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HomeMy WebLinkAboutItem 08.a Date: Item No. APPROVAL OF THE SMALL BUSINESS EMERGENCY GRANT PROGRAM Proposed Action Staff recommends adoption of the following motion: Move to approve the proposed Small Business Emergency Grant Program. Overview The City of Lakeville will receive a federal CARES Act allocation of $4,846,940 for coronavirus -related expenses in early July. The funds may be used for COVID-19-related costs that occur between March 1, 2020, and Nov. 15, 2020, which can include providing financial relief to small businesses. City staff have proposed using $200,000 of the $4.8M for a Small Business Emergency Grant Program. Community and Economic Development Department staff brought draft guidelines for Lakeville’s Small Business Emergency Grant Program to the June 22nd City Council Work Session and June 23rd Economic Development Commission (EDC) meetings to receive feedback on the proposed guidelines. Attached is an updated draft of the Small Business Emergency Grant Program Guidelines, which incorporates the recommendations provided by the City Council and EDC. Changes (bolded) include: • Must have at least one employee in addition to the owner as of March 1, 2020 and not more than 25 full-time equivalent (FTE) employees, and under $1 million in annual revenue • Must have been operating since December 1, 2019 • Corporate-owned chains (but franchise chains are eligible) • Businesses that primarily derive income from gambling (businesses that allow on-site charitable gambling are eligible) • Businesses that primarily sell pawned merchandise, guns, tobacco or vaping products Primary Issues to Consider • Does the Council agree with the updated program guidelines? Do additional changes need to be made to the program? Supporting Information • Redlined draft grant program guidelines document • Updated draft grant program guidelines document • Economic Development Commission June 23, 2020 draft meeting minutes Financial Impact: Budgeted: Y☐ N☒ Source: Related Documents: Envision Lakeville Community Values: Diversified Economic Development Report Completed by: David L. Olson, Community & Economic Development Director July 6, 2020 None CARES Act funding 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400  952-985-4499 fax www.lakevillemn.gov City of Lakeville Small Business Emergency Grant Program Guidelines June July 2020 To provide emergency assistance to small local businesses in Lakeville adversely impacted by the COVID-19 pandemic, the City of Lakeville Small Business Emergency Grant Program will provide grants of up to $10,000 to small businesses most in need of support. Funds will help businesses pay for critical expenses such as rent payments, mortgage payments, utilities, payments to suppliers, and costs associated with reopening (including Personal Protective Equipment). Providing this support will increase the capacity of small businesses with a physical location in Lakeville to survive the current crisis and will help prevent potential future blight scenarios. These grant funds can be used to ensure your business can afford to operate while maintaining the social distancing guidelines for the safety of your employees and customers. The Grant Program will be administered by the City of Lakeville Community and Economic Development Department. Grant funds will be distributed until the program allocation is exhausted. Terms  Up to $10,000 grant based on economic injury from COVID-19 related eligible expenses.  Funds can be used for operating expenses, including rent payments, mortgage payments, utilities, payments to suppliers, or other critical non-payroll business expenses (including expenses related to reopening and personal protective equipment) as approved by the fund administrator. Eligible Businesses Businesses must meet all of the following criteria as of March 1, 2020 to be eligible:  Must be a locally owned and operated for-profit business with a physical establishment in the City of Lakeville  Must have at least one employee in addition to the owner as of March 1, 2020 and not more than 25 full-time equivalent (FTE) employees, and under $1 million in annual revenue  Must have been operating since December 1, 2019 for at least 12 months prior to March 1, 2020 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400  952-985-4499 fax www.lakevillemn.gov  Must be licensed, in good standing, current on property taxes prior to July May 15, 2020, if applicable  Must demonstrate a significant loss in revenue since March 15 (no credit score or collateral requirements apply) Certain businesses are ineligible, including:  Home-based businesses; those without a physical establishment, (except in-home childcare providers will be eligible)  Non-profit organizations  Corporate-owned chains, multi-state chains (but franchise chains are eligible)  Individuals who have or are currently receiving assistance through the Pandemic Unemployment Assistance (PUA) program  Businesses in default conditions prior to February 29, 2020  Businesses that primarily derive income from gambling (businesses that allow on-site charitable gambling are eligible)  Businesses that derive any income from adult entertainment  Businesses that primarily sell pawned merchandise, guns, tobacco or vaping products  Businesses that derive income from passive investments; business-to-business transactions; real