Title
Recommendation to Create an Alameda Strong Community Relief Fund to Provide Grants or Other Types of Relief to Small Businesses, Non-profits and Residential Renters that have been Negatively Financially Impacted by the COVID-19 Pandemic. (Community Development 256)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The COVID-19 pandemic has negatively impacted scores of businesses in Alameda. City Council directed staff to create a public-private community relief fund to assist small businesses, non-profits, and residential renters. Staff proposes creating an Alameda Strong Community Relief Fund in partnership with the City of Alameda’s (City) business associations. The total amount of grants will be based on the funds raised. City Council can approve staff’s proposal, make changes or provide staff additional direction.
BACKGROUND
On April 21, 2020, the City Council approved a $600,000 COVID-19 Small Business Relief Grant Program. City Council expressed concern that the demand, and need, would far outstrip the funds available and asked staff to provide an update at its next meeting. In addition, City Council also directed staff to create a special public-private partnership-soliciting donations from local residents, private entities, and foundations to supplement the Small Business Relief Grant Program.
The Relief Grant Program will fund approximately 80 one-time grants of $7,500 each, and provide immediate financial help to local small businesses impacted by the COVID-19 pandemic. The grant program began accepting applications on Monday, April 27, 2020. The application period closed on May 7, 2020. A total of 238 applications were received. A general summary of the applications received is attached as Exhibit 1. Staff is currently reviewing the applications received and anticipates completing its review process by May 21, 2020. Grant awards will then be mailed out shortly thereafter.
On May 5, 2020, staff provided an update to City Council regarding grant applications received to date. City Council confirmed its direction to staff to set up a community relief fund (Alameda Strong) and provided the following feedback:
• Consider additional City funding for relief grants given the number of applications received and the need for assistance ($200,000 - $300,000 in additional funding)
• Consider funding for rent relief for residential tenants
• Explore a public-private partnership for raising funds (e.g., the Alameda Strong campaign)
• Work with the West Alameda Business Association (WABA) and others who have expressed interest to set up a “Go Fund Me” campaign as soon as possible, while developing the Alameda Strong program on a parallel track, to capture as many donations as quickly as possible
• Outreach to potential applicants in the top three languages in Alameda as part of any new program
• As part of any new program development, consider criteria such as:
o Greater than a 20% loss of income due to COVID-19
o Provide additional consideration to businesses who were open, when allowed to be open, versus those that remained shuttered when they could have opened
o Allow businesses with more than one location in Alameda to qualify if they have over 25 employees spread across several locations
o Allow grantees to give back a portion of their $7,500 grant if not needed so others can receive funds, thus expanding the number of available grants
o Use the same pool of applicants for awarding new grants from the “Go Fund Me” campaign
DISCUSSION
City Funding
Pursuant to City Council’s direction, the City Manager and staff examined sources of additional City funds available to provide assistance to small businesses and residential tenants. On June 2, 2020, staff will present a recommendation to City Council to approve nearly $600,000 in Community Development Block Grant (CDBG) CARES Act funds for emergency rent relief available to low-income tenants (i.e., households making less than 80% of the median income). If approved, this would bring total City funding for emergency relief grants to small businesses and low-income tenants to nearly $1,200,000 ($600,000 in previously approved funding for the Small Business Grant Relief Program and the new CDBG-CARES Act funding of $580,000).
City Council also directed staff to look at additional funding, either from the $2 million allocation from reserves that the City Council authorized for expenditure during the local emergency or from re-programming existing budgeted funds. The City Council suggested that $200,000 - $300,000 could be identified to augment the program. Staff is not recommending that the City Council augment the program using reserves. There are too many uncertainties about the economic future that will impact the City’s revenues and it will be important to maintain reserves to address those challenges. This could be reevaluated as businesses begin to open back up in the Summer and Fall.
City Council has previously approved $200,000 for an economic development branding campaign as recommended in the Economic Development Strategic Plan (EDSP). Work had recently gotten underway on that effort; however, the COVID-19 pandemic has shifted staff’s focus to working on immediate and recovery issues impacting the business community. City Council could decide to re-allocate some, or all of, these branding campaign funds to the grant program. However, staff is recommending that those monies be used to support recovery efforts, including providing consultant resources to a task force that would create a short- to mid-term (12-24 months) plan to bolster economic recovery in Alameda as public health requirements shift and businesses start to re-open to the community under a “new normal.”
