County Commission’s goal is to have money ‘on the street’ by May 1 to help business owners survive during coronavirus crisis
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After passing the gavel to Sarasota County Commission Vice Chair Alan Maio on April 8, Chair Michael Moran read from scribbled notes to make a motion summing up what he said he believed was the consensus of the majority of his colleagues after close to three hours of debate.
The goal was to put to the best possible immediate use the approximately $4.3 million in the Economic Development Fund set aside for the county and the Economic Development Corp. of Sarasota County to attract and retain businesses that would offer careers with better-than-average compensation. Four of the commissioners this week agreed that the best use of the money in the short term would be to help businesses struggling to survive the novel coronavirus pandemic.
“We need to get this money on the street, knowing that it’ll come back into the fund for us to carry out the mission of attracting and retaining folks here,” Moran stressed.
Moran’s motion called for up to $25,000 to be loaned to any business that has submitted an application to the federal Paycheck Protection Program (PPP).
Moran earlier had proposed the use of the PPP applications for the county loan program, calling the federal process “very easy, super streamlined …”
Dave Bullock, interim CEO of the EDC, concurred that submission of copies of those applications to the EDC would be the “quickest way” for his staff and possibly contractual workers to ensure that the necessary due diligence is undertaken.
At one point, Commissioner Nancy Detert suggested that the county money be used as “bridge loans,” to be paid back by businesses after they receive PPP funds. However, Bullock told the board, “We don’t believe that we can require repayment upon approval or receipt of your PPP money. … We don’t believe that is allowable.”
Thirty-five of the loan applicants must be licensed childcare businesses, Moran continued, based on a suggestion by Commissioner Christian Ziegler. However, Moran said, if those 35 slots have not been filled by May 1, other businesses would be eligible for the funds.
No repayment or interest would be required in the first year of the loan. Subsequently, the business owner could keep the money for another three years, but he or she would have to pay 3.5% annual interest.
Further, to be eligible for a loan, a company must have been in business in Sarasota County for a minimum of three years.
The commissioners debated that period, as well. The EDC had suggested two years.
“I wouldn’t want to see this money be used to try to validate a startup,” Commissioner Ziegler said.
“Historically, most businesses go out of business within the first five years,” Detert added. “We’re not trying to save the unsalvageable.”
Bullock countered, “By the time they hit three years as a business generating revenue, they are a pretty established business.”
Moran also was insistent that “the money … be dispersed by May 1.”
He further delegated authority to County Administrator Jonathan Lewis “to deal directly with Mr. Bullock” on any decisions that would need to be made between County Commission meetings.
The total amount of money paid out in loans cannot exceed the $4.3 million in the Economic Incentive Fund, Moran added, in an amendment to the motion Commissioner Maio suggested.
Finally, at the recommendation of Commissioner Charles Hines, who is an attorney, Moran authorized County Attorney Frederick “Rick” Elbrecht to create “whatever documentation he feels is necessary to secure that loan.” Hines had suggested each loan recipient sign a promissory note and a personal guarantee, to ensure the loan is repaid to the Economic Incentive Fund.
When Hines asked whether the EDC has sufficient staff to handle the processing of the applications, Bullock responded, “We will do as good [a job] as can be done. We may have to contract some help.” However, he continued, he already had had an offer of volunteer assistance.
“I think this should be well within the EDC’s budget,” Moran emphasized.
“We’ll work within our budget as best we can,” Bullock told the commissioners.
Moran responded that county staff “has a lot going on here. … This is the time for the EDC to shine.”
With Commissioner Ziegler having seconded the motion and the amendments to it, Hines told his colleagues, “I can’t support it. … [The loan program is] not going to make that big of a difference.”
“I’m a little disappointed, frankly, in what we’re about to approve,” Detert added. “I’m conflicted whether to be a ‘Yes’ or a ‘No.’ My dilemma is do I want to help somebody — the wrong somebodies — or nobody. … This is not what I envisioned as a business package. … I’m trying to help people hanging on by their fingernails. They don’t worry about daycare because they don’t have a job.”
The losing end on three attempts
During the commission’s regular meeting on March 24, when Ziegler broached the idea of using the EDC money to help businesses, Hines indicated he was not inclined to support the idea.
In fact, Hines was on the losing end of three attempts at persuasion during the April 8 discussion. Before Bullock even began his presentation, Hines failed to convince his colleagues to vote on whether they even should apportion any of the $4.3 million as an emergency response.
