Mesa plans to throw a financial lifeline to businesses struggling in the downturn unleashed by the COVID-19 pandemic in the form of grants mainly to small businesses that have not received other forms of federal relief.
The Mesa Small Business Reemergence Plan would tap into the $90 million allocation Mesa received from the Coronavirus Relief Fund approved by Congress in the federal CARES Act.
The grants, part of the Mesa Cares COVID-19 relief efforts, are intended to tide over businesses that have been heavily impacted by the pandemic and that hope to re-open once social distancing restrictions are relaxed.
City Manager Chris Brady said he has tentatively earmarked about 20 percent of the Mesa’s relief fund money to business survival – which would account for about $18 million – though the total will depend on demand and level of need.
Several equally-as-large buckets of relief money would go toward the food security plan unveiled a week ago and a household assistance program that is still under development.
Michelle Albanese, the city’s housing director, outlined plans to spend about $6 million in federal Community Development Block Grant money on preventing low-income families from becoming homeless and helping the already homeless. Brady pointed out that the CDBG funds are only one pot of federal money tied to pandemic relief.
The Coronavirus Relief Fund is much larger and has fewer restrictions, but money not spent by the end of December must be returned to the U.S. Treasury.
“We anticipate we will be spending three or four times this amount’’ on preventing homelessness, a high priority in Mesa’s relief efforts, Brady said. “We expect to be expending an enormous amount of resources.’’
Gov. Doug Ducey on Wednesday extended his stay-at-home order through May 15, citing the lack of a clear trend in a decline of virus cases and deaths.
Arizona’s death toll was 320 as of Thursday with 7,648 verified cases, according to the state Department of Health Services.
In Mesa, state Health Services Department’s ZIP code data show 505 cases in Mesa – deaths are not broken out in the data. ZIP codes 85206 and 85202 had the highest number of cases, with 124 and 100, respectively. The lowest numbers of cases were in 85213, with 17, and 85215, with 12.
Ducey vowed to gradually reopen the state’s economy in May, starting tomorrow, May 4, with retailers allowed to sell curbside or delivery and in-store May 8 with social-distancing restrictions. Restaurants could open as early as May 12, though with radically different operations.
Mesa’s Small Business Reemergence Plan will use a streamlined application process, allowing businesses to submit documents, such as lease agreements, online.
A website address is still under development, but the city Economic Development Department has established a portal: selectmesa.com/mesacaresbusiness.
Applicants must prove they're located in Mesa and that they incurred losses related to the pandemic between March 1 and Dec. 31.
Mesa plans to launch the program May 11, with applications accepted online for two weeks.
A presentation to City Council said the grants would cover such essential expenses as rent and utilities for up to 90 days.
“We are being very careful to manage expectations,’’ Brady said. “It may not cover their entire needs, but it should give them a substantial boost.’’
But Mesa has no intention of throwing good money after bad, said Jaye O’Donnell, the city’s assistant economic development director.
Instead, the grants represent an investment in Mesa’s eventual economic recovery and are not intended as compensation to businesses that lost money and have no plans to re-open, she said.
“We are going to fight for every small business to stay open and to come back in full force,’’ O’Donnell said. “It’s a relief and recovery effort. They have to have a plan to reopen and re-emerge.’’
O’Donnell conceded that it is not possible for Mesa to save every business, adding that "an unprecedented number of businesses" have called the city for help. Even though the application process is being simplified, Mesa needs to vet the businesses for eligibility and some may not have enough cash to survive the review period, she said.
“We do estimate we have approximately 12,000 businesses. We don’t have enough money to save all of them. There will be a percentage that goes out of business,’’ O’Donnell said.
“For businesses that are on the verge of closing, we encourage them to call us right now’’ to discuss potential options for assistance, she said.
Letters would be sent to businesses by May 25, notifying them if they have been selected and how much they will receive.
Businesses that receive the grants would be required to “pledge’’ that they will spend the money on specific costs and will reopen. Those businesses would start receiving the money in early June.
The council voted unanimously to support the re-emergence program, even though some details need to be worked out. Council members agreed that small businesses that received no other federal relief should benefit from the grants.
But there was a debate about whether minority businesses should receive a preference.
Councilwoman Jen Duff argued that minority businesses have had little hope of receiving other federal aid because they lack extensive relationships with banks.
“It’s much more difficult and much further out of reach for these businesses,’’ Duff said.
But council members Kevin Thompson and Jeremy Whittaker vehemently opposed such preferences.
“I want to make sure the focus is on helping all small businesses,’’ Thompson said.
Whittaker wondered whether it would be illegal to ask businesses to declare on a form if they are minority-owned or not.
City Attorney Jim Smith said some federal programs have preferences for businesses owned by minorities or women, but not the Coronavirus Relief Fund.
“I don’t think we should be discriminating against any business owner,” Whittaker said.
Councilman Dave Luna said the city has many small Latino and Asian family businesses that lack accountants and attorneys often important in landing other federal assistance.
“Access to capital is the fundamental problem of these businesses,’’ Luna said. “I think the problem is universal, especially when you are talking about minority groups.’’
“They are part of our community. We should do something to support them,’’ he added.
But Luna opposed any preferences being used to evaluate applications whether they were based on location, ethnic identity or connections.
“We should have a level playing field,’’ Luna said. “Everyone should have access. Nobody should be excluded.’’
Whittaker’s suggestion of barring publicly-traded companies from qualifying for the grants appeared to resonate with Mayor John Giles and Brady.
“We shouldn’t be subsidizing wealthy people in this process,’’ Whittaker said.
Giles and Brady agreed with Whitaker, although Brady warned against creating too many rules that would delay businesses from receiving the grants that many desperately need.
“The more of these safeguards we can build in, the better,’’ Giles said.
But he stressed, “I don’t see a reason for a publicly-traded business to be involved in this program.’’
The Mesa Cares survey, conducted by about 100 employees who called about 2,500 residents, is serving as the foundation of Mesa’s COVID-19 relief efforts.
The survey questioned about 450 of an estimated 12,000 businesses in Mesa.
It found that 54 percent of these businesses reported they were “significantly affected’’ by COVID-19 while 26 percent said they experienced a “minimal impact’’ and 16 percent said they were “on the verge of losing the business.’’
Of Mesa's estimated 12,000 businesses, 11,834 have fewer than 100 employees and 11,519 have fewer than 50, according to O’Donnell.
Businesses identified rent and utility relief as well as cash grants as their primary needs, the presentation said.
The types of businesses hit hardest include retail, restaurants and hotels.
The report found the city has 2,200 restaurants and bars and 66 hotel properties with a total 5,579 rooms, according to the presentation.
O’Donnell, whose family owned a restaurant in Iowa when she was growing up, said that many small, family-owned businesses are not equipped to succeed in a digital world.
She said they may lack a web site or a system that allows customers to pay online, which are now part of a critical business strategy for survival as the nation adjusts to the demands of social distancing.
The federal bailout money could potentially be used to help businesses pay for such critical services, O’Donnell said.
The city also is developing a list of vendors who would offer advice on how a restaurant can cope with social distancing, such as spacing tables properly.