Austin pieces together additional $15M, hopes to save music venues, legacy businesses, child care

Coronavirus

AUSTIN (KXAN) — Austin City Council approved Thursday an additional $15 million in COVID-19 relief dollars for three sectors deemed vital in the city: music venues, legacy businesses and childcare providers.

City staff proposed Tuesday that the council create a $5 million Austin Music Venue Preservation Fund, a $5 million Austin Legacy Business Relief Grant and a $5 million childcare provider relief grant. This effort is being referred to as Save Austin’s Vital Economic Sectors (SAVES).

According to the presentation from city staff, the legacy business relief grant could go toward live music venues, restaurants and arts organizations pay expenses as a result of COVID-19. The childcare provider relief fund would be available to both in-home and center-based childcare providers pay expenses as a result of COVID-19.

So far, the groups representing musicians, childcare providers and restaurants who spoke with KXAN said they are grateful this funding is being put into motion. They feel it will only be a “small step” in the larger effort needed to truly save the businesses that need help right now.

A graphic from the presentation city staff presented to Austin City Council at a work session on September 29, 2020. Slide Courtesy City of Austin.

The city says the $15 million would come from:

  • $6 million from Human Capital Management System – switching from a pre-payment to a pay-as-you-go model
  • $4.8 million from the Pay for Success Reserve Fund – switching from prepayment to pay-as-you-go funding model
  • $3.7 million from temporary use of right-of-way fees – using revenue transfer offset by a 50 cent increase in the Transportation User Fee
  • $500,000 from the Capital Rehabilitation Fund – pushing less critical maintenance projects to the 2022 Fiscal Year

City staff said they looked into the possibility of dipping into the city’s reserve funding for this relief money but ultimately decided not to in order to honor the city’s goal of boosting its General Fund reserves from 12% to 14% and to account for future economic uncertainty.

These dollar amounts are significantly less than what music industry groups and service industry groups had expressed hope for at the last council meeting. Good Work Austin, an organization for hospitality and service industry workers asked for the city to allocate $75 million in relief dollars. Many in Austin’s music community had been calling for at least $10 million to be allocated into a music venue preservation fund.

The council, which has initiated many different financial relief programs over the course of this pandemic, asked city staff at that meeting to return in two weeks with any possible funding avenues they could find to help these industries.

Tuesday, the city also listed other areas they could explore to help keep businesses afloat, including hosting virtual performances with music venues and arts organizations, coordinating marketing campaigns to promote unique Austin businesses, increasing lease mediation services for local businesses and creating a guide to help businesses pivot during the pandemic.

Staff also requested council approve the creation of an Austin Economic Development Corporation at Thursday’s council meeting, this corporation could help with developing these priority city projects.

What impacted industries are saying

Patrick Buchta, executive director of advocacy nonprofit Austin Texas Musicians, said of this SAVES proposal, “we’re cautiously optimistic.”

“But that proof is in the pudding, and we need action, as always,” he added, saying this $5 million specifically for venues could be a start towards achieving the funds needed by places that host live music in town.

“Maybe it will help some of our venues at least cover some of the back rent that’s owed,” Buchta said of this new funding. “Let me be clear its not the fix-all solution we need, so we need to stay engaged with the city council to seek other sources of funding to turn the lights back on.”

Dr. Joan Altobelli, the vice president of licensed childcare at the YMCA of Austin said of this new funding effort “I think it’s a really positive first step towards saving some of the childcare providers that either are still in business or have recently closed temporarily.”

Altobelli explained that at the start of this year, YMCA’s childcare operations in Austin served 5,000 children. In March, they had to halt their operations entirely until the state allowed for essential worker childcare, and gradually ramped up numbers from there.

But she says YMCA of Austin has had to do furloughs, layoffs and shrink the ratio of instructors to kids due to the pandemic. Now their capacity is at around 500, which is 10% of what it would usually be.

“We’re not breaking even on our childcare any longer,” Altobelli said. “On our childcare, we are losing money every day, because we just simply can’t put that onto the parents and have them turned away because they can’t afford [child care].”

If YMCA of Austin qualifies, Altobelli said they will apply for this grant funding.

Mars Chapman, the co-owner at Casey’s New Orleans Snowballs in Austin says this SAVES proposal “is a step.”

“It’s a small step, and I’m not going to be too picky right now,” he continued. Chapman said that his business’ year-to-date sales at their store are 51% of what they were in 2019. Under this new proposal, his business would likely be applying for the legacy business relief funding, of which there is $5 million available.

Chapman noted that Austin businesses requested more than $120 million in relief dollars through the city’s earlier Austin Small Business Relief Grant and only $16.2 million was awarded (with only 35% of applicants receiving funding.)

