News

As businesses fight for survival, Palo Alto launches relief program

Grants limited to businesses that have been in town for at least 12 months, have 50 or fewer employees

Small businesses in Palo Alto that have been rattled by the COVID-19 shutdown could be eligible for grants of up to $10,000 from the city under a program that the City Council approved Monday night.

The City Council voted 5-2, with council members Alison Cormack and Eric Filseth dissenting, to launch the new program with $500,000 in city funds. The grant program also will allow corporations and community members to contribute funding, much like the business-relief effort that Mountain View created in late March with Google's support.

Unlike other business relief programs, including the one in Mountain View, Palo Alto's will use a lottery to select grant recipients rather than a first-come, first-served approach. It will be restricted to businesses that have Palo Alto storefronts, that are participating in the city's business registry and that have between one and 50 employees.

In approving the program, council members characterized it as a positive gesture toward the business community, which has been in free fall since the economic shutdown began on March 17. Some downtown businesses, including Dan Gordon's, have permanently closed, while others have reported that they're barely hanging on.

"It's really hard to listen to what's happening in our community," said Councilwoman Liz Kniss, who participated in three roundtable discussions that included more than 50 business owners over the past week. "There's some heartbreak out there. And it's pretty clear everything is not going to reopen. That's one of the most difficult things that we're hearing."

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Kniss said that during these events, business owners talked about their trouble getting funding from the federal Paycheck Protection Program and suggested that the city suspend its Residential Preferential Parking program, which limits how many employees can park in residential neighborhoods.

"They are also looking for guidance, looking for support. They are also looking for some hope at this point. It was very difficult to hear this," Kniss said.

Cormack, who also has been participating in the meetings with business leaders, said some businesses have adjusted their operations to survive, with restaurants now selling items out of their pantries and dentists talking about how to provide safe space for clients. The hardest hit area, she said, will be personal services such as physical therapists, hairdressers and nail salons.

"The changes that will need to occur for these to restart are really significant," Cormack said.

The downward spiral of the retail industry is reflected in the city's grim budget projections, which now estimate a revenue drop of about $38.8 million in fiscal year 2021, which begins on July 1. Sales taxes are expected to plummet by 43%, going from $36.1 million in the current budget to $20.5 million next year. Revenues from hotel taxes are expected to plunge by 44%, from $26.6 million to $14.9 million.

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The business relief program aims to support cherished community institutions that are on the brink of closing down and stem the loss of revenues. The program will be limited to small businesses that have been in the city for at least 12 months and that have seen their revenues drop by more than 25% since the health emergency began. The city will partner with the Palo Alto Chamber of Commerce to collect contributions and distribute grants, which could be as high as $10,000.

While council members generally agreed that the program is worth launching, Filseth pointed to the city's budget crisis and the council's imperative to cut $38.8 million out of the budget — a painful exercise that the council will begin on May 11.

"We're going to be turning down worthy programs right and left going forward. That's what I'm struggling with," Filseth said. "On the one hand, it's a worthy program. On the other hand, it's going to make our problem 1% worse."

Cormack voted against the proposal because it explicitly excluded nonprofit groups. Her colleagues, however, concluded that including nonprofits would complicate the program and make it more difficult to administer.

The council also agreed that a lottery is the best way to determine who gets the funds. A report from Shikada notes that the first-come, first-served method used by Mountain View and by the federal Small Business Administration for loans may be easier to administer but it favors those businesses who are more sophisticated in completing financial applications. A lottery system in which an applicant receives a number and then the city randomly selects numbers will eliminate that advantage.

"Giving money away, I think, is not easy because the person who gets the money is delighted and the person who didn't get the money is not only not delighted but sometimes angry and very puzzled as to why they weren't selected," Kniss said. "That's why I'm so glad to see the lottery selection here."

Recipients of the city's grants also will have broad discretion on how to spend the money. Unlike in other cities, which restrict the use of grant funding to payroll or lease payments, Palo Alto plans to let business owners spend the money however they deem necessary to remain in operation. This could mean spending it on operating expenses to sustain the businesses and reopen after the stay-at-home order ends, according to Shikada's report.

The council also agreed to set the maximum grant amount at $10,000, reasoning that this is roughly what will be required to support expenses for a small business for two months. While Mayor Adrian Fine said he'd prefer to see more grant recipients, even if it means smaller grants, he voted with the council majority to support the proposal.

"Although this is limited and certainly not enough, I think it's the right thing to do — to support some of our businesses," Fine said.

