The city of Durango is contemplating what role, if any, it should play in supporting businesses financially impacted by unforeseen circumstances caused by city operations.
Councilor Kip Koso proposed a business resiliency or remediation fund to help businesses keep their doors open. He used one example of a business that experienced a sewage backup during city sewer maintenance within the last year.
According to city staff, such unforeseen incidents with disproportionate impacts on small businesses are rare – only three such incidents have been documented since 2023.
Koso said the city also doesn’t have a strong mechanism to support businesses affected by major projects, such as future critical infrastructure work on Main Avenue, which business owners expect will impede commercial deliveries and access to storefronts.
Councilors have questions about the size and scope of the proposed remediation fund – and whether it is necessary at all.
Councilors’ concerns have revolved around available funding, when businesses would be eligible for recourse, and the responsibilities of private businesses and municipal government.
The latest discussion on the matter was held at a meeting last week, where councilors directed staff to bring them more information about how such a program would work.
Councilor Jessika Loyer said she would support such a program if it started small – city staff discussed grants or loans generally in the $1,000 to $5,000 range.
Koso said such small grants may not be effective and the program should offer larger grants, noting some impacts to businesses can be as high as $20,000 to $50,000.
City Manager José Madrigal said if the program were to launch this year offering tens of thousands of dollars in grant funding per incident, the city would have to pull funding from city operations.
Mayor Gilda Yazzie said such a program “is a bad idea.”
“This should be something for a nonprofit, a social service agency out in the community, to take this banner to help businesses in trouble,” she said. “If businesses are going to survive, they’re going to have to learn how to be mean and tough and watch their money and look out for having insurance that covers catastrophic items.”
She said the Colorado Intergovernmental Risk Sharing Agency has previously found the city was found not at fault for one business’ sewage backup problem.
Koso said that is just one example – an “egregious” one – and other businesses have had similar issues over the years.
“In no way, shape or form in my head is this limited to one entity that had an issue within the last year. I think this has a much broader application,” he said.
City Attorney Mark Morgan warned City Council about references to that business because of potential litigation. He said the business owner has hired an attorney, and continued discussion by councilors about that specific example “is going to really compromise CIRCA’s ability to defend us.”
WeFill, a refilling business for household and personal care products, experienced a sewage backup last year caused by city sewer work, said owner Cristin Salaz.
Salaz addressed City Council at an August meeting where she said sewage flooded the back half of her business, ruined product and cost her seven weeks of lost revenue.
Earlier this week, Salaz declined to tell The Durango Herald whether she was contemplating a lawsuit against the city.
“I’m not really up for talking about that right now because I have kind of put it in my rear-view mirror and I’d like to keep it there, because my mental state requires me to not think about getting screwed over by my town,” she said.
She said she knows of at least eight other individuals or businesses that have had similar issues because of city activities, although she declined to name any of them.
In August, she told City Council the city didn’t communicate with her about planned sewer work near her business and communication could have remedied the situation.
Councilors met in an executive session later that meeting to receive legal advice about a possible lawsuit over “damages incurred by a private business owner due to a flooding incident caused by city operations,” according to the meeting agenda.
Morgan told the Herald at the time that he had heard Salaz hired an attorney, although CIRCA had offered her Good Neighbor Policy limits despite finding the city was not liable.
Durango Economic Opportunity Manager Tommy Crosby presented City Council with options for structuring a fund aimed solely at remediation for unforeseen circumstances at a study session last month.
City staff have modeled a remediation fund that fills financial gaps where insurance denies a claim or doesn’t apply. He said it would be a last-resort program – not a long-term funding source for businesses.
“We can really see the risks start to snowball and the threat to those businesses having to leave our community or permanently having to close due to the inability to recover from these rare, high-impact incidents,” he said.
That said, the program is meant to complement private insurance, not replace it.
A core standard of eligibility would require an unforeseen business impact – “unforeseen” being the keyword.
“Unscheduled, unplanned for. Sewage backup. Unforeseen flood. Something that is out of the ordinary,” he said. “You’re not replacing your water heater or your HVAC system.”
A business would need to have a valid, active business license, operate within city limits and document its hardship – providing proof it made an insurance claim and that claim was denied or only partially covered, he said.
Staff recommended a hybrid funding model for different circumstances, offering grants and no- or low-interest loans that would be repaid over time.
He said the city could explore a potential partnership with the Region 9 Economic Development District, which offers emergency impact loans in severe circumstances such as flooding last year in Vallecito and Pagosa Springs.
He posed key questions for councilors to consider:
- What funding mechanism – a grant, loan or hybrid – would the city offer?
- Should funding be capped at a specific amount and how should that amount be determined?
- What proof of hardship standards should be required?
At its Feb. 3 meeting, City Council voted 4-1 to have staff bring more information back to council at a future meeting. Yazzie voted against the motion.
cburney@durangoherald.com
