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HomeMy WebLinkAboutItem 12a - ARPA Allocations for Economic Development DATE: September 6, 2022 TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director By: Tim Schwehr, Economic Development Manager SUBJECT: ALLOCATE A TOTAL OF $1 MILLION IN AMERICAN RESCUE PLAN ACT (“ARPA”) FUNDS FOR ECONOMIC DEVELOPMENT/BUSINESS STIMULUS PURPOSES FOR THE ARPA SMALL BUSINESS GRANT PROGRAM AND THE ARPA SMALL BUSINESS PERMIT ASSISTANCE PROGRAM Recommendation: Approve SUMMARY In March 2022, the City Council directed staff to proceed with allocating $1 million in American Rescue Plan Act (“ARPA”) funds towards a Small Business Grant Program and Small Business Permit Assistance Program. The ARPA Small Business Grant Program will provide eligible businesses with up to $10,000 to complete façade improvements, new signage, interior renovations, marketing and branding initiatives, and other related items. The ARPA Small Business Permit Assistance Program will pay up to $5,000 in building permit and/or planning application fees related to opening, expanding, or renovating a small business. It is recommended that the City Council approve the allocation of $1 million in ARPA funds for Economic Development/Business Stimulus purposes for the ARPA Small Business Grant Program and the ARPA Small Business Permit Assistance Program. BACKGROUND The City has been notified it will receive $8,865,000 in funding through the American Rescue Plan Act (“ARPA”). The funding is available to use for various purposes, including economic and financial assistance. At a Council study session held on March 1, 2022, there was consensus to move forward with a series of recommendations for use of City ARPA funds. This included a total of $1,550,000 in funding for five economic development and financial assistance programs aimed at helping residents and businesses financially impacted by the COVID-19 pandemic. It was further agreed at this meeting that details on each program would be returned to the City Council for their review and approval. Additionally, based on City Council input and further research into anticipated demand ARPA Allocations for Economic Development September 6, 2022 Page 2 of 5 and expenditures, $750,000 is now being recommended for allocation to the Small Business Grant Program and $250,000 to the Permit Assistance Program, in lieu of the $500,000 initially proposed for each program. The table below shows the allocation amount and current status of each program that was authorized by the City Council for economic development/business stimulus. Program Funding Status Small Business Grant Program $750,000* Pending Small Business Permit Assistance Program $250,000* Pending Merry & Bright Holiday Shopping Program $250,000 $100,000 spent during the 2021 Holiday Season. $150,000 remains. Homeless Prevention & Diversion Program $250,000 Approved by City Council in May 2022. Funds disbursed. Downtown Arcadia Broadband Study $50,000 RFP released in July 2022. Contract to City Council later this year. Total $1,550,000 * Originally proposed at $500,000 each DISCUSSION A total of $1 million in ARPA funds is recommended to be allocated to the Small Business Grant Program and the Small Business Permit Assistance Program. The goal of these programs is to provide various options for the business community to make improvements to their physical spaces, better position themselves in a changing economic environment, and to help incentivize active participation in making individual businesses more attractive and viable. Small businesses were the hardest hit during the COVID-19 pandemic and these funds are intended to provide direct support. Businesses may participate in both programs provided they meet the individual eligibility requirements of each program. A discussion of each program is provided below and draft program guidelines with additional details are included as Attachments “A” and “B” to this report. These guidelines will continue to be refined prior to release. ARPA Small Business Grant Program A total of $750,000 in ARPA funding is proposed for allocation to the ARPA Small Business Grant Program. This program will provide grants of up to $10,000 to qualified “Tier 1” category businesses, and up to $5,000 to qualified “Tier 2” category businesses. Tier 1 category businesses will consist of all retail, restaurants, gastropubs and bars, non- restricted personal service uses, live entertainment businesses, and other related business types that have also been open a minimum of one year. In addition to exterior improvements, Tier 1 businesses will be eligible to use grants for interior renovations, expenses related to updating or establishing a business website or hiring a consultant to implement new digital marketing initiatives expenditures related to updates to a business’s branding or logo (i.e., graphic artist or other paid consultant), and other items ARPA Allocations for Economic Development September 6, 2022 Page 3 of 5 aimed at improving the online and digital presence of a business. Total expenditures for all non-construction related items, however, shall be limited to no more than $5,000. The criteria selected for Tier 1 participation is intended to meet the following objectives: 1. Direct the majority of the small business grant funding to the types of businesses most highly impacted by the COVID-19 pandemic, including those impacted by the public health restrictions limiting in-person activities; 2. Prioritize funding for retail and other business categories that