By SHANNON HAUGLAND
Sentinel Staff Writer
The city has mailed out some $3 million in CARES Act checks under Phase 2 of a program to help businesses and nonprofits harmed financially by the pandemic.
Checks, mailed Friday, for the 147 for-profit businesses ranged from $105 to $47,500, for a total of about $2.63 million; the 18 nonprofits that applied received between $950 and $47,500, for a total of $380,000.
The city is finishing work on the last few of the applications, and plans to make a list of the names and amounts received available to the public.
One of the main challenges, city staff said, was deciding how to adjust the amounts received, since the $4 million in applications exceeded the $3 million available.
A total of $3 million was available under each of the two phases to help businesses and nonprofits. The $3 million under Phase 1 was intended to provide at least some aid to businesses that experienced losses due to COVID-19, including the loss of the visitor season, lost business and extra costs; and to get the funds distributed quickly.
“I’m happy with the team and happy with the process,” said City Administrator John Leach. “I think it was fair, I think it was equitable. We did all we could to provide targeted help to businesses that needed it.”
The city had to distribute the funds by Dec. 30.
The city CARES Act group provided guidance for Phase 1 and 2. The Assembly approved allotting the city’s share of CARES Act funds, of $14 million, toward utility and moorage assistance, social programs (e.g. food, housing, daycare), help for businesses and nonprofits, mitigation and school assistance.
Because the amount businesses qualified for exceeded the amounts available in Phase 2, Leach said the amounts distributed had to be “scaled,” under a method outlined in a memo to the Assembly at a recent meeting. All saw a decrease in the amount they qualified for, some more than others.
“Any and all scaling was done in the exact same manner for every single applicant,” Leach said Wednesday.
The city’s CARES Act grant technician, Rob Allen, performed the initial review, and told people what they were eligible for, under the grant criteria; the application advised businesses and nonprofits under Phase 2 that the city may have to reduce the amount to meet the budget.
“Some people were frustrated by the amounts they received compared to what they were eligible for,” Leach said. He said the application had explained that the amounts may be reduced to stay within the budget.
Leach said in city staff’s review of the applications it was clear that some were eligible to receive 100 percent of their prior year’s revenue.
“The intent was never to make everybody whole,” he said. “What we were trying to do was provide the most support we could to businesses hurt the most, and provide the most economic impact to the community.”
Leach said the five or six people who were most disappointed after receiving their checks, and called him, seemed to be those who saw reductions in the amount they were eligible for, by as much as 65 percent.
Allen, who is a temporary city employee, said he had received a few emails from businesses thanking him for his work, and said he also received a handful of complaints from those who received less than they were qualified for.
“The issue is we had such a wide range of businesses,” Allen said. “Some of the biggest businesses in town applied, and small businesses as well.”
Some of the main factors were whether fixed costs exceeded revenues. The 15 percent cap on assistance – not covering more than 15 percent – also played a role in reductions for some businesses.
Leach wrote a memo detailing the scaling steps and read it at a recent Assembly meeting:
Only businesses experiencing losses of 35 percent or more in the qualifying quarters from 2019 to 2020 could apply. Fixed costs and other grant support were taken into account, as well as full-time employees.
The approach for “scaling” in the for-profit sector was different than for nonprofits, which had a different application process.
To fit within the budget, city staff took a few steps, outlined for the Assembly. Some businesses had significant year-to-year losses but revenues were small. Leach said if they had no other grant support and enough eligible fixed costs the grant would constitute a very significant portion of their regular revenue (based on 2019 revenue).
“Rather than covering up to 100 percent of some smaller business’ prior year revenue, we set a threshold of not covering more than 15 percent,” Leach said. He noted this is the average percent of 2019 revenue that the initial eligibility amount covered for all businesses.
Although it reduced overall requests to $2.94 million, further action was required, in order to cover some of the nonprofit help as well.
Leach said the overall goal was to help those who experienced the most loss, and took a tiered approach to apply further reductions:
- those experiencing a loss of over 75 percent were reduced by 5 percent.
- those experiencing a loss of between 50 and 75 percent were reduced by 10 percent and those experiencing a loss of under 50 percent were reduced by 15 percent. The average reduction turned out to be 23 percent.
For the nonprofits, the program was “structured to factor in loss to the organization but also contribution to the community the nonprofit makes.”
The applications were reviewed by the Sitka Legacy Fund and grant amounts were recommended by a city review panel, which took into account other grant funding received by the organizations. The grant amounts were reduced by an average of 20 percent, with individual requests reduced by between 5 and 81 percent, Leach said.
City Finance Director Melissa Haley said the process was “completely formula driven” and applied equally to all businesses.
Allen said the goal of the formula was to provide a meaningful amount to each of the businesses. But in the end, he added, “There’s no perfect way to get there. There seemed to be serious thought behind it (by city staff), and everyone was treated the same.”
Allen is the former CEO of Sitka Community Hospital. In the consideration and review of grants, Allen included a list of possible conflicts, including his role as a board member in the Sitka Sound Science Center and Shee Atika Corp.; as well as family relationships to two businesses in town, Allen Marine and the Channel Club.
He said he felt the city did a good job in “getting money into people’s and businesses’ hands.” He also thanked the work of the Sitka Legacy Fund in reviewing and making recommendations for the nonprofit sector.