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As businesses fight for survival, Palo Alto launches relief program

Grants limited to businesses that have been in town for at least 12 months, have 50 or fewer employees

by / Palo Alto Weekly

Uploaded: Tue, May 5, 2020, 9:40 am

Small businesses in Palo Alto that have been rattled by the COVID-19 shutdown could be eligible for grants of up to $10,000 from the city under a program that the City Council approved Monday night.

The City Council voted 5-2, with council members Alison Cormack and Eric Filseth dissenting, to launch the new program with $500,000 in city funds. The grant program also will allow corporations and community members to contribute funding, much like the business-relief effort that Mountain View created in late March with Google's support.

Unlike other business relief programs, including the one in Mountain View, Palo Alto's will use a lottery to select grant recipients rather than a first-come, first-served approach. It will be restricted to businesses that have Palo Alto storefronts, that are participating in the city's business registry and that have between one and 50 employees.

In approving the program, council members characterized it as a positive gesture toward the business community, which has been in free fall since the economic shutdown began on March 17. Some downtown businesses, including Dan Gordon's, have permanently closed, while others have reported that they're barely hanging on.

"It's really hard to listen to what's happening in our community," said Councilwoman Liz Kniss, who participated in three roundtable discussions that included more than 50 business owners over the past week. "There's some heartbreak out there. And it's pretty clear everything is not going to reopen. That's one of the most difficult things that we're hearing."

Kniss said that during these events, business owners talked about their trouble getting funding from the federal Paycheck Protection Program and suggested that the city suspend its Residential Preferential Parking program, which limits how many employees can park in residential neighborhoods.

"They are also looking for guidance, looking for support. They are also looking for some hope at this point. It was very difficult to hear this," Kniss said.

Cormack, who also has been participating in the meetings with business leaders, said some businesses have adjusted their operations to survive, with restaurants now selling items out of their pantries and dentists talking about how to provide safe space for clients. The hardest hit area, she said, will be personal services such as physical therapists, hairdressers and nail salons.

"The changes that will need to occur for these to restart are really significant," Cormack said.

The downward spiral of the retail industry is reflected in the city's grim budget projections, which now estimate a revenue drop of about $38.8 million in fiscal year 2021, which begins on July 1. Sales taxes are expected to plummet by 43%, going from $36.1 million in the current budget to $20.5 million next year. Revenues from hotel taxes are expected to plunge by 44%, from $26.6 million to $14.9 million.

The business relief program aims to support cherished community institutions that are on the brink of closing down and stem the loss of revenues. The program will be limited to small businesses that have been in the city for at least 12 months and that have seen their revenues drop by more than 25% since the health emergency began. The city will partner with the Palo Alto Chamber of Commerce to collect contributions and distribute grants, which could be as high as $10,000.

While council members generally agreed that the program is worth launching, Filseth pointed to the city's budget crisis and the council's imperative to cut $38.8 million out of the budget — a painful exercise that the council will begin on May 11.

"We're going to be turning down worthy programs right and left going forward. That's what I'm struggling with," Filseth said. "On the one hand, it's a worthy program. On the other hand, it's going to make our problem 1% worse."

Cormack voted against the proposal because it explicitly excluded nonprofit groups. Her colleagues, however, concluded that including nonprofits would complicate the program and make it more difficult to administer.

The council also agreed that a lottery is the best way to determine who gets the funds. A report from Shikada notes that the first-come, first-served method used by Mountain View and by the federal Small Business Administration for loans may be easier to administer but it favors those businesses who are more sophisticated in completing financial applications. A lottery system in which an applicant receives a number and then the city randomly selects numbers will eliminate that advantage.

"Giving money away, I think, is not easy because the person who gets the money is delighted and the person who didn't get the money is not only not delighted but sometimes angry and very puzzled as to why they weren't selected," Kniss said. "That's why I'm so glad to see the lottery selection here."

Recipients of the city's grants also will have broad discretion on how to spend the money. Unlike in other cities, which restrict the use of grant funding to payroll or lease payments, Palo Alto plans to let business owners spend the money however they deem necessary to remain in operation. This could mean spending it on operating expenses to sustain the businesses and reopen after the stay-at-home order ends, according to Shikada's report.

The council also agreed to set the maximum grant amount at $10,000, reasoning that this is roughly what will be required to support expenses for a small business for two months. While Mayor Adrian Fine said he'd prefer to see more grant recipients, even if it means smaller grants, he voted with the council majority to support the proposal.

"Although this is limited and certainly not enough, I think it's the right thing to do — to support some of our businesses," Fine said.

Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.

Comments

Let Them Eat Lobster
College Terrace
on May 5, 2020 at 10:17 am
Let Them Eat Lobster, College Terrace
on May 5, 2020 at 10:17 am

Eating lobster (as depicted in the accompanying pic) is a non-essential food requirement/item during this time of pandemic crisis.