generate the most in-person customer activity and foot traffic to the City’s commercial areas; and 3. Prioritize sales tax generating uses. Tier 2 category businesses consist of the remainder of businesses meeting the minimum eligibility requirements outlined in the program guidelines. These require that a business is independently owned and operated, located within a commercial or mixed-use zone, have no more than 50 (full-time) employees, and have a bona fide commercial storefront (i.e. direct public entrance from the exterior of a building). Additionally, adult-oriented businesses, massage parlors, pawn shops, and bail bond offices are prohibited from participating in this program. Tier 2 businesses are eligible to receive a grant of up $5,000. Use of grant funding shall be restricted to exterior improvements only with the objective of focusing funding for Tier 2 businesses on items that also make a positive contribution to the appearance of the City’s commercial areas. Following approval by the City Council, the City will transfer $750,000 in ARPA funding to a financial account established for this program. Following outreach to the Arcadia business community, an application submittal period will begin with grant applications submitted to the Development Services Department. Businesses will be required to outline on their application how they intend to use the funding and provide a rough cost estimate. Following an initial 60-day open application period, the Development Services Department will review all applications received prior to the submittal deadline. Grants will be awarded based on the criteria outlined in the program guidelines. In its current draft form, the guidelines include the following criteria: • The potential of the proposal to positively impact in-person customer activity and sales at the subject business. This includes whether or not the proposed use of funds is something new or a continuation of an existing initiative, and the Development Services Department’s overall evaluation of the merits and how impactful the proposed project would be. • The potential positive impact of the project for the surrounding business district. This includes the potential to attract additional customers to the area, increase foot traffic, and/or positively contribute to the overall appearance of the commercial area. ARPA Allocations for Economic Development September 6, 2022 Page 4 of 5 • The anticipated positive impact of the project to the City. This includes increasing sales tax revenue, positively contributing to the overall appearance of the City, and/or meeting other specific City goals and objectives. • A nexus to the COVID-19 pandemic and post-pandemic recovery. This includes items like expanding or make permanent outdoor seating areas, interior modifications to promote enhanced health and safety for customers and employees, and other items or initiatives related to “the new normal” of doing business post-onset of COVID-19 in March 2020. Businesses approved for grants will then be required to submit a detailed cost estimate for review and approval prior to issuance of grant funding. Participating businesses will be issued 50% of the estimated cost of their project upfront. The remainder will be disbursed upon project completion, and the second disbursement adjusted, as needed, based on actual costs and submittal of receipts. ARPA Small Business Permit Assistance Program A total of $250,000 in ARPA funding is proposed for allocation to the ARPA Small Business Permit Assistance Program. Funding allocated to this program will pay for up to $5,000 in planning application fees and/or building permit fees for small businesses when opening a new business, expanding a current business, or making physical improvements to their existing place of business. Planning application fees paid through this program will include those for Conditional Use Permits ($3,000), Minor Use Permits ($1,225), design review of major façade improvements ($1,525), design review of new business signage ($400), and other common business entitlements. Eligible building permit fees paid through this program include fees for plan check review, tenant improvement permits, and fees for other permit and inspections required when building out or renovating a commercial space. The eligibility requirements for the ARPA Small Business Permit Assistance Program are similar to the requirements outlined earlier in this report for Tier 1 of the ARPA Small Business Grant Program. Specifically, to participate a business will need to be a retail use, restaurant, gastropub or bar, non-restricted personal service use, live entertainment business, or other similar business type. This program also requires that a business be independently owned and operated, located in a commercial or mixed-use zone, have a bona fide commercial storefront (direct public access from the exterior of building), and have 50 or less (full-time) employees. Following approval by the City Council, the City will transfer $250,000 in ARPA funding to a financial account established for this program. Fees paid through this program will be charged directly from the established program account, which will help to streamline program management and tracking of expenses. Interested businesses will be required to submit a program application to the Development Services Department for review and ARPA Allocations for Economic Development September 6, 2022 Page 5 of 5 approval. Applications will be accepted on an ongoing basis with a maximum $5,000 limit per business over the life of this program. