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Council refines SAVES proposal

Wednesday, October 14, 2020 by Ryan Thornton

The city has not yet found the right balance in regards to distributing $15 million in financial assistance under Save Austin’s Vital Economic Sectors (SAVES). As City Council prepares to consider allocating $8.5 million in sales tax revenue to the program on Thursday, there is still no consensus on an administrative plan to best help local music and arts venues, restaurants and bars, and child care centers recover from the Covid-19 pandemic.

During a discussion over the SAVES effort at Tuesday’s work session, Council members raised a series of concerns both about the proposed eligibility criteria and use of the $15 million. In contrast to Council’s intention, Mayor Steve Adler said the city’s strategy – which divides relief dollars among a music venue preservation fund, a legacy business relief grant and a child care provider relief grant – does not yet articulate a plan to provide businesses with the tools necessary to survive in the long term, beyond the coming two or three months.

“At a high level, for me, I look at this and think that the program protocols may be too prescriptive and not give … the case management teams the ability to really fashion solutions that would, in a longer period of time, help us with the live music infrastructure in the city,” Adler said.

As proposed, SAVES would include three separate funds of $5 million each for live music venues, child care providers and service-industry businesses that have been established in Austin for at least 20 years. The city estimates that the plan could distribute the $15 million to approximately 83 legacy businesses with awards of either $40,000 or $60,000; 29 live music venues with awards up to $160,000; and a portion of the city’s 357 child care centers with grants ranging from $2,500 to $60,000.

Veronica Briseño, the city’s chief economic recovery officer, said the differences in financial assistance among the three funds are related to the specific needs of the industries as well as the numbers of potential applicants. The higher maximum amounts for live music venues are intended as an acknowledgement that venues have not had the same operational flexibilities as other businesses during the pandemic. In addition, the award amounts correspond to the fact that fewer – an estimated 50-60 – businesses will qualify for the live music fund than the other grants.

Without offering a specific modification, Adler suggested revisiting the rigid financial award strategy in favor of a more expansive and individualized case management system that would provide eligible business owners with services like legal or accounting assistance that could help them renegotiate rental lease agreements or restructure their business models for long-term sustainability. As one example of that broader approach, relief funds could be leveraged to help business owners negotiate and purchase their business sites from landowners.

Agreeing with Adler’s suggestions, Council Member Ann Kitchen urged the city to raise the legacy business fund award cap of $60,000 to help businesses survive the pandemic, despite the fact that an estimated 350-400 local businesses would meet the criteria necessary to apply for a portion of the $5 million.

“You’ve got to help them stay alive right now to bridge to a longer-term solution, so the assistance with legal, the assistance with bankruptcy if that’s appropriate for them, the assistance with other kinds of things is really going to be important,” Kitchen said. “And so I think some dollars need to go to that.”

Adler suggested reserving $3.7 million in temporary use of right-of-way revenue for those types of professional services. Council previously decided not to include the fees as part of the $15 million SAVES funding plan, but the money remains an additional funding option.

Briseño said the city is in the process of interviewing third-party organizations to administer the funds with the consideration of what individualized case management assistance would entail.

The city is proposing to pay the third-party administrator up to $1.5 million to distribute the $15 million among applicants selected through a randomized lottery system. Kitchen said the $1.5 million fee “just seems like an awful lot” to administer a lottery approach that “doesn’t help us make sure that our legacy businesses and our brand is really protected.”

Council Member Jimmy Flannigan said the lottery approach is likely “the best of the worst set of options” considering the lack of financial assistance from the state or federal government.

“If we had a minimally functional state and federal government, spending the money they have – in terms of the state – or allocating the money that every city in the country is demanding, we wouldn’t be put into this Sophie’s choice that they have put on us to try and pick which businesses are going to make it through the process,” he said.

Adler requested that the city reconsider some of the proposal’s prescriptive criteria before bringing the program back to Council. Specifically, Adler said that the 20-year minimum for businesses applying to the legacy business fund may not be helpful. He also noted that the exclusion of businesses with delinquencies or deficiencies regarding local and state licensing requirements may be counterproductive considering the vast impact of the pandemic.

“That might be part of the help that’s needed and we might have some of these establishments that are in a bad place right now because they’ve been out of business for the last six months,” Adler said.

Photo made available through a Creative Commons license.

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