“What I fear is the shuttering of many small businesses around town,” Chapman said. “That kind of catastrophic collapse would take years to recover from and would leave Austin a substantially changed city. It would also allow new ventures to move in, some I’m sure would be local. Others would be based elsewhere. That’s money flowing out of the local economy and a step toward being just like any other city.”

Adam Orman, owner of L’Oca d’Oro restaurant and a founding member of Good Work Austin said that from the outset of this relief effort, Austin had the opportunity to be “the first city in America to pass industry-specific, restaurant and bar assistance. It was a chance to do something really exciting.”

But the SAVES proposal with around $5 million available for legacy businesses did not line up with Orman’s expectations. Orman expressed concern about the $4.8 million in the program that would would come from the Austin’s Pay for Success homelessness initiative to fund interventions and services.

Both Council Member Kathie Tovo and Austin Mayor Steve Adler expressed concern about removing funds from this program, but Adler suggested that they approve the funding as city staff had written it on Thursday, then work out another means later to replenish the funds to the Pay for Success initiative.

But Orman worried that if the money for Pay for Success doesn’t get replenished, that businesses who took the assistance would be blamed.

“We don’t want it, and we definitely don’t want it since it’s only $5 million,” Orman said over the phone. “It ends up being sort of insulting to both sides.”

He went on to say that if the funding source of this program is going to include homelessness assistance, he expects that Good Work Austin will advise its member bars and restaurants not to apply.

Additionally, Orman said he plans to continue to ask the city to help support more support for salaries and opportunities to work.

“I think that’s the next thing that… the city can do that would be that would really help, and that they need to show more urgency about,” he said.

The need is great

Austin Mayor Steve Adler acknowledged that even these new relief dollar amounts may not be able to save many Austin business operations.

“The scale of the challenge we have in our community is just huge,” Adler said at Tuesday’s council work session. “The need is so great. We have so many businesses in our community who are just suffering. We really need federal help to deal with the scale of this challenge.” 

Adler noted this SAVES funding will be focused on businesses that face a significant likelihood of closing permanently.

Austin Mayor Pro Tem Delia Garza urged the community groups who have lobbied for this funding to “send the same email campaign to state leaders.”

“We need help from all levels of government to address these very big issues,” she said.

Other relief offered so far

A recent memo from the City of Austin explains so far during the pandemic, the city has distributed more than $37.5 million to support businesses, nonprofits and residents who have been impacted. The city says an additional $20 million is either currently being given out or will be distributed in the coming weeks.

  • Austin Economic Injury Bridge Loan Program
    • Began April 2020
    • $5.6 million in funds allocated
    • $645,000 in small business loans to 19 to 70 applicants
  • Relief in a State of Emergency (RISE)
    • Began April 2020
    • Applications for the second round of RISE funding (RISE 2.0) opened in Septmember
    • $12 million in funds allocated
    • $9.2 million in direct support to more than 7,200 households
  • Relief of Emergency Needs for Tenants (RENT) Pilot
    • Began May 2020
    • Another round of the program was launched in August
    • $12.4 million in funds allocated
    • $1.27 million to 1,681 households through direct rental assistance to landlords for one month
  • Austin Creative Space Disaster Relief Program
    • Began June 2020
    • $1 million in funds allocated
    • $987,943 to 32 of 65 applicants
    • Applicants requested $3.7 million, nearly four times the amount available.
  • Austin Music Disaster Relief Program
    • Began in June 2020
    • Reopened in August 2020
    • $1.5 million in funding allocated
    • $1.5 million in grants to 1,497 performing musicians impacted by COVID-19
  • Austin Childcare Provider Relief Grant
    • Began July 2020
    • $1.05 million in funds allocated
    • $1.05 million in grants to 72 of 120 applicants
  • Austin Non-Profit Relief Grant
    • Began July 2020
    • $6.35 million in funds allocated
    • $3.6 million in grants to 221 nonprofits impacted by COVID-19
    • The remaining $2.4 million is expected to be distributed later on in Septemer
  • Austin Small Business Relief Grant
    • Began July 2020
    • $16.5 million in funds allocated
    • $16.2 million in grants to 2,526 applicants
    • Applicants requested more than $120 million, nearly seven times what was funded for the program
  • Austin Creative Worker Relief Grant
    • Began August 2020
    • $3.36 million to 1,877 of 5,502 applicants
  • Austin Civilian Conservation Corps
    • Slated to begin in October 2020
    • $2 million in funds allocated
  • Technical Assistance Program
    • Slated to begin October 2020
    • $1 million in funds allocated
  • Worker and Customer Safety Program
    • Slated to begin October 2020
    • $1.5 million in funds allocated

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