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), as it can be seen with certainty that it will have no impact on the environment. Thus, this matter is exempt under CEQA. FISCAL IMPACT The City has been allocated a total of $8,865,000 in American Rescue Plan Act (“ARPA”) funding available to use for various purposes, including economic assistance. Allocating $1,000,000 of the City’s ARPA funds to the two programs outlined above is an appropriate use of ARPA funding consistent with the American Rescue Plan Act objective to provide economic assistance to residents and businesses impacted by the COVID-19 pandemic. No General Funds, other than staff time, will be utilized for these programs. RECOMMENDATION It is recommended that the City Council determine that this action does not constitute a project and is, therefore, exempt under, the California Environmental Quality Act (“CEQA”); and approve the allocation of $1 million in American Rescue Plan Act (“ARPA”) funds for Economic Development/Business Stimulus purposes for the ARPA Small Business Grant Program and the ARPA Small Business Permit Assistance Program. Attachment “A”: ARPA Small Business Grant Program Guidelines (Draft) Attachment “B”: ARPA Small Business Permit Assistance Program Guidelines (Draft) City of Arcadia ARPA Small Business Grant Program Guidelines and Requirements Attachment "A" Introduction: The ARPA Small Business Grant program provides grants of up to $10,000 to existing Arcadia small businesses for one or more of the purposes outlined below. To participate, a small business shall submit a program application to the Development Services Department for review and approval. Grants are awarded based on the consistency of the proposed project with program guidelines and requirements, and subject to funding availability. American Rescue Plan Act (ARPA) Background: The ARPA Coronavirus State and Local Fiscal Recovery Funds provide a substantial infusion of resources to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery. The allocation to the City of Arcadia totaled $8,864,856. One allowable use of these funds is to provide financial assistance to small businesses to assist them and the community at large with economic recovery. In September 2022, the Arcadia City Council approved the allocation of $750,000 in ARPA funds for the ARPA Small Business Grant Program. Program Eligibility Requirements: Tier 1: • Located within the city limits of Arcadia • Independently owned and operated businesses • Open and operating in Arcadia for a minimum of one-year prior to grant application submittal • Classified as a retail use, restaurant, recreation or entertainment use, gastropub or bar, personal service (general) use, or other related use based on the City of Arcadia Development Code • No more than 50 full-time equivalent (FTE) employees • Located at a commercial or mixed-use zoned property 1 • Has a bona fide ground-floor commercial storefront 2 Tier 2: • Located within the city limits of Arcadia • Independently owned and operated businesses • Classified as a professional office, medical office, light industrial use, personal service (restricted) use, Tier 1 category business open less than one-year, or other related use based on the City of Arcadia Development Code • No more than 50 full-time equivalent (FTE) employees • Located at a commercial or mixed-use zoned property1 • Has a bona fide ground-floor commercial storefront2 Eligibility Exclusions: • Any national chain that is not locally franchised • Businesses with no bona fide ground-floor commercial storefront • Businesses located in residential zones • Any adult business, massage parlor, pawn shop, bail bond service, or other related use based on the City of Arcadia Development Code • Businesses located outside the city limits of Arcadia 1 Commercial or Mixed-Use Zoned Property includes all types of commercial, industrial, and mixed-use zoning 2 Bona fide ground-floor commercial storefront is defined as a ground-floor direct public entrance to the outside of the building. Funding Limits and Permitted Use of Funds: Businesses meeting Tier 1 requirements are eligible for up to $10,000 in grant funding. Funds may be used for the following purposes: • Interior or exterior improvements to their place of business • New exterior signage • Outdoor seating and dining areas (food and beverage businesses) • Hiring a consultant to update a business website, implement new digital marketing initiatives, update a business’s branding or logo, and other similar items (maximum of $5,000). Please note that payments to media companies for print or online advertising is not an eligible expense. Any direct advertising expenses related to the approved grant funded project are required to be paid solely by the business owner at their expense. • Other items not listed above, but determined to be consistent with the program objectives of assisting small businesses to improve the interior and exterior of their place of business, or improving a business’s online and digital presence. Businesses meeting Tier 2 requirements are eligible for up to $5,000 in grant funding. Funds may be used for the following purposes: • Exterior improvements to their place of business • New exterior signage • Other items not listed above, but determined to be consistent with the program objective of assisting Tier 2 small businesses to improve the appearance of their place of business as viewed from the public realm Processing & Approval: Grant applications are processed by the