Loading...
HomeMy WebLinkAbout01 - Coronavirus Relief Funds Grant Agreement and Small Business - CorrespondenceReceived After Agenda Printed June 1, 2020 klTheChamber Agenda Item No. 1 NEWPORT BEACH May 31, 2020 Mayor Will O'Neill Newport Beach City Council 100 Civic Center Drive Newport Beach, CA 92660 Re: June 1, 2020 Special Meeting Agenda Item No. 1 Coronavirus Relief Funds grant Agreement and Small Business Relief Grant Program Dear Mayor O'Neill and City Council Members: I have reviewed the City Staff Report for Agenda Item No. 1 on your June 1, 2020 Special Meeting Agenda and I urge the City Council to authorize the Mayor to execute Subrecipient Agreement. I want to thank the City Council and City Staff for acting quickly to receive the CARES Act funds that Supervisor Steel has allocated to the City of Newport Beach for grants to small businesses. Our small business community has suffered greatly due to the effects the government mandated shut down has had on the local economy. I also appreciate the opportunity I was offered to discuss the proposed program parameters with the Council Ad Hoc Committee to Address Commercial Re -Opening and Business Advancement. I look forward to a continued collaboration with City Staff on the development of the Grant Program guidelines. Understanding that staff had to move quickly to prepare the Staff Report and develop the preliminary guidelines for the Proposed Grant Program, I have several comments and recommendations regarding the implementation of the program. These are as follows: Eligibility in accordance with federal requirements 1. The 3 -month time period used to determine a decline in sales is not sufficiently defined. For some seasonal businesses, using the 3 month period immediately preceding may not be indicative of their revenue decline. It would be better to use a comparable period 12 CONNECTION. EDUCATION. COMMUNITY. ADVOCACY. 4343 Von Karman Avenue, Suite 150-W, Newport Beach, California 92660. Ph: (949) 729-4400. Fax: (949) 729-4417. www.newportbeach.com klTheChamberWPOA months prior if the business has been open at least one year.or the preceding 3 month period for qualification purposes for measuring the revenue decline 2. The criteria specifying one or more of the business' employees contracted COVID-19 at work would be very difficult to prove. The State of California has deemed that a rebuttable presumption arises for Worker's Compensation purposes that an employee diagnosed with coronavirus has contracted it at work. Perhaps this requirement should allow a grant application if an employee has contracted coronavirus and remove the "at work" requirement. Newport Beach Terms and Conditions 1. The requirement that the business must have a business license that has been active for at least six (6) months seems excessive. Any business that opened prior to March 1, 2020 would not be aware of the impending shutdown and should be eligible for the grant program. In addition, if this requirement remains unchanged, it is not clear from what date the six (6) month period begins. 2. The 20 or less full-time employee standard seems too restrictive for some small businesses, particularly restaurants. It is not clear at what point in time that the number of employees a business has is calculated. Is this 20 or more employees at the time of shut down or at the time of the grant application? It is also not clear when counting part- time employees if each employee counts as one employee or if a full time equivalent (FTE) standard will be used? 3. All business applicants should have a current business license and (not "or") be current on business improvement district assessments, if applicable. Grant Amounts 1. It is not clear from the three levels of grants whether a business can apply for an amount less than specified for the number of employees it has if anticipated costs are less than $5,000, $7,500 or $10,000. 2. The first category should be "5 employees or less" 3. As 1-5 employee businesses (micro -businesses) are particularly affected by the shutdown, I would suggest that perhaps a minimum of 25% of the available funds be set aside for micro -businesses. To the extent that the full 25% is not required to satisfy grant requests from micro -businesses, the remaining funds could be used for grants to larger businesses. Next Steps There is no clear definition of "costs incurred between March 1 and December 30, 2020." Staff should be given direction as to what costs are reimbursable. I would suggest these as follows: CONNECTION. EDUCATION. COMMUNITY. ADVOCACY. 4343 Von Karman Avenue, Suite 150-W, Newport Beach, California 92660. Ph: (949) 729-4400. Fax: (949) 729-4417. www.newportbeach.com klTheChamberWPOA ❖ Retrofitting of premises to allow for social distancing and the physical protection of employees and customers ❖ Store signage ❖ Marketing •3 COVID-19 related website upgrades ❖ Protective gear for employees (PPE) ❖ Implementation of California Guidelines for re -opening a business 2. Paragraph No. 3 contemplates a lottery system in the event that there are more grant funds applied for than funds available. I would suggest an alternative allocation method for discussion by Council. Perhaps the funds should be allocated on a pro -rata basis to all eligible grant applicants if the amount requested exceeds the amount available. 3. An additional step should be added requiring that if requested, the grant recipient will agree to an inspection to verify the proper expenditure of the grant funds. I would encourage the Council provide direction to City Staff to enlist the participation of leaders in the business community, including the Newport Beach Chamber of Commerce, for advice and guidance in developing the final program guidelines. Respectfully, Steven Rosansky President/CEO CONNECTION. EDUCATION. COMMUNITY. ADVOCACY. 