Ketchikan Gateway Borough staff are working to plug gaps in the borough's COVID-19 business relief programs after local business owner Spring Barry testified at Monday's Ketchikan Gateway Borough Assembly meeting that some local businesses — including her own — are still being excluded.
In early June, Assembly members allocated $3 million from the borough's portion of the federal Coronavirus Aid, Relief and Economic Security Act to support local businesses making more than $100,000 gross revenues annually; such businesses account for the vast majority of gross sales in the borough.
In early July the Assembly voted to establish another business relief program open to businesses that make between $10,000 and $100,000 gross revenues annually. The borough has been accepting applications for its business relief program since July and began accepting applications for its small business program on Monday.
In order to qualify for the borough's business relief programs, businesses must be able to show at least a 40% decline in gross revenue collected in the second quarter of the calendar year when comparing 2019 earnings to 2020 earnings. But because Barry established Woodlands Clothing in October, she doesn't have business records dating that far back, making her store ineligible for local relief.
"When opportunity knocks, you answer that door, and that's what I did," Barry explained during her testimony Monday. "And I did that by making huge financial commitments in a variety of different ways, like property owners and signing a lease, and making commercial space renovations to an area of town that I feel like is forgotten about a lot, and that's Newtown. Also, by purchasing insurance, and hiring local contractors and buying product from local artists and makers and fishermen that we can also feature in our store. And I also hired employees. ... I know that I'm not the only one (who's ineligible), and I've been talking around the business community."
Though she recognized she wouldn't be able to offer much informed advice, Barry suggested a young business "exemption" on the borough's business grant applications, or perhaps a case-by-case consideration of relief for such businesses.
"I ask this because no one takes into account when you go to start a business, global pandemic (as a) potential risk factor. That doesn't come to anyone's mind," Barry said. "I do hope that you see the value in businesses that are in a similar situation as mine surviving, and providing the opportunity for relief, because once things resume in Ketchikan to a relative normal, we do make considerable contributions to the community in the form of taxes, and contributions to charitable organizations, sponsoring youth activities and creating jobs."
Borough Finance Director Cynna Gubatayao said in a work session at Monday's Assembly meeting that she understood Barry's concerns.
"I want to make it very clear, that I believe every word that Ms. Barry says," Gubatayao said. "But if I have one business that brings me an application that says, 'I should have made $50,000 this quarter. I made zero a year ago, I should have made $50,000,' then I'm not sure how I deal with the other 2,922 businesses that tell me, 'I should have made this much, you know, I was going to make this much more.' That's just the first thing that comes to mind."
The challenge, she explained, would be determining how to support those businesses left out without sacrificing oversight and accountability to which other applicants are being held.
"What can we do that targets the right businesses but also doesn't open this up to flagrant abuse?" Gubatayao asked.
She said Thursday in a phone interview that she is tentatively planning to create a new program rather than creating exemptions with the borough's existing programs.
As of July 21, the borough had received 129 applications requesting a total of $1.67 million from its business grant program and received 24 applications from its small business grant program totaling $35,783.78. Staff will begin reviewing applications for the regular business grant program next week.
Barry also drew the Assembly's attention to issues with the state's business relief program that she encountered.
The $290 million AK CARES grant program, which opened for applications on June 1, is designed to help businesses in the state, especially those that were unable to get federal aid from the Paycheck Protection Program or Economic Injury Disaster Loans. The state's program is funded by the federal CARES Act as well — hence the name. The state Department of Commerce, Community and Economic Development is partnering with the private Alaska Industrial Development and Export Authority and Credit Union 1 to administer the grants.
"They are only on June 2 applications, and it's been seven weeks," Barry said on Monday. "So, if you applied, like me, with lots of responsibilities, lots of commitments, lots going on, I applied on (June 4), so to me, do the math, it says it could be another 12 weeks, easily, before I hear anything from them."
Most of that time is being spent verifying information from applicants and working with applicants to collect additional information, explained Glenn Hoskinson in a Wednesday phone interview. Hoskinson is a special assistant to the commissioner of DCCED. Between 30 and 40 CU1 employees are currently processing applications.
As of the close of business Wednesday, CU1 employees had approved 371 of 2,378 AK CARES applications totaling about $15.1 million, Hoskinson said in a Thursday phone interview.
Hoskinson said Wednesday that the applications will soon be handled more quickly: AIDEA is planning to hire more program operators in the coming weeks to process applications, though she didn't know how many or when precisely that will occur.
Gubatayao said on Monday that ambiguous state guidance for the AK CARES program has affected the borough's business grant programs as well.
Under the state's current guidance, businesses are ineligible for the AK CARES program if they have received any amount of federal relief money, including through the Paycheck Protection Program or through EID loans. The program website since the program's launch has not provided clear direction about whether business owners can still apply for state relief if they've also received local relief.
The opaque restrictions have driven several local businesses to delay seeking aid from local relief programs to avoid jeopardizing relief from the state program, which would likely be able to provide more relief than the borough's business grant program, Gubatayao explained.
And though the state on June 17 announced that it would be rolling out changes soon to address those concerns — such as allowing businesses to apply for the program if they've received less than $5,000 in federal relief — its actions have been inconsistent. The June 17 announcement expressed that "the updated program details and the effective date will be announced in the coming days," yet in the days since the announcement the state has not issued any press releases or revised guidance on the program website.
Last week, DCCED Commissioner Julie Anderson assured members of the state House of Representatives Labor and Commerce Committee that the changes were still coming and announced more changes to the program requirements. Among those she announced, businesses that receive local COVID-19 relief still would be eligible for the AK CARES program, but state relief and local relief would not be allowed to overlap so as to prevent "double dipping" where business owners reimburse the same expenditures twice.
With an eye toward that inconsistency, Barry said in a Wednesday phone interview that the program's "rules are changing on the fly."
To Barry's point, in a Thursday evening phone interview, Hoskinson confirmed that local businesses will now be eligible for the AK CARES program even if they received local relief money, but she said the state website had not yet been updated to reflect that information and wouldn't be until Monday at the earliest.
Hoskinson assured that the remaining changes will be fully implemented within the "next couple weeks," though she declined to give a more specific estimate to avoid confusion if dates change. She expects a press release about the changes to be issued this week or early next week.
Until then, borough staff will be looking at ways to provide relief to businesses that have been excluded from the borough's existing programs.
"It's going to be a challenge for staff," Barry acknowledged on Wednesday, who have been doing "hard work ... to get these funds out into the community, and are doing an excellent job at that."
Still, she said, "I'm hoping we can find a solution."