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Council Still to Approve Small Business COVID Recovery Grants

Dec 22, 2021 12:00AM ● By Story by Shaunna Boyd

CITRUS HEIGHT, CA (MPG) - At a recent meeting, the Citrus Heights City Council considered next steps for allocating the federal American Rescue Plan Act (ARPA) funding to support COVID recovery in Citrus Heights. The City’s total funding award is $15.6 million. The first installment of $7.8 million was received in May 2021, and $5.3 million was allocated in Phase 1 to restore staffing at the Citrus Heights Police Department. The final $7.8 million installment is expected in May 2022, but the current available funding totals $2.4 million.

Economic Development and Communications Manager Megan Huber said Phase 2 will focus on COVID recovery grants for small businesses in Citrus Heights, in addition to a separate funding category for the recovery of the travel, tourism, and entertainment industry, which has experienced significant impacts throughout the pandemic.

Huber said that new and renewed business licenses increased in 2021, “which means there is great entrepreneurship activity happening. Small businesses are staying resilient and active.” Citrus Heights has a majority of small businesses, with 87% of businesses having fewer than 20 employees. Huber said a review of business licenses showed 1,518 commercial businesses and 1,666 home-based business, which is a high level of home-based businesses for a city of this size.

At the beginning of December, the economic development department distributed a business survey to determine the level of COVID impact on local businesses. The survey is still ongoing, but Huber said preliminary results show that the biggest COVID impact to businesses has been reduction in revenue, with almost 70% of businesses reporting at least 15% revenue loss.

Citrus Heights Chamber of Commerce Executive Director Dianne Ebbitt spoke at the meeting, sharing the struggles of local business owners: “Our businesses are hurting because of the COVID pandemic. They struggle every day to keep their doors open … It’s been devastating to our businesses.”

“These businesses need help,” said Ebbitt, “Making the ARPA funds available to the Citrus Heights businesses would help lift a huge burden.”

Scott Angel of STORE Capital, the group that owns 8505 Auburn Blvd.—better known as the vacant Studio Movie Grill site—submitted a comment to the City Council, stating that the stalled project negatively impacts the surrounding businesses. STORE Capital foreclosed on the location in mid-2021, after Studio Movie Grill declared bankruptcy and abandoned the project in 2020.

Angel said that ARPA funds earmarked for travel, tourism, and entertainment would help revitalize the site by enabling them to attract a quality tenant to complete construction of the project and operate the site. He said completion of the plans would “bring the community together at the new entertainment venue—creating job opportunities, additional tax income for the municipality, and will benefit the existing shopping center by bringing new patrons to the area.”

One of the neighboring businesses in that shopping center is Big Lots, and that property and much of the surrounding parking lot is owned by Red Mountain Group, which owns 122 properties in 20 states. Graham Allchorn, one of the owners, said they have been feeding money into that property to “shore up” the site, but they can’t continue to do that indefinitely. He said Big Lots has seen a $1.5 million loss of revenue with decreased sales, and ARPA funds could help keep that business open.  

Huber said they’ll design the grant application process to be as simple as possible: “We know that our small businesses are busy out there just looking to survive, and we do not want to give them a huge chore of an application process.”

To be eligible for the small business recovery grants, businesses must have no more than 20 full-time employees, earned $3 million or less in annual revenue in 2019, and experienced a net revenue loss of at least 15% in either 2020 or 2021.

The grant amounts would be determined through a tiered approach, so businesses with $1,000 to $100,000 in annual revenue in 2019 would receive a $5,000 grant; those with revenue between $100,000 and $1 million would receive $15,000; and businesses with revenue over $1 million would get $25,000. However, for home-based businesses, which makes up the majority of businesses in Citrus Heights, the recommendation was for a flat grant amount of $500.

Huber suggested an initial application period of 30 days, with the possibility of subsequent rounds if the funds aren’t exhausted in the initial round. Businesses would submit applications and supporting documents, including business license certificate, W9, and tax returns from 2019 and 2020 or 2021.  The City would then review the applications to determine eligibility and applicable grant amount.

The funding for travel, tourism, and entertainment would target businesses such as bowling alleys, movie theaters, performing arts venues, and event venues. Huber said this would be a request-based program to ensure the most effective COVID recovery response. She recommended a 60-day application period, with finance committee review and Council approval. This program would give priority to vacant sites that are causing blight and need capital investment for COVID recovery.

The totals for each category would be $1.4 million for the small business recovery grants and $1 million for the travel, tourism, and entertainment grants.

Vice Mayor Tim Schaefer expressed concern that the grants would be used to “cure” the checkbooks of business owners without any positive impact to the City. However, Interim Administrative Services Director Bill Zenoni explained that the federal guidelines stipulate that the funds are to help businesses impacted by COVID, and that the grants might not bring any tangible results beyond the businesses remaining open.  

Councilmember Bret Daniels pointed out that if each of the 1,500 commercial businesses received just $1,000 each, that would exhaust the $1.4 million planned for this program. He said, “I think our number’s too low there, actually.” While he acknowledged the importance of revitalizing the Studio Movie Grill site and the surrounding shopping center, he doesn’t want to see so much of the funding concentrated on just one area. He said he’d like to see more money allocated toward the small business grant category to “rescue” as many businesses as possible.

Huber said, “There’s no way to know the true demand of something like this, which means, we’re designing the path as we’re walking down it.” She said they’re prepared to make adjustments depending on the level of demand.

The Council will consider approval of the detailed program guidelines for small business recovery grants at the January 13 meeting, with the program expected to launch mid-January 2022. Guidelines for the travel, tourism, and entertainment program will be presented to Council in February or March 2022.