A grant program intended to offset what City Manager Erik Walsh called a “one-two punch” of losses some small businesses have suffered in recent years is moving forward after City Council discussion Wednesday.
Funded with $2.25 million in federal funds from the American Rescue Plan Act (ARPA), the COVID/Construction Recovery Grants Program will provide qualifying businesses grants to make up for revenue loss due to the COVID-19 pandemic and protracted road projects that have kept customers away.
But city officials say there needs to be more effort put toward finishing construction projects on time and communicating with small business owners throughout the process.
“We’re local government and we touch everybody every day, whether they know it or not,” Walsh told the council. “I think sometimes we lean too far to the facilitators of the right of way, and … the balance is being the protector of the right of way and making sure that we’re sensitive not only to the completion of a project but how it’s impacting those surrounding stakeholders.”
City staff estimate the program could provide grants to 60 to 80 businesses and storefront-type operations in one of 15 designated construction zones that can demonstrate net revenue losses in 2022 compared to the previous year.
Grants will be made between $10,000 and $35,000 and based on a scoring system that takes into account the level of losses and business size, among other criteria.
Corridors designated in the program include those where road work began between Jan. 1, 2020, and June 30, 2022. Businesses that have already received a $10,000 grant under the $15 million COVID Impact grant program launched last summer will be eligible for a maximum of $25,000 under the new grant program.
The newly proposed grant program is based on net revenue losses rather than gross sales losses, said Brenda Hicks-Sorensen, director of the city’s economic development department. The business must have been in operation one year from the date of the grant award and certify it will remain in the same location at least one year after.
The funds can be used for working capital, machinery and equipment, payroll, contract labor and other business operations. The grant program will be managed by the small business loan provider LiftFund, which will receive a 10% administrative fee.
The grant program, like others funded through ARPA, the CARES Act and tax increment reinvestment zones, is one measure that city is taking to use federal dollars to help business owners recover and rebuild following the pandemic.
But it’s also focused on shoring up a business that lost sales because of construction activity at their doorstep, much of it slated in the 2017 bond to improve decades-old infrastructure.
“The frequent phrase [from business owners] was we were just getting our feet under us from COVID when the construction kind of showed up, so to speak,” said Hicks-Sorensen.
“So we definitely are tying it back to COVID,” she added. “However, the criteria is based on the construction and that’s what we’re looking at.”
While some business owners are calling it a victory for the entire community, at least one is saying his business does not qualify under the parameters set by the city.
Even if it did, completing the construction that’s been started would make a greater difference to his bottom line than any grant.
Bo Lim, co-owner of the Golden Star restaurant at 821 W. Commerce St., said she has used retirement savings to keep the 90-year-old cafe open through the pandemic. Then the cost of goods and labor increased.
When the construction on West Commerce began within only a few days’ notice, she didn’t have time to inform her customers and many thought the restaurant had shut its doors, she said. Her losses mounted.
Lim plans to apply for the grant — “any little bit helps” — but also wants to see the city improve how it communicates with businesses about such projects in the future.
“These businesses are essential to the community because they provide jobs to people in the area, and they provide services and goods for the community as well,” said Lim. “Any vote for this grant is a vote for the community.”
Aaron Peña, owner of Squeezebox on North St. Mary’s Street and other music venues, learned of the proposed grant program on Friday following a heated meeting between city staff and frustrated bar and restaurant owners.
Road construction along the St. Mary’s Strip began in May 2021 and is scheduled to be completed in December 2023. In recent months, bar owners and others along the Strip and other areas have lodged complaints about infrastructure work that has slowed sales and affected parking and pedestrian safety.
“So we knew that the pressure was on the city and especially the mayor and the city manager,” he said. “I’ve been very vocal, very public about my criticism and the kind of lack of urgency.”
The potential grant is appreciated because it could help pay a couple of months’ rent, he said. “But it’s nowhere near the loss of revenue that we’ve suffered.”
Augustine Cortez, owner of Augie’s BBQ restaurant at 909 Broadway, where construction has been ongoing for four years, said the maximum grant award represents only two weeks of payroll at his restaurant.
“It’s like getting a pocketful of change … and putting it on the floor and see what people come and try and grab it,” he said.
Cortez does not plan to apply for the grant, he said.