If the board members agreed that day to use up the Economic Incentive Fund in making short-term loans to county businesses, Hines pointed out, “Then we’ve lost the opportunity potentially down the road … for the big business that finally says, ‘I’m leaving New York or New Jersey; help pay my impact fees; I’m coming [to] create careers in Sarasota County.’ That’s this debate. … If we are going to support [a loan program], to me, it’s got to really make a difference for our community. It’s not just, ‘Hey, here’s your money, [so] open back up.’”
Moran asked Bullock’s feelings about Hines’ worries that the money should be kept in place for the purpose for which it was set aside.
“This is Dave’s opinion,” Bullock began, though he added that his discussions with other people had helped form it: “My opinion is that the incredible economic need that our local business are going to experience in the coming weeks and months — I suspect, much further than we can envision today — that is business retention at its heart and soul, and these funds are intended for business retention.”
Moreover, Bullock said, by structuring the payments as loans, “We make this money available for future use for this or other programs that involve business retention and attraction. I know some of this won’t be paid back, but I’m confident that some of it will.”
Moran also asked whether Bullock had taken into consideration “the financial concerns that this board is going to be dealing with over the coming months?”
“Yes,” Bullock replied.
Later, after noting that the discussion had gone beyond the time county staff had allocated to it in preparing the day’s agenda, Hines made a motion to table the decisions for two more weeks. That failed 2-3, with only Commissioner Maio supporting it.
“I don’t see any pain in getting this money out there ASAP, getting it on the street, helping out local businesses,” Commissioner Ziegler said.
Finally, Hines was the sole commissioner to vote against the provisions Moran proposed for awarding the $4.3 million in loans.
“This is the first torturous decision of dozens that we’re going to have to make,” Maio said. “None of them are going to be pleasant and easy.”
On March 24, the commissioners directed County Administrator Lewis to ask the EDC staff to make “a short presentation” on recommendations for using the Economic Incentive Fund to help small businesses survive during the pandemic.
Using the Zoom teleconferencing software program to offer his comments on April 8, Bullock showed the board a series of slides to illustrate his organization’s proposals. Altogether, he said, the county had 16,193 small businesses registered at the end of 2018. “The vast majority of those,” he noted, had 10 or fewer employees. For example, 9,957 had up to three workers.
The EDC “conducted a series of listening sessions” with business and community leaders, Bullock continued. Those included representatives of the hospitality, finance, information technology, retail, manufacturing, and construction/development sectors, as well as leaders of industry associations and the Chambers of Commerce in the county.
The EDC also reviewed the International Economic Development Council’s best practices for local businesses following a disaster, he noted.
As a result of its analysis and discussions, Bullock said, the EDC found that the $4.3 million could help 430 businesses, if each loan was kept to a minimum of $10,000. If the loans were set at a $25,000 maximum, he continued, up to 172 businesses could get help.
The general feeling he took from the EDC discussions, he told the commission, was that a loan “somewhere in the 20s” would be the best option.
Delving into the childcare business debate
As the commissioners began asking questions of Bullock and offering their views, Ziegler brought up a discussion he said he had had with former County Commissioner Paul Caragiulo, whose seat Ziegler won in 2018 after Caragiulo chose to step down following one term.
Ziegler explained that he and his wife have three children, ages 6, 4 and 1. In mid-October 2019, he continued, he and his wife learned that the daycare they were using for the two younger children would close in two weeks. “During those two weeks, I had families just calling me and emailing me,” asking for ideas about what to do with their youngsters, Ziegler added. “And that was one facility that closed.”
In the county, he continued, about 10,000 children range in age from infants to 5 years, and the county has 180 licensed daycare facilities. Already, he said, approximately 74 of those have closed.
“I feel very strongly about this,” Ziegler added: A certain portion of the $4.3 million needed to be allocated to licensed childcare facilities. “It’s a big economic impact that’s really difficult to measure. But it helps as many citizens as possible. … If you don’t have childcare, you will be sheltering at home a lot longer than [Gov. Ron DeSantis’ April 1 Executive] Order will last,” Ziegler stressed. (The order calls for people to stay at home as much as possible through April 30, to try to prevent spread of COVID-19.)
“I just don’t think it’s appropriate,” Commissioner Detert said of the proposal. “It just makes no sense to me.”
“It’s indirectly helping every business by getting that employee back in the office as quickly as possible,” Ziegler countered.
For much of the next 90 minutes, Ziegler and Detert continued a debate that could be characterized as a form of “serve and volley,” though not quite at the speed seen in a tennis match.
Finally, after the vote, Detert explained that she supported Moran’s motion because it called for loans, and she hoped those would be paid back.