4343 Von Karman Avenue, Suite 150-W, Newport Beach, California 92660. Ph: (949) 729-4400. Fax: (949) 729-4417. www.newportbeach.com Received After Agenda Printed June 1, 2020 Agenda Item No. 1 June 1, 2020, Council Special Meeting Comments The following comments on items on the Newport Beach City Council agenda are submitted by: Jim Mosher ( iimmosher(@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item V. Public Comments on Non -Agenda Items The agenda's listing of the meeting time as "12:00 PM" could cause confusion among those to whom that means midnight. It would have seemed safer to say 12:00 noon." Item 1. Coronavirus Relief Funds Grant Agreement and Small Business Relief Grant Program 1. Given the many possibilities and as yet unresolved details as to how it might work, I strongly recommend the Council not adopt recommendation "c" as written by staff (on page 1-1), but rather direct the City Manager to bring back for further review and approval her Small Business Relief Grant Program plan for spending the $2,123,426.69. 2. The assurance under "Funding Requirements" that "There is no direct fiscal impact related to this item" seems a bit strong. There is a possibility funds spent in a way deemed out of compliance with federal guidelines might have to be returned, and there is no certainty the City could recover them. 3. As the staff report indicates (page 1-2), on May 26 (see minutes), the Board of Supervisors agreed to allocate funds to cities (which could potentially be used for many purposes) for "economic support initiatives." It seems to have been Supervisor Steel's decision to further restrict use of the District 2 city funds as going directly to "small businesses." 4. The May 26 action also gave the individual supervisors authority to define the term "small business" in a way unique to their district. Supervisor Steel's definition in the Agreement (Attachment A, page 1-9) seems to conform to the County one. But City staff evidently plans to further restrict the definition as indicated on page 1-4. a. None of the definitions are clear as to how "employees" are counted, which is critical to how large a grant a specific business is eligible for. In particular, how are people who work for a business, but only occasionally or part-time, counted? i. Even given that uncertainty, it is unclear why City staff reduced eligibility from 100 employees to 20 employees without reducing the County's cap on annual gross receipts ($15 million). b. It is also not clear why City staff restricts eligibility to for-profit business. c. City staff's further restriction to businesses "located in a commercial or industrial space" arguably would make businesses in mixed-use districts ineligible (assuming this refers to the districts defined in Part 2 of the City's Zoning Code). It definitely appears intended to bar the one business class most directly affected by the City's own discretionary emergency actions: the short-term lodging businesses. June 1, 2020, City Council special meeting comments - Jim Mosher Page 2 of 2 5. The staff report provides no estimate of how many businesses staff thinks might be eligible, or for how much funding they could be eligible for. If staff's prediction that the program will be oversubscribed is correct,' it is unclear how the lottery contemplated on page 1-5 would work. a. Would all requests from retail, restaurant and personal service establishments be fulfilled before any requests from any other kinds of business are considered? Or would the higher priority businesses be given multiple lottery tickets compared to lower priority ones? b. Is the lottery to be held on some fixed future date, with no requests at all being granted prior to the drawing? Or is it held only after it becomes apparent the funds have been exhausted (in which case a lottery to distribute the zero balance seems pointless)? 6. The reference on page 1-7 to "a novel coronavirus (named "COVID-19')" makes the common error of confusing the virus, originally called the "2019 novel coronavirus" but later renamed "SARS-CoV-2", with "COVID-19," the disease it causes. COVID-19 has never, technically, been the name of the virus. 7. The copy of the Agreement (provided as Attachment A to the staff report) is missing two important exhibits referred to on page 1-10: the Department of Treasury's Guidance for State, Territorial, Local, and Tribal Governments dated April 22, 2020 (Exhibit A) and Coronavirus Relief Fund Frequently Asked Questions updated as of May 4, 20202 (Exhibit B). 8. Although the federal government seems to operate under different rules, and this seems to be the implementation of a federal program, California generally abhors gifts of public funds.3 It would be good to see the argument for this grant program having been tailored to ensure that in all cases it provides a public benefit and not a purely private one. ' This is not as obvious as it might seem. Some of the free facade improvement funds dedicated to Balboa Village have gone begging. 2 There is now a May 28 version, as well, with several extra pages. 