estate transactions; property rentals or property management; billboards; or lobbying In addition to the City of Lakeville Small Business Emergency Grant Program, businesses are strongly encouraged to apply for all available COVID-related funding. However, due to the limited amount of funding and in order to serve as many businesses as possible, businesses will be ineligible to receive duplicative funds from the City of Lakeville Small Business Emergency Grant Program AND State of Minnesota or Dakota County CDA Small Business Emergency Loan funds. Businesses receiving federal relief funds are still eligible for the City of Lakeville Small Business Emergency Grant Program but must use City funds for other eligible expenses than those covered by federal funds. Application Process  Application Forms will be accepted beginning ___________July 7, 2020 through _____________July 19, 2020.  Completed application forms can be completed on lakevillemn.gov or emailed to kbachmayer@lakevillemn.gov.  If applications exceed the funding available, City of Lakeville Community & Economic Development staff will select grant recipients using a first come – first serve basis. The City will notify approved applicants by email on or before July 24, 2020. 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400  952-985-4499 fax www.lakevillemn.gov  Upon notice of an approved application, applicants will be required to submit the following within 10 business days: o 2019 Federal Business Tax Return or appropriate Business Tax Schedule based on entity type. o Evidence of revenue loss related to the COVID 19 pandemic. Applicants should submit documentation that best demonstrates the impact and is deemed acceptable to the Community & Economic Development Department. Some examples of acceptable documentation include Sales Tax Reporting, Period Statements from 3rd-party Sales Platforms, Merchant Services Statements, and Point of Sale or Register reports. o Evidence of employment prior to March 1, 2020. Acceptable documentation may include period reporting from a 3rd-party payroll processor, applicant’s Federal Form 941/Employer’s Quarterly Federal Tax Return, or other State or Federal payroll-related filing. o Any additional documentation or information deemed necessary by the Community & Economic Development Department to determine eligibility, generate loan documents, disburse loan proceeds, or meet program reporting requirements. o Failure to submit required documentation will result in forfeiture of a grant award. Any forfeited grant money will be awarded to the next business application in queue. Note: The Lakeville City Council reserves the right to revise these guidelines as needed to best address the impact of the current pandemic. 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400 • 952-985-4499 fax www.lakevillemn.gov City of Lakeville Small Business Emergency Grant Program Guidelines July 2020 To provide emergency assistance to small local businesses in Lakeville adversely impacted by the COVID-19 pandemic, the City of Lakeville Small Business Emergency Grant Program will provide grants of up to $10,000 to small businesses most in need of support. Funds will help businesses pay for critical expenses such as rent payments, mortgage payments, utilities, payments to suppliers, and costs associated with reopening (including Personal Protective Equipment). Providing this support will increase the capacity of small businesses with a physical location in Lakeville to survive the current crisis and will help prevent potential future blight scenarios. These grant funds can be used to ensure a business can afford to operate while maintaining the social distancing guidelines for the safety of its employees and customers. The Grant Program will be administered by the City of Lakeville Community and Economic Development Department. Grant funds will be distributed until the program allocation is exhausted. Terms • Up to $10,000 grant based on economic injury from COVID-19 related eligible expenses. • Funds can be used for operating expenses, including rent payments, mortgage payments, utilities, payments to suppliers, or other critical non-payroll business expenses (including expenses related to reopening and personal protective equipment) as approved by the fund administrator. Eligible Businesses Businesses must meet all of the following criteria as of March 1, 2020 to be eligible: • Must be a locally owned and operated for-profit business with a physical establishment in the City of Lakeville • Must have at least one employee in addition to the owner as of March 1, 2020 and not more than 25 full-time equivalent (FTE) employees, and under $1 million in annual revenue • Must have been operating since December 1, 2019 • Must be licensed, in good standing, current on property taxes prior to July 15, 2020, if applicable 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400 • 952-985-4499 fax www.lakevillemn.gov • Must demonstrate a significant loss in revenue since March 15 (no credit score or collateral requirements apply) Certain businesses are ineligible, including: • Home-based businesses; those without a physical establishment, (except in-home childcare providers will be eligible) • Non-profit organizations • Corporate-owned chains (corporate-owned ineligible; franchise chains are eligible) • Individuals who have or are currently receiving assistance