Staff recommends, given the anticipated $1.2 million in direct funding for small businesses and tenant relief, that the City uses its resources to leverage this commitment with a communitywide effort to support local businesses and neighbors through a foundation-led drive to raise money from residents and larger businesses who may be in a position to support those businesses and non-profit organizations that make Alameda what it is.
Alameda Strong Community Relief Fund
Business Association Stakeholders
Based on City Council’s direction to create a public-private partnership, on May 7, 2020, staff from the Community Development Department and the City’s Public Information Officer (PIO) met with eleven business association representatives, including the board members and the executive directors from the Downtown Alameda Business Association (DABA), the West Alameda Business Association (WABA), and the Chamber of Commerce (Chamber), to discuss creating a COVID-19 community fund. There was strong consensus among the business representatives around three primary concerns:
• Defined goals. The City should clearly define the goals (e.g. to prevent business closures, provide gap financing, or support employee retention) and intended uses of the funds. Consistent with City Council feedback, one business owner suggested that the funds be for businesses suffering substantial loss of income due to the pandemic, such as 50 percent loss compared to the 20 percent minimum requirement for the current small business grant program.
• Separate funds. Concern was expressed regarding the community fund providing financial relief to both residents and businesses. The business representatives felt that this may unintentionally divide the community over how to distribute limited funds. If the community fund provides relief to both groups, the fund should be structured with separate funds for each group.
• Urgency. Finally, the business representatives felt a passionate sense of urgency in setting up the community fund as soon as possible. Many people stated that there was a limited window of opportunity before a “fundraising fatigue” set in. Some suggested to immediately start marketing the program and soliciting funds while the details remain to be finalized and approved. Also consistent with City Council feedback received on May 5, 2020, a “Go Fund Me” was discussed to allow for individual donations while a community fund is developed for larger contributions. The business associations agreed to form a committee to immediately start on the project. Staff will report on whether a “Go Fund Me” or other type of fund has been set up as of the date of the City Council meeting.
The business representatives also discussed business eligibility and structure of the community fund. There was consensus on the following points:
• Number of employees. The group felt that sole proprietors should be eligible for the grants. A close majority did not to want to include home-based businesses. They also agreed with an upper limit of 25 full-time equivalent employees, with an exception for restaurants which may have more employees.
• Grant size. There was general agreement with the set amount of $7,500 with some flexibility. Recipients should be able to apply for a lesser amount, with the knowledge that the remaining funds can be used to support more businesses in need.
• Inclusiveness of demonstrating public support. The marketing component for the community fund may include t-shirts and window signs with a unity message, such as “Alameda Strong.” However, the group suggested that the program be structured so people can participate in demonstrating their community support regardless of being able to make a donation. One example of this is an ability to print a poster that a child could color and place in a window.
• Community event. The group favored a “virtual” town hall event to promote a clear sense of purpose of community support and safety.
Foundation and Grant Administration
In order for donors to make a tax-deductible donations, staff is recommending working with East Bay Community Foundation (EBCF) as the fiscal agent for the Alameda Strong Community Relief Fund. EFCF worked with Berkeley on its relief fund. One of the four factors EBCF looks at when taking on new partners is whether they are: “Bold, courageous, and innovative actions by government that address community needs.” This aptly describes the Alameda Strong public-private partnership.
For grant administration, including evaluation of applications, staff is proposing to use Working Solutions. Working Solutions is a U.S. Treasury-certified Community Development Financial Institution (CDFI). Its first COVID-19 relief grant partnership was established within less than two weeks, from concept to going live, with the City of Oakland. Working Solutions is now working with other cities on their programs. Working Solutions also works with the Napa Valley Family Foundation. Working Solutions administered emergency grant funds for businesses impacted by the Napa earthquake but who did not qualify for SBA emergency loan funds.
EBCF will have the formal relationship with Working Solutions as it will ultimately administer the monies raised in Alameda. The City will have a formal relationship with EBCF. The cost for administering the program will be one percent (1%) of the fund for EBCF and 13-15% for Working Solutions.
Alameda Strong Community Relief Program
Staff proposes the Alameda Strong Community Relief grants be split between three groups as follows:
• Alameda small businesses: 60% of the fund, including sole proprietors without limitations
• Alameda nonprofits: 20% of the fund
• Alameda renters: 20% of the fund
Staff proposes grants of $7,500 for businesses and non-profits and one month’s rent or a maximum of $2,500 for renters.