3 Generally prohibited by the state constitution (Article 16, Section 6), but legally, and troublingly, not applicable to charter cities unless they adopt such a provision, which Newport Beach voters never have. Received After Agenda Printed June 1, 2020 Agenda Item No. 1 June 1, 2020 Mayor Will O'Neill City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Re: Agenda Item No. 1 --Coronavirus Relief Funds Grant Agreement and Small Business Relief Grant Program Dear Mayor O'Neill and City Council Members: As a group of former Newport Beach Mayors and Councilmembers concerned with the safe recovery of Newport Beach, we have reviewed the proposed Coronavirus Relief Funds Grant Agreement and Small Business Relief Grant Program and urge the City Council to approve these two items. We feel that a quick rollout of this program will be most beneficial for our local businesses which have been hit hard by the pandemic. Businesses that have been shut down for many weeks are in need of assistance and this program will be of great benefit to them. Quick access to the funds is most important to assist these businesses. Please approve these items and direct staff to proceed expeditiously. Respectfully, Edward Selich Steve Rosansky Keith Curry Mike Henn Don Webb Tony Petros Rush Hill Nancy Gradner Received After Agenda Printed June 1, 2020 Agenda Item No. 1 June 1, 2020, Council Special Meeting Comments The following comments on items on the Newport Beach City Council agenda are submitted by: Jim Mosher ( iimmosher(@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item V. Public Comments on Non -Agenda Items The agenda's listing of the meeting time as "12:00 PM" could cause confusion among those to whom that means midnight. It would have seemed safer to say 12:00 noon." Item 1. Coronavirus Relief Funds Grant Agreement and Small Business Relief Grant Program 1. Given the many possibilities and as yet unresolved details as to how it might work, I strongly recommend the Council not adopt recommendation "c" as written by staff (on page 1-1), but rather direct the City Manager to bring back for further review and approval her Small Business Relief Grant Program plan for spending the $2,123,426.69. 2. The assurance under "Funding Requirements" that "There is no direct fiscal impact related to this item" seems a bit strong. There is a possibility funds spent in a way deemed out of compliance with federal guidelines might have to be returned, and there is no certainty the City could recover them. 3. As the staff report indicates (page 1-2), on May 26 (see minutes), the Board of Supervisors agreed to allocate funds to cities (which could potentially be used for many purposes) for "economic support initiatives." It seems to have been Supervisor Steel's decision to further restrict use of the District 2 city funds as going directly to "small businesses." 4. The May 26 action also gave the individual supervisors authority to define the term "small business" in a way unique to their district. Supervisor Steel's definition in the Agreement (Attachment A, page 1-9) seems to conform to the County one. But City staff evidently plans to further restrict the definition as indicated on page 1-4. a. None of the definitions are clear as to how "employees" are counted, which is critical to how large a grant a specific business is eligible for. In particular, how are people who work for a business, but only occasionally or part-time, counted? i. Even given that uncertainty, it is unclear why City staff reduced eligibility from 100 employees to 20 employees without reducing the County's cap on annual gross receipts ($15 million). b. It is also not clear why City staff restricts eligibility to for-profit business. c. City staff's further restriction to businesses "located in a commercial or industrial space" arguably would make businesses in mixed-use districts ineligible (assuming this refers to the districts defined in Part 2 of the City's Zoning Code). It definitely appears intended to bar the one business class most directly affected by the City's own discretionary emergency actions: the short-term lodging businesses. June 1, 2020, City Council special meeting comments - Jim Mosher Page 2 of 2 5. The staff report provides no estimate of how many businesses staff thinks might be eligible, or for how much funding they could be eligible for. If staff's prediction that the program will be oversubscribed is correct,' it is unclear how the lottery contemplated on page 1-5 would work. a. Would all requests from retail, restaurant and personal service establishments be fulfilled before any requests from any other kinds of business are considered? Or would the higher priority businesses be given multiple lottery tickets compared to lower priority ones? b. Is the lottery to be held on some fixed future date, with no requests at all being granted prior to the drawing? Or is it held only after it becomes apparent the funds have been exhausted (in which case a lottery to distribute the zero balance seems pointless)? 6. The reference on page 1-7 to "a novel coronavirus (named "COVID-19')" makes the common error of confusing the virus, originally called the "2019 novel coronavirus" but later renamed "SARS-CoV-2", with "COVID-19," the disease it causes. COVID-19 has never, technically, been the name of the virus. 7. The copy of the Agreement (provided as Attachment A to the staff report) is missing two important exhibits referred to on page 1-10: the Department of Treasury's Guidance for State, Territorial, Local, and Tribal Governments dated April 22, 2020 (Exhibit A) and Coronavirus Relief Fund Frequently Asked Questions updated as of May 4, 20202 (Exhibit B). 8. Although the federal government seems to operate under different rules, and this seems to be the implementation of a federal program, California generally abhors gifts of public funds.3 It would be good to see the argument for this grant program having been tailored to ensure that in all cases it provides a public benefit and not a purely private one. ' This is not as obvious as it might seem. Some of the free facade improvement funds dedicated to Balboa Village have gone begging. 2 There is now a May 28 version, as well, with several extra pages. 3 Generally prohibited by the state constitution (Article 16, Section 6), but legally, and troublingly, not applicable to charter cities unless they adopt such a provision, which Newport Beach voters never have.