through the Pandemic Unemployment Assistance (PUA) program • Businesses in default conditions prior to February 29, 2020 • Businesses that primarily derive income from gambling (businesses that allow on-site charitable gambling are eligible) • Businesses that derive any income from adult entertainment • Businesses that derive income from passive investments; business-to-business transactions; real estate transactions; property rentals or property management; billboards; or lobbying In addition to the City of Lakeville Small Business Emergency Grant Program, businesses are strongly encouraged to apply for all available COVID-related funding. However, due to the limited amount of funding and in order to serve as many businesses as possible, businesses will be ineligible to receive duplicative funds from the City of Lakeville Small Business Emergency Grant Program AND State of Minnesota or Dakota County CDA Small Business Emergency Loan funds. Businesses receiving federal relief funds are still eligible for the City of Lakeville Small Business Emergency Grant Program but must use City funds for other eligible expenses than those covered by federal funds. Application Process • Application Forms will be accepted beginning ___________, 2020 through _____________, 2020. • Completed application forms can be completed on lakevillemn.gov or emailed to kbachmayer@lakevillemn.gov. • If applications exceed the funding available, City of Lakeville Community & Economic Development staff will select grant recipients using a first come – first serve basis. The City will notify approved applicants by email on or before __________, 2020. • Upon notice of an approved application, applicants will be required to submit the following within 10 business days: o 2019 Federal Business Tax Return or appropriate Business Tax Schedule based on entity type. 20195 Holyoke Avenue, Lakeville, MN 55044 952-985-4400 • 952-985-4499 fax www.lakevillemn.gov o Evidence of revenue loss related to the COVID 19 pandemic. Applicants should submit documentation that best demonstrates the impact and is deemed acceptable to the Community & Economic Development Department. Some examples of acceptable documentation include Sales Tax Reporting, Period Statements from 3rd-party Sales Platforms, Merchant Services Statements, and Point of Sale or Register reports. o Evidence of employment prior to March 1, 2020. Acceptable documentation may include period reporting from a 3rd-party payroll processor, applicant’s Federal Form 941/Employer’s Quarterly Federal Tax Return, or other State or Federal payroll-related filing. o Any additional documentation or information deemed necessary by the Community & Economic Development Department to determine eligibility, generate loan documents, disburse loan proceeds, or meet program reporting requirements. o Failure to submit required documentation will result in forfeiture of a grant award. Any forfeited grant money will be awarded to the next business application in queue. Note: The Lakeville City Council reserves the right to revise these guidelines as needed to best address the impact of the current pandemic. CITY OF LAKEVILLE ECONOMIC DEVELOPMENT COMMISSION MEETING MINUTES June 23, 2020 1. Chair Scherer cal led the meeting to order at 4:04 p.m. in the Council Chambers. Members Present: Comms. Christiansen, Collman, Dautel, Emond, Gillen, Seiler, Starfield Ex-officio Members Present: Mayor Anderson, City Administrator Miller, Chamber President Jech Members Absent: Comm. Matasosky, Scherer, Stone Staff Present: David Olson, Community & Economic Development Director; Kati Bachmayer, Economic Development Coordinator 2. Approval of May 26, 2020 Meeting Minutes Comms. Emond / Collman moved to approve the minutes of the May 26 meeting minutes as presented. Motion carried unanimously. 3. Review of Draft Small Business Emergency Grant Program Guidelines Mr. Olson informed EDC members that it is anticipated that the City of Lakeville will soon be receiving an allocation of federal CARES Act funding when a statewide allocation plan is approved by the MN State Legislature and is signed by Governor Walz. One of the allowed uses of these funds is to provide assistance to businesses that have been negatively impacted by the COVID-19 pandemic. Community and Economic Development Department staff have been requested to draft guidelines for a Small Business Emergency Grant Program in anticipation of the City receiving an allocation. Numerous cities and counties in the Twin Cities and Greater MN have developed local small business emergency grant or forgivable loan programs for businesses impacted by COVID-19. Mr. Olson went over the proposed terms, eligible and ineligible businesses and asked EDC members for feedback and input on the proposed guidelines. Extensive discussion was held on several elements of the proposed grant program guidelines. • Comm. Starfield recommended changing the 12-month operating requirement to allow for any business that was “open prior to March 1, 2020” to qualify. Comm. Collman supported the 12-month requirement because an established business can more easily demonstrate a financial need through annual revenue reporting. The majority of EDC members supported using a shorter than 12-month operating requirement. Mr. Olson shared the example that the Dakota County CDA proposed program allows businesses who were registered with the MN