it’s incredibly difficult for a committee giving out cash infusions to do so without at least piquing an appearance of corruption or cronyism.
The city’s Economic Development Committee, which includes, like all committees, some but not all of the city’s councilmembers, has to this point been tasked with approving or rejecting applications for the Small Business Grant.
“There’s always going to be a perception or an absolute where somebody has direct or indirect or relationships with a person getting grant money,” Hess said. “It’s difficult to shield that without a completely independent board with nothing to do with any elected officials giving out the money.”
And, in fact, a glance at the 2020 grant awards and rejections drives Hess’s point home.
Of the $143,560.95 requested in grants, $62,932 were awarded in 2020. Of that, $18,000 went to West Twin Cinema, the city’s only movie theater. The theater is co-owned by councilmember Andrea Camp.
While there’s no evidence immediately available to suggest anything was any less than above board with that award decision, Camp does sit on the Economic Development Committee. While very likely a perfectly sanitary and appropriate use of funds, this, Hess said, is exactly why the law is written the way it is.
“I’m getting a little beat up on this,” Hess said. “But it’s not that I fear cronyism as much as that when you’re in the public world, in a small town, you have to combat the impression that it’s going on.”
Hess voted no on the first reading of the 2022 city budget in last week’s council meeting. He was joined by councilmembers Steven Mazzuca and Paul James. Hess has been clear this specific provision is his sticking point (James has said that the projected deficit is of greater concern to him).
And, even though the budget would shift these illegally appropriated funds into a legal workaround, Hess isn’t budging as long as it’s in there.
“It’s kind of like when you talk about a poisonous tree,” he said. “Start with a bad apple, it doesn’t matter how many altruistic things you come up with, it’ll never overcome the original seed. Some people say we’re marginal on the law but it’s in the best interest of the city. Well, I don’t like that argument. If you don’t like the law, petition to change it.”
On the flipside, Hess added, it may not be the best way to use that money, legal or not.
“The counterargument is that we need this $85,000 a year to save our economy,” Hess said. “We lose an energy market, and the dollars and cents of $85,000 aren’t enough to fix the problem. It’s a little drop in the bucket. Sure, some people benefit, but is this where you need to spend your money?”
Alternatives Hess suggested included a small business incubator or resource center or more money for infrastructure to solve the housing shortage.
The council will enter executive session at 4 p.m. Tuesday to receive legal advice on the matter before returning to public session thereafter to debate the matter.
“The public wants to see what we have to say,” Hess said. “They elected us and we should do this in daylight.”
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