Staff proposes the following requirements for eligibility for an Alameda Strong Community Relief grant for businesses and non-profits:
• Applicant must show a 50% loss of income due to COVID-19 from March 16, 2020, to the application date
• Additional consideration should be given to an applicant that opened when allowed to open versus one that remained shuttered when it could have opened, businesses that were required to stay shuttered would not be penalized
• The applicant must be a small business or non-profit with up to twenty-five (25) employees, a restaurant (no limit on the number of employees), if applicant has more than one location in Alameda the applicant may have up to 50 employees
• A grantee may apply for grant that is less than $7,500, thus expanding the number of available grants
• The applicant must have a physical establishment or home-based business in Alameda
• The business must have a current Business License and have paid the Fiscal Year (FY) 2019-20 Business Improvement Area assessment if located in a Business Improvement Area
• The applicant must provide a completed Business W-9 form
• Applications must be submitted through the City’s required online portal
Staff proposes the following requirements for eligibility for an Alameda Strong Community Relief grant for renters:
• Applicant must submit his/her current Residential Lease Agreement in Alameda
• Applicant must verify COVID-19 financial impact (a loss of 20% or more in income)
• Applicant must verify that the Tenant’s rent was current immediately preceding March 4, 2020
• Applicant cannot receive both a CDBG grant and an Alameda Strong Community Relief grant
• Applicant must provide documentation from the landlord to confirm the amount of unpaid rent. Payments must be made directly to the landlord
• Application must be submitted through the City’s online portal
Marketing Alameda Strong Community Relief Fund
At the end of the stakeholder meeting referenced above, a marketing subcommittee was set up with one member of DABA and the Chamber, the City’s PIO and two members of WABA. This group is working together to create a campaign for the Alameda Strong Community Relief Fund. The campaign will include branding, a logo, a community kick-off and ways to acknowledge donors.
As of the writing of this report, staff is working to set-up the Alameda Strong Community Relief Fund. Shortly after receiving final direction from City Council staff will partner with the business associations to launch the Community Fund.
ALTERNATIVES
• Approve the proposed Alameda Strong Community Relief program as described in this report.
• Modify any of the proposed aspects of the Alameda Strong Community Relief program, such as revising the funding allocations for small businesses, non-profits and renters or any of the requirements for eligibility.
• Direct staff to use all, or a portion, of the $200,000 that was budgeted for rebranding, now proposed to be use for COVID-19 recovery planning, to augment the COVID-19 grant relief fund or assist in supporting the Alameda Strong Community Relief program.
• Direct staff to create and implement a loan program in lieu of a grant program.
• Decide not to establish an Alameda Strong Community Relief program at this time and reevaluate the need for such a program in the future.
FINANCIAL IMPACT
There is no financial impact on the General Fund from creating an Alameda Strong Community Relief Fund. All funding will be raised from donations. Marketing will be paid for out of the existing budget from funds not spent due to the COVID-19 shelter-in-place order. The City’s business associations will assist with the work.
There would be a financial impact on the General Fund if the City Council decides to use a portion of the reserves to augment the COVID-19 grant relief program (or seed the Alameda Strong Fund). Use of the reserves could lessen the City’s ability to respond to revenue short-falls due to the pandemic in the next fiscal year.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The Alameda Strong Community Relief Fund is consistent with the urgency ordinance declaring the local emergency. The Alameda Municipal Code (AMC) Chapter 2-24.2 defines a local emergency as “the actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within this jurisdiction… requiring the combined forces of other political subdivisions to combat.”
ENVIRONMENTAL REVIEW
The Alameda Strong Community Relief Fund is exempt from review under the California Environmental Quality Act Section 153 (not a project); and Section 15061(b)(3) (no significant environmental impact).
CLIMATE IMPACTS
Creating and administering an Alameda Strong Community Relief Fund does not generate adverse climate impacts.
RECOMMENDATION
Create an Alameda Strong Community Relief Fund to provide grants to small businesses, non-profits, and residents that have been negatively impacted financially by the COVID-19 pandemic.
CITY MANAGER RECOMMENDATION
The City Manager recommends support for creation of an Alameda Strong Community Relief Fund. If the City Council determines to put further City funds into small business assistance, I recommend it be used as a matching component to private donations such as for every $2 in private donations, $1 of City funds would match. As stated earlier the City has $200,000 to assist in a branding/marketing campaign. If the City wants matching funds, a portion could be used from that source.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Lois Butler, Economic Development Manager
Financial Impact section reviewed,
Nancy Bronstein, Human Resources Director and Interim Finance Director
cc: Eric Levitt, City Manager
Exhibit:
1. Summary of Applications Received for the COVID-19 Small Business Grant Program