In a 5-2 vote, Craig City Council decided to remove the $85,000 transfer to the Craig Urban Renewal Authority planned for small business grants from the 2022 budget at a special meeting of council on Tuesday.

Before Tuesday, the city’s budget for next year included a transfer of $85,000 to the Craig Urban Renewal Authority. In years past, that sum had been used for a small business grant program awarded to businesses in Craig. Those grants were mainly used for beautification projects, such as new facades or other improvements.

The council spent time in executive session Tuesday to get legal advice on how to move forward with the small business grants before returning to its special session to discuss the next steps.

City attorney Heather Cannon had raised concerns previously about the legality of the grant program as it had existed for the last two years. However, according to advice given to council by Cannon Tuesday, proposed additions to the grant language, which would have ensured it led more directly to a public good, could have made the program legal, even while remaining under the direction of the city.

“The additions are a contract that basically requires job retention, that ties the award of the grant to a defined public purpose,” Cannon said Tuesday. “And the second big revision is a site improvement checklist that will be used in determining every grant award recipient, so there is consistency in applying awards and ensuring that we are, again, tying into public purposes defined in the application.”

However, the decision made by council was instead to eliminate the program entirely — not to give the money to the CURA, and also to end the small business grant program under the direction of the city.

In last week’s regular city council meeting, three council members voted against the proposed budget for the 2022 fiscal year, an unusual split noted by city manager Peter Brixius last Tuesday. The first reading narrowly passed 4-3 at that meeting, and some council members who had hesitancies cited the $85,000 transfer as a point of concern.

According to the Craig city charter, the city government cannot give public funds to private businesses. Specifically, the charter reads, “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.”

To remedy this, the city council had planned to give the $85,000 it would have spent — and for each of the last two years had spent — on its own grants to the CURA, in hopes that the CURA would end up using it for the same grants. The city council holds a majority of seats on the CURA board.

Councilman Chris Nichols, who has been a vocal proponent of the grants, said that the program was effective and accomplished goals it was set out to do. However, it was Nichols who introduced the motion to remove that allocation because of the controversy that has circulated around the question of its legality.

“I do feel there’s more work to be done,” Nichols said at the meeting on Tuesday. “I don’t want to cripple the URA and the controversy and the allocation of the chamber to put the money to the URA. So I make a motion to remove that $85,000 from an allocation of the budget to the URA.”

Nichols added that he still believes that the grants did a public service and benefited the community — especially small businesses in town, but after controversy surrounding the program spread, he said it would be best to remove the allocation to ensure trust in the council.

“What has not benefited the community has been the name calling, the claims of (inappropriate) actions, ‘cronyism,’ ‘inappropriate,’ ‘illegal.’ I think that has negatively affected the reputation of the council and the trust of the council,” Nichols said, referencing words that had been used by, among others, mayor-elect Ryan Hess in the week since the first reading. “So the community good at this point of the program is tarnished — even though it meets the public purpose. I think the community good of the grant program is tarnished to the point that if this council — and the new council — wants to work together in the future, that we eliminate the $85,000 from the budget.”

The motion, seconded by councilmember Steven Mazzuca, was to pull back the funding for the URA from the budget in addition to eliminating the small business grant program from the budget, as well. That money would instead return to the general fund.

Councilmember Bruce Cummings and mayor Jarrod Ogden voted against the motion.