Only for the moneyed/arrogant I presume?

If so, I hope the lottery winners are more down to earth restaurants serving value-added meals.


Norman Beamer
Crescent Park
on May 5, 2020 at 10:21 am
Norman Beamer, Crescent Park
on May 5, 2020 at 10:21 am

Big mistake to exclude non-profits -- they benefit the community.


Davis FIELDS
Crescent Park
on May 5, 2020 at 10:47 am
Davis FIELDS, Crescent Park
on May 5, 2020 at 10:47 am

Also sorry to see nonprofits excluded. Ours is hanging on by its fingernails, and we are supporting a lot of people in dire straits during this crisis. In our eighth year, founded and operating in Palo Alto. www.divorceandrelationshiprecovery.org/find-a-group


Downfall
Fairmeadow
on May 5, 2020 at 10:57 am
Downfall, Fairmeadow
on May 5, 2020 at 10:57 am

This program and its suggested administration is a horrible idea. The failures of the federal and state governments to provide an adequate safety net to small businesses should not fall to cities like PA to help try and pickup the slack. Why is the city giving away any money when the projected budget shortfall is so severe. The city govt cannot print money like the fed. This is yet another feel good project for the city council that the city cannot afford.

Administering this via lottery is ridiculous and screams that the city council was either not willing or not able to put thought in to how to make the tough decisions on how to allocate the funds.


Theresa
Old Palo Alto
on May 5, 2020 at 11:00 am
Theresa, Old Palo Alto
on May 5, 2020 at 11:00 am

Boo on excluding non profits...many of them are struggling right now.

I’ve been researching grants for us lately and many small business grants exclude non profits.


Online Name
Embarcadero Oaks/Leland
on May 5, 2020 at 11:19 am
Online Name, Embarcadero Oaks/Leland
on May 5, 2020 at 11:19 am

$500,000 is a big lump sum but $10.000 for a business is too little to do much good, esp. with rents as high as they are.

What's the city doing to help businesses suffering from the high rents when places like Mayfield Bakery have cited the high rents charged by the Town & Country landlord as a major reason for their closure?

Are we going to see more offices rather than resident-serving businesses downtown and on Cal Ave?


Local responsibilities
Mountain View
on May 5, 2020 at 11:55 am
Local responsibilities, Mountain View
on May 5, 2020 at 11:55 am

@downfall perhaps the bigger question should be asked “why are these cities budget shortfalls so severe”. Given that many are that way before even entering the COVID situation.

Absurd and unfounded pensions, Continual raises tovgov’t employees while others are taking cuts. Yeah, there’s a lot that should be deeply looked at here, would be a fantastic investigative fest of journalism.....PAOnline, you up for the task?


Gus L.
Barron Park
on May 5, 2020 at 12:01 pm
Gus L., Barron Park
on May 5, 2020 at 12:01 pm

So where do you sign up for the grant, the article doesn't mention that.


Small Business Owner
Adobe-Meadow
on May 5, 2020 at 3:06 pm
Small Business Owner, Adobe-Meadow
on May 5, 2020 at 3:06 pm

How do I throw my hat into the ring?


Rambutan
Ventura
on May 5, 2020 at 4:24 pm
Rambutan, Ventura
on May 5, 2020 at 4:24 pm

Program hasn't launched yet BUT to qualify a business MUST be on the Palo Alto Registry by May 11!
Sign up here: Web Link

Palo Alto Community Call Center: 650-272-3181
CPA Business Resources: Web Link


Resident
Old Palo Alto
on May 5, 2020 at 6:13 pm
Resident, Old Palo Alto
on May 5, 2020 at 6:13 pm

There weren't really any great restaurants in Palo Alto to begin with, especially if you had children. This has been a problem for many years.
The food was not that great for the price. Adding in the tip made things more unappetizing.
My wife and I would return home feeling that we wasted money, and regretted not just cooking at home. We can live without restaurants, and don't imagine that we will ever eat out again. Our kids cook well now and are attune to food safety and hygiene.
If the cost of living were less here, perhaps more people would eat out, and the rental cost for these restaurants would be lowered. Someone mentioned that the same property owners have owned most of the buildings for decades. Are they benefiting under the proposition 13 as well?


Gus L.
Barron Park
on May 21, 2020 at 7:44 pm
Gus L., Barron Park
on May 21, 2020 at 7:44 pm

So was this just a ruse together businesses to sign up for the registry? And then they said that the registry will be refunded for a year.
What is going on?


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