Elk Grove loosens ARPA business recovery grant program; Uncertain if some businesses received cash grants larger than revenue losses

At their regular meeting last night, the Elk Grove City Council unanimously approved a modification to expand eligibility for the American Rescue Plan Act (ARPA) of 2021 to aid local businesses. During their deliberations, the city management team could not answer city council inquiries if companies received cash grants larger than reported revenue losses. 

The most significant modification will allow Elk Grove-based businesses that experienced any documented loss from the COVID-19 pandemic to be eligible for a grant. The previous threshold was a 25-percent loss in revenue.

In her presentation, economic development manager Rachel Brown reported that of the $4 million designated for small business grants, 186 of 272 applicants had been approved, totaling $1.22 million. There were 74 applicants not qualified and 12 pending approval. 

Of those 74 applicants not qualified, half experienced revenue loss below the 25-percent threshold.    

Additionally, the list of acceptable financial documents was expanded for eligibility. Currently, the submittal of tax returns is required for consideration. 

"Some businesses really struggled with submitting tax returns, so I'd like to broaden the acceptable financial documents to allow revenue and expense documentation other than tax returns," Brown said. "We still prefer to get the tax returns if the business has those."

Brown did not specify what documents would be acceptable instead of tax returns. She said the new guidelines would expand eligibility to about 40 businesses. 

During public comment, Elk Grove Chamber of Commerce president Angela Perry asked that businesses that opened after the onset of the pandemic be included for grant consideration. Later in the hearing city manager Jason Behrmann said he believed ARPA does not permit those entities to be considered. 

During city council deliberation, Councilmember Kevin Spease sought clarification on the grant amounts a business could receive. Brown, who could not answer Spease's inquiry, was assisted by Behrman, who said grants could not be more than the lost revenue reported. 

"If you only had a loss of $1,000 [in revenue] your grant amount is capped at $1,000, you're not going to get even if you are eligible for $15,000 [the maximum in one business category] you wouldn't get $15,000," Behrmann said. "That would be an easy amendment we can make to the suggestion."

City Councilmember Stephanie Nguyen asked, "I don't know if those [businesses] that qualified were getting more than what they lost."

Brown was unable to answer if there were businesses that received grants that exceeded their reported revenue losses. She did acknowledge to Nguyen that there could have been businesses that received grants greater than their reported revenue loss.

Mayor Bobbie Singh-Allen brushed aside Nguyen's concerns.

"We can't penalize that which we already allocated; this just now expands the eligibility pool without being punitive," Singh-Allen said. 

Behrmann said that the previous 25-percent revenue threshold probably prevented that from happening but could not say with certainty. 

"Based on the grant amounts that we awarded, it is less likely that somebody was granted more than their loss," he said.

Behrmann added, "We can take a look at it, but it is probably much less likely under the first round."   

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D.J. Blutarsky said...

Accepting documentation other than tax returns is foolish. I always suspected the underground economy among small family-owned businesses in Elk Grove was thriving. Now they can have their cake and eat it too.

As for those businesses that opened during the pandemic and may not have filed their taxes yet. Don't most businesses have to file quarterly tax returns and make quarterly sales tax payments to the State?

And no offense to the Economic Development staff, but do any of them have accounting degrees and can they even tell the difference between a Profit-Loss statement and a beer coaster from Dust Bowl Brewery!

The whole program is a money grab being managed by non-money people.

Eye on Elk Grove said...

Where are the city of Elk Grove's financial checks and balances when it comes to the millions of dollars received in COVID relief monies?

What is it really? Here is our balance, write us a check. No questions asked? No need to provide financial proof. No need to be in compliance with State and Federal agencies? Where are the Generally Accepted Accounting Principles (GAAP)?

It appears there is no financial oversight whatsoever. And why couldn't the staff person in charge of allocating the grant money answer questions that were clearly under her purview.

And of course, no questions asked of the Elk Grove City Council members' business/charity friends who received ample funding.

Yep, business as usual at the city of Elk Grove!

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