To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Kristin Read, Assistant Town Manager
Title
Discussion/Direction: Additional COVID-19 Small Business Support Grant Awards
Body
________________________________________________________________________________
Executive Summary
At the October 6, 2020, Town Council meeting, Council awarded grants for the second-round COVID-19 Small Business Support Grant Program. When approving the awards, Council also directed staff to “review additional businesses that may be qualified based on the classification of being a personal service as opposed to being a professional service.” Council’s direction was that this review should apply to both the first- and second-round grants and should include an examination of the State executive orders in terms of what businesses were closed and which were allowed to open during the “Safe at Home” period. Staff has undertaken that review and provides additional information for Council to consider potential additional grant awards.
Discussion
The Town’s grant programs included the following criteria:
• Ineligible businesses include liquor stores; auto- and construction-related businesses; regional businesses with more than five locations in Colorado; professional service businesses; and nonprofit organizations.
In the first round of grants, 42 businesses were determined ineligible due to the grant review committee’s assessment that they were professional service businesses. In the second round, nine businesses were determined ineligible by the committee per that criteria.
When notified by staff of the committee’s recommendation, an acupuncture business raised the point that it had to be fully closed during the “Safe at Home” period, whereas other healthcare-type businesses did not.
In examining online information related to the order - see Pages 7 and 8 of Attachment A -acupuncture was on the “No” (not allowed to be open) list, while some other businesses deemed ineligible by the grant review committee for being a professional service were on the “Yes” (allowed to be open) list. Some were not addressed on either list, as it is noted the list is not all-inclusive. Additional information Council may wish to review - including the “Stay at Home” order; an order ceasing elective medical procedures; Secretary of State information on professional services; and personal service information from the State relative to COVID - is also available in Attachment B.
Staff believes it is of interest to Council whether an applicant business was actually closed during the stay-at-home period. This information was not collected on applications for the second-round grants, the focus of which was financial impacts from May-August. In reviewing available information, staff believes at least half of the nine businesses denied as professional services were closed in March/April.
The first-round grant application asked applicants whether they had experienced a business closure as a result of the pandemic. Of the 42 businesses denied as a professional service, 22 said they had experienced a closure, while 20 said they had not. Six of the 22 that reported experiencing a closure did note that they were allowed to still perform emergency services.
Staff did not factor this closure information into the options outlined in the sections below but can delineate additional options using this information as Council desires.
Considering all of the available information, it becomes difficult for staff to make clear and consistent distinctions regarding which types of businesses should be eligible for grants. Therefore, staff does not have a recommendation on additional awards but rather provides the following options for Council decision-making.
Second-round options
Given the smaller number of applicants for the second-round grants - and that all grants awarded were for the same amount - Council’s options when considering additional awards are more straightforward here than on the first round.
Two acupuncture businesses were deemed ineligible as professional services in the second round.
If Council wishes the Safe at Home “Yes/No” list to be considered in determining eligibility, then these businesses would qualify for grants, totaling an additional $10,000 in awards. This is Option 1.
The remaining seven businesses determined ineligible as professional services during round two were:
• CPA - financial services are on the “Yes” list with no qualifiers
• Chiropractor - on the “Yes” list, but with “limited circumstances”
• Dentists (two) - on the “Yes” list under “emergency dental procedures” and on the “No” list under “routine dental procedures”
• Physical therapy clinic - health care operations are on the “Yes” list with no qualifiers
• A staffing agency and a testing laboratory - these types of businesses are not addressed on the Yes/No list
Council may wish to award grants to none, some or all of these seven businesses. Adding any of them would be Option 2, under which Council should provide specific direction on which to include. If awarding all businesses denied as a professional service during the second round, including the two acupuncture businesses, the total additional awards would be $45,000. This and additional information is summarized in an abbreviated format in Attachment C, and detailed listing of the applicants and the presented grant options are in Attachment D.
First-round alternatives
Options become much more complex when examining the 42 businesses denied as professional services in the first-round grant program, which also had the criteria:
• Categories of priority businesses include storefront retail, restaurants/food shops, and personal care small businesses (barbers, hair and nail salons, etc.)
In addition to being based upon whether the business was a “priority business,” as detailed above, award amounts were based upon sales tax remittance. Further, not all applicants requested the full $5,000 available grant amount, which also led to variable award amounts.
Paralleling the options above, to include only the excluded acupuncturists would mean awarding grants to four businesses that had previously been deemed ineligible. This is Option 1. If Council finds these are priority personal care businesses, the awards to these businesses based upon their sales tax remittance would be $1,250, $2,500 (2) and $3,750 - this is Alternative A, which totals $10,000. If Council does not consider these priority businesses, the awards would be $500 and $1,000 (3). This is Alternative B, which totals $3,500.
