AUSTIN (KXAN) — At Tuesday’s work session, Austin City Council heard from city staff about how they plan to set up a grant application program aimed at throwing an economic lifeline to struggling music venues, legacy businesses and childcare operations.
At present, this program would distribute a total of around $15 million drawn from other areas of city funding or delays to planned investments, with around $5 million going to each of these three focus areas (though city staff noted a total of as much of $1.5 million may be needed to pay the third-party grant distributor).
The city has already distributed more than $37 million through COVID-19 relief programs already, but economic setbacks as a result of the pandemic persist across the city. Given Austin’s moniker as “the Live Music Capital of the World,” music venues in the city have expressed particular frustration with being skipped over in prior pandemic relief efforts.
After hearing from childcare providers, restaurants and music venues in dire straits and at risk of closing permanently, city council asked city staff to quickly look for any additional city funding that might be available to help these sectors. City staff came up with this $15 million plan for Save Austin’s Vital Economic Sectors (SAVES), which council voted to approve on Oct. 1.
SAVES includes three programs:
- Austin Childcare Provider Relief Grant
- Austin Live Music Venue Preservation Fund
- Austin Legacy Business Relief Grant
All of these programs will use a random lottery process to select recipients. Applicants must be located within a City of Austin Council District.
Council Member Ann Kitchen expressed concern about this lottery process, worrying that some of Austin’s iconic businesses may be left out of the relief effort.
Austin’s Economic Development Director Veronica Briseño replied, “I’m going to be very honest, there is no doubt that businesses are going to be left out. The need is just too great for the amount of funds that we have.”
Briseño’s department explained to KXAN that while a lottery is the current format listed to distribute these funds, its up to council to either approve or change the guidelines for administering the grants.
Council Member Jimmy Flannigan said that the lottery method seems like the “best of a worst set of options” and placed blame on state and federal government for forcing cities to pick the winners and losers among businesses during the pandemic. there is no perfect answer when we are forced in a place of picking winners and losers
“I want these businesses to hear that if the funds were there, we would help everyone,” Flannigan said.
“And the funds are sitting in Governor Abbott’s bank account, and that ultimately is what needs to happen,” he added, in reference to CARES Act dollars allocated to Texas that have gone unspent.
Austin Legacy Business Relief Grant
City staff explained organizations can apply for the Austin Legacy Business Relief Grant if they fall into these categories: art service organizations, arts venues, bars, childcare providers, live performance and music venues, restaurants and studio spaces. Staff said these businesses need to have been established in the City of Austin for at least 20 years, though both Mayor Steve Adler and Council Member Jimmy Flannigan expressed some reservations about the 20-year requirement.
The grant will be a one-time award of either $40,000 or $60,000 depending on the business.
The $40,000 grant would be available to businesses with fewer than 25 full-time equivalent employees and have been in operation for more than 20 years.
The $60,000 grant would be available for businesses with more than 25 full-time equivalent employees or businesses who have been in operation for more than 30 years.
Currently one of the criteria for applicants is that they “have a low likelihood of a similar business reopening in the same or nearby location due to increased rents or other market factors.” City staff said they included that requirement at council;s request.
In an email to KXAN, a spokesperson for the city’s economic development department explained that particular criterion, “could disqualify some applicants from the Austin Legacy Business Relief Grant, including owners of restaurants.”
But the department is waiting to see if that criterion is approved by council on Thursday in its current form.
The city’s Economic Development Department told KXAN that there are an estimated 327 businesses eligible to apply for this grant. But if the city awarded the maximum amount allowed under each set of guidelines, the city anticipates only 83 businesses will receive these legacy business grants.
Austin Childcare Provider Relief Grant
City staff explained the Austin Childcare Provider Relief Grant will offer one-time grants that range between $2,500 and $60,000. They intend to focus this funding on licensed operations that provide full-day childcare to children ages five and younger, as well as operations that have a Texas Rising Star accreditation, National Accreditation, or are scheduled for a TRS assessment.
Recipients of prior city of Austin childcare relief grants may apply for this funding. Childcare providers with multiple eligible locations may receive funds for each site.
How much funding providers receive through this grant varies based on their enrollment, service to essential workers, number of employees, equity considerations and their acceptance of childcare subsidies.
According to information provided by Austin Public Health, there are 357 childcare centers that operate in the city limits. The economic development department said if it awarded the maximum allowed amount under each set of guidelines, they could award childcare grants to 83 applicants.
Austin Live Music Venue Preservation Fund
Live music venues in the city may apply for funding of up to $40,000 per month for six months through the Austin Live Music Venue Preservation Fund. Each recipient’s grant total will not exceed $160,000.
City staff said this funding will be focused on live music venues that have been closed or operating with significantly reduced capacity (below 75% operational capacity compared to 2019).
Applicants have to submit a “Live Music Venue Equity Strategic Plan” and those awarded the funding will be required to participate in Undoing Systemic Racism training. The city plans to provide concepts to help applicants make plans that are actionable in these areas.
The city says every effort will be made to begin distributing this funding within 30 days after the application period closes.
City staff believes there are between 70 and 110 live music venues in the city. The Economic Development Department told KXAN that if the city awarded the maximum allowed under the guidelines, they could award these music venues grants to 31 live music venues.
Where is the funding coming from?
The specifics of where this $15 million will come from still have not been approved in their entirety. The council has already approved $6 million for this fund, which would come from changing how the city plans to pay for an upgrade of its Human Capital Management System.
Council didn’t go for the previous proposal to fund the rest, so the city has come up with another solution. The city is expected to end the year with $13 million more in sales tax revenue than they were anticipating, so the city is suggesting that $8.5 million of those sales tax revenue dollars be used to pay for the rest of this SAVES program funding.
Council will vote on whether to approve this $8.5 million chunk of funding on Thursday.