How to use federal money allocated to help cities rebound from the COVID-19 pandemic was a topic of lengthy discussion at Tuesday’s Edmonds City Council meeting — and the matter will be discussed again at next week’s June 16 business meeting.

Edmonds is set to receive $1.2 million in CARES (Coronavirus Aid Relief and Economic Security) Act funds, and Mayor Mike Nelson last week proposed that the city use two-thirds of the money ($800,000) to provide grants of up to $10,000 for small Edmonds businesses.

Nelson also proposed that the remaining $465,100 in CARES funds help defray unbudgeted city costs related to the COVID-19 outbreak, including extra custodial staff, requirements to frequently sanitize facilities, security measures at parks and extra signage.

City Economic Development Director Patrick Doherty explained Tuesday night that the vision for the business grants program is to allocate them to storefront business — including retail, restaurants, and hair and nail salons — that were forced to close during Gov. Jay Inslee’s stay-at-home orders aimed at slowing the COVID-19 outbreak. Under the mayor’s proposal, qualified businesses would have a minimum of two employees and a maximum of 30 workers. The business would also have to show an at least 30% loss in business/revenue year-over-year in April and/or May 2020.

“While certainly most businesses have suffered during this crisis, storefront businesses have largely not been able to be open,” Doherty said, adding that in some cases businesses’ revenue has dropped up to 90 percent. Those storefront businesses provide hundreds — if not thousands — of jobs in the community for entry level or lower-skilled workers, Doherty added, and ensuring those people have jobs will help the lower-income households in Edmonds who have suffered financially during the crisis, he said.

To select grant recipients, the city has been working on selection criteria using a ranked numeric system, with extra points given to businesses owned by women, veterans and minorities, and — to ensure geographical distribution across city — for those outside of the Edmonds Bowl. Businesses in the creative sector would also receive more consideration, in a nod to Edmonds’ Creative District designation. Another factor would be what other grant money businesses have received.

The city loans would be forgivable if the business stayed afloat for at least four months after the money was provided, Doherty said, noting that the grant money would fill the gap between the summer months and holidays — often a busy time for businesses.

Doherty also addressed a question raised both by some councilmembers and local business owners: Why aren’t businesses with one employee eligible? Doherty said the program as proposed focuses on two to 30 employees because businesses that employ more people are helping lower-income households even more and “you get more bang for your buck.” Edmonds has about 210 business with two to 30 employees and changing the number to one to 30 would expand the grant-eligible pool by another 500-600 businesses.

“You don’t have enough money to give meaningful grants to every applicant,” Doherty said. A $10,000 grant is “a meaningful amount that will help businesses weather the storm,” Doherty said. “If we spread the peanut butter too thin we worry that it won’t be a meaningful impact if we were going to give a couple thousand or $3,000 to every single business.”

Councilmember Laura Johnson said she didn’t have enough concrete information to determine how great the need is for local businesses, noting that some firms have received relief while others have not, and relief is still coming in. As a result, the picture of how many businesses need help may look different next month, she added.

“I do want to use these funds to help our small businesses,” Johnson said. “I think that is priority, they are struggling to pay rent, to pay employees, and to safely reopen and stay open. However, we also want to help our families that are struggling to pay the bills and stay in their homes. The question is, who has the most need here and what’s the best use and will have the widest and most lasting impact?”

As a result, Johnson said she believes the safest approach would be a 50-50 split of the $800,000 between businesses and residents in need.

Doherty replied that distributing the money to residents wouldn’t have much impact. For example, he noted that Edmonds has 1,663 low-income households earning 30% of the countywide median income, and if the city distributed the $800,000 just to those households it would result in a one-time check of $480, which “is not a lasting sustainable change.” On the other hand, investing in businesses where those residents may have jobs, or could get a job, “is potentially a more lasting and sustainable approach to helping them out of their situation,” Doherty said.

He also added that the city is already helping households through its just-launched $100,000 housing relief program, as well through funds allocated to the help the Edmonds Food Bank and Senior Center.

Councilmember Diane Buckshnis said she wanted to ensure that grants are distributed outside of the Edmonds Bowl — a desire echoed by some other councilmembers — and added she also believes that sole proprietors should be eligible.

Councilmember Vivian Olson said she thinks that the city has done a better job than it ever has in trying to reach businesses outside of the Bowl noting that she personally passed out 120 multilingual flyers containing COVID-19 financial relief information to non-Bowl neighborhoods, including Perrinville, Highway 99 and Five Corners.

Regarding suggestions that money be allocated for human services, Olson pointed to Doherty’s previous assessment that allocating the city’s federal funds to residents most in need would only result in a one-time payment of $480 — and that “is going to make very little impact” compared to helping local businesses.

But other councilmembers were of the opinion that some of the $800,000 should be dedicated to assisting residents in addition to businesses.

Council President Adrienne Fraley-Monillas said she agreed with Laura Johnson that a 50-50 split between small businesses and citizens may be a better option than the mayor’s current proposal. She added she has been talking with citizens living on very low incomes who have been laid off and need help with utilities, day care, food and medical costs.

Councilmember Luke Distelhorst said that he spent the weekend researching what other cities and counties are doing with their CARES money, and discovered that most of them are allocating some of it to human or social services “to take care of their residents most in need.”

While Distelhorst said he appreciates the struggles of small businesses, “we need to have a significant portion (of the CARES fund) going to our low- or low, low-income residents.”

Councilmember Susan Paine also agreed with the idea of a 50-50 split, adding it was important to support “our neighbors who are so close to the economic edge.

“We need to make sure we reach our residents who don’t have much cushion,” she added.

Councilmember Kristiana Johnson said any plan for using CARES funds should ensure that the city is reimbursed for all expenses incurred during the pandemic. Doherty replied that the estimate of $435,000 does include all unexpected expenses, with the exception of the $200,000 that Nelson reallocated from other budget savings to three nonprofits for COVID relief: the Edmonds Food Bank, the Edmonds Senior Center, and the Edmonds Chamber of Commerce Foundation.

Some councilmembers also suggested looking into the possibility of shifting unused city money that has been allocated to the Edmonds Chamber of Commerce Foundation’s WISH Fund, which finances business-to-business grants for services — and instead use it for general business grants.

Doherty said that based on the council’s feedback Tuesday night, he would revise the CARES proposal and the council would discuss it further next Tuesday.

And the good news is, according to an announcement by Council President Fraley-Monillas, citizens next week will be able to offer public comments via Zoom. (Since remote meetings have been in effect, commenters have been limited to emailing their comments to the council.) The city will be supplying more details shortly about how to offer Zoom comments, she said.

Among other business Tuesday night, the council:

• Further discussed but didn’t take action on a recommended option for replacing the city’s aging sludge incinerator with a pyrolysis and gasification system. The matter will be discussed again at next week’s council meeting.
• Approved a utility easement for Snohomish Count PUD to provide power for the Edmonds Waterfront Center, now under construction.

— By Teresa Wippel