Like with previous grant opportunities offered by the city, he feels certain his business, weighed down by the increasing costs of products and labor he can’t pass along to customers, won’t qualify for the grant according to the program’s parameters, he said.
What he wants most is for the construction he sees all around his restaurant to be completed. “We need accessibility for our guests to comfortably come to a place where we can earn our living — that’s all,” said Cortez, who also owns Augie’s Barbed Wire BBQ near the San Antonio Zoo.
He plans to close the Broadway restaurant, saying he can’t afford another two years of construction planned for Avenue A adjacent to Augie’s BBQ.
Cortez wants city officials to hold accountable what he calls the “big boys,” for the impact on small businesses when city-owned utility infrastructure work must be completed to accommodate developers and major construction projects like those going up on lower Broadway.
Most council members expressed support for the grant program with Councilman Manny Pelaez (D8) saying the city is obligated by its charter to help business owners survive the “crushing inconvenience” of prolonged road construction that damages their businesses.
“If we’re pushing them to the precipice of bankruptcy, then we have all more reason to come to the rescue,” he said.
But Councilman John Courage (D9) also said developers perhaps should share the cost.
“Shouldn’t we be getting a greater partnership from the development community that oftentimes creates some of these situations?” he asked. “If that building wasn’t getting built, if that for-profit building wasn’t going to be built, maybe we wouldn’t have seen so long a construction and seen so many businesses suffering in a particular area.”
Councilwoman Phyllis Viagran (D3) felt two corridors in the district she represents — Goliad Road and South Presa Street — should have been included among the 15 listed in the program. Both did not meet the construction date span requirement.
“Businesses closed because of Goliad and we all know this,” she said. “I want to move this forward because I know that our areas on the West Side in particular, areas down St. Mary’s and Broadway, have suffered a lot. I just think we need to have a better conversation about where we move this forward with small businesses.”
Following discussion by council, members did not vote to approve the grant program. Through ordinances previously adopted by council regarding the use of ARPA money for small business, Walsh has the authority to administratively enact the program and plans to do so, said a city spokeswoman.
But holding contractors accountable for completing jobs on time and according to specifications, and working more closely with utility providers, is also in the works.
“We’ve got to have a better strategic management of our projects,” Walsh said. “We’ve got to strengthen our relationship and our accountability with the telecommunication providers and the utilities.”
Mayor Ron Nirenberg pointed to the issue as a “longtail” effect of the pandemic.
“This program is being created because that pandemic spared virtually no one, directly or indirectly, from the impacts,” he said.
On Jan. 26, the council will consider and vote on a “responsible bidder” ordinance that gives city staff the ability during a bid process to skip over contractors who were considered poor performers on past projects.
While penalties for poor performance or missed deadlines are outlined in contracts, Walsh also wants to both harden the penalties for missing deadlines as well as add incentives for contractors that complete a job earlier than scheduled.
Meanwhile, funds have been added to the budget to help manage construction projects and keep the business community informed, he said.
To get the word out to eligible businesses, city staff is developing an outreach effort that includes block-walking in the coming weeks. The grant application will be open through the end of February, Hicks-Sorensen said.
Eligible construction project areas include:
- Broadway Street (IH-35 to East Houston Street)
- Bulverde Road Phase 1 (Butterleigh Drive to North of Quiet Meadow Street)
- Commerce Street (St. Mary’s to Santa Rosa streets)
- Commerce Street (Frio to Santa Rosa streets)
- Enrique M. Barrera Parkway Phae 1 (Old Highway 90 area)
- Fredericksburg Road (North Flores Street to West Woodlawn Avenue)
- Harry Wurzbach Road/Austin Highway connection
- North Main Avenue & Soledad Street (Pecan to Navarro streets)
- North New Braunfels Avenue Phase 1 (East Houston to Burleson streets)
- North St. Mary’s Street (East Mistletoe Avenue to West Josephine Street)
- San Saba Street (Nueva to Martin streets)
- Santa Rosa Street (Cesar Chavez Boulevard to Martin Street)
- The Alamo (area streets)
- West Commerce Street (Frio to Colorado streets)
- Maverick Plaza (area streets)
The council is scheduled to hear an update on all ARPA spending at its Feb. 26 meeting.