The remaining 38 businesses deemed ineligible as professional services in the first round had a variety of business types:
• Chiropractor - on the “Yes” list under “limited circumstances”; seven total - three of these had sales tax remittance during 2019, all of less than $2,500, so if found a priority business, these would have $12,000 in awards based upon their requests under Alternative A, and if found a non-priority business, these would have $5,000 in awards under Alternative B
• Dental (includes an endodontist, orthodontist and oral surgeon) - on the “Yes” list under “emergency dental procedures” and on the “No” list under “routine dental procedures” -
10 total - none of these had sales tax remittance during 2019, so if found a priority business,
these would have $12,500 in awards under Alternative A, and if found a non-priority business, these would have $5,000 in awards under Alternative B
• Eye care - not addressed on the Yes/No list; five total - two of these had sales tax remittance during 2019 of less than $2,500, so if found a priority business, these would have $8,750 in awards under Alternative A, and if found a non-priority business, these would have $3,500 in awards under Alternative B
• Financial - on the “Yes” list with no qualifiers; three total - none of these had sales tax remittance during 2019, so if found a priority business, these would have $3,375 in awards based upon their requests under Alternative A, and if found a non-priority business, these would have $1,500 in awards under Alternative B
• Health care/mental health/physical therapy - on the “Yes” list with no qualifiers; six total -
none of these had sales tax remittance during 2019, so if found a priority business, these would have $6,950 in awards based upon their requests under Alternative A, and if found a non-priority business, these would have $3,000 in awards under Alternative B
• An insurance business, a sales business and a staffing agency - not addressed on the Yes/No list - one each, for three total - none of these had sales tax remittance during 2019, so if found a priority business, these would have $3,750 in awards under Alternative A, and if found a non-priority business, these would have $1,500 in awards under Alternative B
• Travel - not addressed on the Yes/No list; two total - one of these had sales tax remittance during 2019 of less than $2,500, so if found a priority business, these would have $3,492.50 in awards based upon their requests under Alternative A, and if found a non-priority business, these would have $1,500 in awards under Alternative B
• Veterinary - animal services are on the “Yes” list with no qualifiers; two total - one of these had sales tax remittance in 2019 of more than $5,000, so if found a priority business, these would have $6,250 in awards under Alternative A, and if found a non-priority business, these would have $1,500 in awards under Alternative B
Council may wish to award grants to none, some or all of these 38 businesses. Adding any of them would be Option 2, under which Council should provide specific direction on which to include. If including all denied as a professional service during the first round as priority businesses - including the four acupuncture businesses - the total additional awards could total as much as $67,067.50. (Again, these options are summarized in Attachments C and D.)
Additional considerations
Another component to Council’s direction provided on October 6 was to open applications up to businesses that the State shut down and/or qualified as a personal service. This is because of the chance that some businesses that may now become eligible did not apply during the second round of grants due to being determined ineligible during the first round.
Staff did not believe it prudent to reopen applications until after tonight’s discussion provided further clarity regarding which businesses Council finds eligible. If Council wishes to reopen the second-round grants to certain classes of businesses, staff would appreciate direction tonight in clarifying criteria and would suggest the following program schedule:
• Monday, Oct. 26 - Grant applications open
• Friday, Nov. 6 - Grant applications close at 5 p.m.
• Monday, Nov. 9 - Review team meets to consider applications and form recommendations
• Thursday, Nov. 12 - Review team recommendations published at CRgov.com/BusinessGrants by 5 p.m.
• Tuesday, Nov. 17 - Town Council considers recommendations and awards grants
• Late November - Granted funds are mailed to receiving businesses
Another alternative to reopening applications would be to instead open an appeals period in which any applicant not awarded a grant could submit a request for reconsideration. If choosing this approach, staff would urge Council to develop consistent criteria for use in determining any awards.
To qualify for reimbursement under the CARES Act, grants would need to be awarded by December 30.
Proposed Motions
“I move to direct staff to award additional second-round grants under
Option 1, which would include an additional $10,000 in awards
Option 2, to NAME TYPE(S) businesses, which would include an additional $____ in awards.”
“I move to direct staff to award additional first-round grants under
Option 1
A, which would include an additional $10,000 in awards
B, which would include an additional $3,500 in awards.”
Option 2, to NAME TYPE(S) businesses
For each type: This business SHOULD/NOT be considered a priority business
This would include an additional $____ in awards.”
“I move to direct staff to
Reopen the second-round grants to NAME TYPE(S) businesses as presented.
Open an appeals period so applicants not awarded grants can request reconsideration.”
Attachments
Attachment A: State Stay at Home Order Information
Attachment B: Additional Information on Closure and Personal/Professional Services
Attachment C: Grant Options Summary
Attachment D: Grant Options Detail