Secretary of State by December 1, 2019 to be eligible. Economic Development Commission Minutes June 23, 2020 Page | 2 • Members requested that the 25 employee cap requirement be updated to note it is 25 FTEs (full-time equivalent). Comm. Seiler recommended using the U.S. Small Business Administration’s FTE calculation method that is currently being implemented for the Paycheck Protection Program. Mr. Olson noted that DEED’s program allows up to 50 FTEs but has designated $18 million for businesses that have 6 or fewer employees. • Comm. Gillen questioned the requirement for businesses to employ at least one employee and supported including sole proprietor businesses in the program. Mr. Olson noted that sole proprietors were able to collect unemployment insurance during the pandemic and therefore may be unable to demonstrate a financial need for grant funds. • Members debated the $1 million annual revenue cap. Comm. Dautel said $1 million is a fairly low number and may eliminate a lot of businesses from our applicant pool. Comm. Seiler noted that a $10,000 grant could make an impactful difference for a business with annual revenue of $1 million or less, whereas it would not make as big of an impact on businesses with higher annual revenues. Chamber President Jech noted that many of Lakeville’s hospitality businesses, like hotels, have higher annual revenues but were severely negatively impacted by MN Executive Orders regarding COVID-19. General consensus from the EDC members was that the $1 million annual revenue cap could be removed from the eligibility requirements or change the wording from “25 employees and under $1 million” to “25 FTE employees and/or under $1 million.” • Members supported allowing local franchise owners to be eligible for the program and have corporate-owned chain businesses remain ineligible. • Members discussed including priority or preference for tourism and hospitality businesses. Ms. Jech pointed out the importance of maintaining our hospitality businesses for future tourism opportunities and the large losses they’ve incurred since mid-March. A preference for completely closed or partially closed businesses was also offered as an idea, similar to the DEED program. Comm. Collman was not in favor of singling out any one industry and preferred to allow all businesses in Lakeville who meet the criteria to have an equal opportunity to be awarded a grant. • Mayor Anderson told the EDC that during the June 22 City Council work session a city council member advocated for awarding grants to those businesses who demonstrate the highest need vs. issuing awards based on a first come, first served process. In order to award grant funds based on highest need, a review committee may need to be formed and there was concern about slowing down the decision and award process. • Overall, members supported the removal of ineligibility criteria that discriminated against certain types of businesses. Mayor Anderson said the City Council was in favor of including all legally operating businesses in Lakeville. Economic Development Commission Minutes June 23, 2020 Page | 3 • Comm. Dautel expressed concern about applicants being awarded grant money and then shutting down operations soon after. Members supported incorporating ways to ensure continuation of operation after the grant money had been received. • Comm. Collman expressed concern about how the City would determine a business was in default (which would make a business ineligible to receive funds). He also encouraged the City to require a signed affidavit from the business to verify their receipt or non-receipt of funds from federal or state programs. At the end of the discussion, Mayor Anderson told EDC members that the City Council would be revisiting this topic at an upcoming July meeting. The City is hopeful the CARES Act allocation will be decided in the near future. 4. Continued Roundtable Discussion of COVID-19 Impacts on Lakeville Businesses EDC members shared information about how COVID-19 continues to impact their business and other area businesses. Frustration was expressed about current state- imposed restrictions on restaurants and a desire to learn when additional indoor/outdoor capacity will be allowed in business establishments. Recent updates to the federal Paycheck Protection Program were applauded, as members felt the changes provided necessary flexibility to best help small businesses who received the funds. Mr. Olson reminded the group that any complaints received regarding businesses not following Phase 3 guidelines will be handled similarly to code violations and a letter of concern will be sent. Mayor Anderson told EDC members that he was recently on a call with DEED Commissioner Steve Grove and several other metro city mayors. He shared that DEED was working on a plan for Phase 4 reopening strategies but didn’t have a start date yet. 5. Director’s Report Mr. Olson informed EDC members that the Dakota County CDA board approved the City’s RIG (Redevelopment Incentive Grant) $81,600 application on June 16. This grant will be help mitigate environmental cleanup cost for the Kingsley Place development. He also noted that the City is still waiting to hear back on the DEED cleanup application but expects to receive notification by the end of June. Adjourn Meeting adjourned at 5:35 p.m. Respectively submitted by: Kati Bachmayer, Economic Development Coordinator