Development Services Department and awarded based on the consistency of the proposed use of funds with the following criteria: • The potential of the proposal to positively impact in-person customer activity and sales at the subject business. This includes whether the proposed use of funds it is something new rather than just a continuation of an existing initiative, and the Development Services Department’s overall evaluation of the merits and potential impact of the proposed project. • The potential positive impact of the project for the surrounding business district. This includes the potential to attract additional customers to the area, increase foot traffic, or positively contribute to the overall appearance of the surrounding commercial area. • The anticipated positive impact of the project to the City. This includes the potential to increase sales tax revenue, make a positive contribution to the appearance of the city and public realm, or meet other specific city goals and objectives. • The proposed use of funds nexus to the COVID-19 pandemic and post-pandemic recovery. This includes items to expand or make permanent outdoor seating areas, interior modifications to promote enhanced health and safety for customers and employees, and other items or initiatives related to “the new normal” of doing business since the onset of the pandemic. Grants shall be issued only to conduct the specific improvements and initiatives approved. Grant amounts shall be based on a detailed cost estimate to be provided by the participant following the City’s initial review of their application. Following grant approval, an initial disbursement of 50% of the estimated project cost will be issued to the program participant. The remaining funds shall be disbursed at the time of final project completion and adjusted, as needed, based on actual expenses incurred and verified through submittal of receipts. Final grant amounts shall not exceed the maximum permitted amount for each tier, or exceed the initial approved grant amount for the project by more than 5% without prior City authorization. City of Arcadia ARPA Small Business Permit Assistance Program Guidelines and Requirements Attachment "B" Introduction: The ARPA Small Business Permit Assistance Program provides up to $5,000 in funding to help pay for planning application fees and/or building permit fees for qualified small businesses to assist with opening a new business, expanding an existing business, or remodeling the interior or exterior of their current location (commercial space). To participate, a small business shall submit a program application to the Development Services Department for review and approval, subject to the program requirements listed below. American Rescue Plan Act (ARPA) Background: The ARPA Coronavirus State and Local Fiscal Recovery Funds provide a substantial infusion of resources to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery. The allocation to the City of Arcadia totaled $8,864,856. One allowable use of these funds is to provide financial assistance to small businesses to assist them and the community at large with economic recovery. In September 2022, the Arcadia City Council approved the allocation of $250,000 in ARPA funds for the Small Business Permit Assistance Program. Program Eligibility Requirements: • Located within the city limits of Arcadia • Independently owned and operated businesses • Classified as a retail business, restaurant, recreation or entertainment use, gastropub or bar, general personal service business, or other related use based on the City of Arcadia Development Code • No more than 50 full-time equivalent (FTE) employees • Located at a commercial or mixed-use zoned property 1 • Has a bona fide ground-floor commercial storefront 2 Eligibility Exclusions: • Any national chain that is not locally franchised • Businesses with no bona fide ground-floor commercial storefront • Businesses located in residential zones • Any adult business, massage parlor, pawn shop, bail bond service, or other use inconsistent with the program eligibility requirements outlined above • Businesses located outside the city limits of Arcadia Funding Limits and Permitted Use of Funds: Funding allocated to this program will pay up to $5,000 in planning application fees and/or building permit fees for small businesses when opening a new business, expanding a current business, or making physical improvements to their existing place of business. Planning application fees include those for Conditional Use Permits ($3,000), Minor Use Permits ($1,225), Design Review of major façade improvements ($1,525), Design Review of new business signage ($400), and other commonly required business entitlements. Eligible building permit fees include fees for plan- check review, tenant improvement permits, and other construction permit and inspection fees required when building out or renovating an existing commercial space. Processing & Approval: Program applications shall be submitted to the Development Services Department for review. Applications will be accepted on an ongoing basis with approval subject to funding availability and consistency with the program guidelines and requirements. A business may receive a maximum of $5,000 in reduced fees over the life of this program. 1 Commercial or Mixed-Use Zoned Property includes all types of commercial, industrial, and mixed-use zoning 2 Bona fide ground-floor commercial storefront is defined as a commercial space that has a ground-floor direct public entrance to the outside of the building.