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20-0818_SOUTH COUNTY OUTREACH_Agenda Report_F3aCity of San Juan Capistrano Agenda Report TO: Honorable Mayor and Members of the City Council FROM: Benjamin Siegel, City Manager SUBMITTED BY: Ken Al-Imam, Chief Financial Officer DATE: August 18, 2020 SUBJECT: Proposed Use of State CARES Funds RECOMMENDATION: 1.Approve the proposed expenditure of CARES funding provided by the State of California in the general allocation amount of $200,000 for small business grants, $200,000 for rental assistance to individuals, and $50,000 for economic support to nonprofit organizations that provide food distribution services to the San Juan Capistrano community; 2.Authorize the City Manager to enter into contracts with Small Business Development Center of California State University, Fullerton (SBDC), South County Outreach and RSG, Inc. to administer the grant programs, with all administrative costs to be reimbursed by CARES funding; 3.Authorize the City Manager to develop specific eligibility and program requirements for the proposed grant programs, in consultation with the Small Business Development Center of California State University, Fullerton (SBDC), South County Outreach and RSG, Inc., and implement the programs immediately in order to comply with CARES expenditure deadlines; 4. Authorize the City Manager to modify the proposed allocation of State and County CARES funding as needed if certain programs are over/under subscribed by applicants. EXECUTIVE SUMMARY: In response to the COVID-19 global pandemic, Congress provided funding to states under the Coronavirus Aid, Relief and Economic Security Act (CARES) to be used to mitigate the impacts of COVID-19. The State of California has made a portion of its CARES funds available to municipalities. The City’s share of these funds is $450,000. Staff recommends that this money be expended in the form of small business grants, 8/18/2020 F3a City Council Agenda Report August 18, 2020 Page 2 of 4 rental assistance to individuals and financial support to local nonprofit organizations that provide essential food distribution services to city residents. CARES money cannot be used to offset City revenue losses. DISCUSSION/ANALYSIS: To address the impacts of the COVID-19 global pandemic, Congress provided CARES funding to states, counties and cities with a population greater than 500,000. To date Congress has appropriated no funding for cities with populations smaller than 500,000. However, in June 2020 the County of Orange agreed to share a portion of its funding to Orange County cities based on population, with $313,000 provided to San Juan Capistrano. This County pass-through funding is expected to be sufficient to meet the City’s anticipated public health-related expenditures through the end of the calendar year. In July 2020, the State agreed to share $450,000 of its CARES funding with the City. To achieve the most direct and balanced community benefit from the use of these funds, staff recommends that this money be expended in the form of small business grants, rental assistance to individuals and financial support to nonprofit organizations that provide essential food distribution services to City residents, as discussed in more detail in the following sections. Small Business Grants Staff recommends that $200,000 of the state CARES money be provided to San Juan Capistrano businesses that suffered revenue losses as a result of the Governor’s stay- at-home orders or as a result of reduced customer demand due to COVID-19. Staff recommends that the maximum grant to each business be capped at $10,000. This program would be modeled after a similar program recently provided by the County of Orange, with the major difference being to expand the reach of the business grants program to businesses in San Juan Capistrano that had 100 or fewer employees as of March 1, 2020 (the County program set the employee maximum at 25 employees) and that meet other specified criteria. Similar to the County small business grant program, to receive a small business grant the business must have experienced either a 25% decline in revenue due to COVID-19 or laid off at least one employee as a result of the pandemic. Like the County’s small business grant program, staff recommends that small business grants not be made available to home-based businesses. The Small Business Development Center of California State University, Fullerton (SBDC) developed and administered the County’s small business grant program. Staff recommends that the City use SBDC to adapt program materials and website portals to conform to the City’s program design. Staff has had initial discussions with SBDC, which would not charge the City to provide this assistance. The City would conduct outreach for the program by means of information posted on the City’s website, use of the Weekly Update and other City resources, and assistance provided by the Chamber of Commerce. Once applications are received, staff recommends that the City contract with the independent consulting firm of RSG, Inc. to process the applications and follow up on required documentation. RSG provided the most responsive and cost efficient proposal City Council Agenda Report August 18, 2020 Page 3 of 4 for this service based on a targeted solicitation effort by staff. RSG’s not-to-exceed fee of $11,000 would be paid from the CARES funds provided by the state. Rental Assistance to Individuals To provide financial relief to residents of San Juan Capistrano that have experienced a loss of income due to COVID-19, staff recommends that the City provide up to $200,000 in rental assistance. The amount paid per family would be limited to one month’s worth of rent. Staff recommends that the City use South County Outreach (SCO) to operate this program on a “turnkey” basis. SCO is already providing similar rental assistance program services to six South County cities, is highly experienced and qualified, and has expressed an interest in administering a program for the City. SCO would obtain evidence of COVID-19 financial impact, photo identification and social security numbers from applicants. SCO would also ascertain whether the family met maximum income requirements (30% of area median income) and provide case management assistance to recipients. This would include development of a budget that considers family income and living expenses. SOC charges a 10% administrative fee per grant to manage its rental assistance program, payable from CARES funding. SOC would front the funds expended for each rental assistance disbursement and then invoice the City for reimbursement. Food Distribution Funding In order to support nonprofit organizations that provide essential food distribution services to our community, staff recommends providing grants up to $25,000 to those nonprofit organizations that are headquartered in San Juan Capistrano and that have an established, well-functioning food distribution program that regularly feeds in excess of 200 San Juan Capistrano families per week. To put these funds to work as quickly as possible, pending City Council approval of the program staff would initiate a limited application period. In order to make maximum use of State and County CARES funding, staff proposes to modify the proposed allocation of funding described in this agenda report as needed if certain programs are over/under subscribed by applicants. FISCAL IMPACT: Staff anticipates that this program will have no impact on City finances. Based on current federal and state guidance and consultation with the City’s independent audit firm, costs of the program described in this agenda report are expected to be eligible for CARES reimbursement. Since State CARES funding is disbursed in six monthly installments from August 2020 to January 2021, program funding will initially be advanced by the City using General Fund reserves pending receipt of all six monthly installments of State CARES funding. All costs eligible for either County CARES funds or State CARES funds must be incurred by December 31, 2020. ENVIRONMENTAL IMPACT: Not applicable. City Council Agenda Report August 18, 2020 Page 4 of 4 PRIOR CITY COUNCIL REVIEW: On June 16, 2020, the City Council authorized the City Manager to sign the County COVID-19 Expense Reimbursement Agreement, which provided funding for $313,000 of public health expenses. COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: This item does not go through the Commission/Committee review process. NOTIFICATION: • Chamber of Commerce • Small Business Development Center • RSG, Inc. • South County Outreach ATTACHMENTS: Not applicable.