Businesses in East Lansing are scrambling to survive, affected not only by the governor’s emergency executive orders but also by the sudden departure of tens of thousands of college students and daily commuters who would normally be in town spending money every day.
Now, East Lansing’s Downtown Development Authority is trying to help with emergency grants to get businesses through the COVID-19 crisis.
A look at one local establishment, Crunchy’s illustrates the struggle. Often a lively, crowded place when Michigan State University is in session, Crunchy’s has had to lay off 20 of its 35 employees and has restricted business to curbside pickups of beer and food. [Disclosure: Crunchy’s financially supports ELi’s weekly news digest.]
It took a few weeks, but the money to help Crunchy’s finally came in Thursday from the Paycheck Protection Program, the federal small business relief funding aimed at helping small businesses stay alive and pay their staff.
Mike Krueger, the owner and manager of the popular East Lansing restaurant, said he’d applied for the money on April 3, as soon as the program went live. He had to wait it out to see if he’d get what he requested, which will help cover a 75 percent decline in sales since February.
Krueger still doesn’t know if the low-interest, eight-week loan will be forgiven or if he’ll be able to follow all the bureaucratic rules. “There’s so many strings, I don’t know how much it will help,” Krueger said.
The federal loan Crunchy’s received is based on a two-month average of payroll costs from 2019, and only 25 percent of the grant can go toward rent and utilities or much of it will have to be paid back. With customers barred from coming indoors, Krueger said he didn’t know how he could dispense payroll beyond paying furloughed employees to sit at home, since he will not have work for them until the governor allows him to open his establishment’s doors.
To try to stem the economic fallout, East Lansing’s Downtown Development Authority (DDA) approved a new grant program on Thursday that will offer $2,500 to 100 businesses that operate in the DDA’s district. That includes the downtown core extending along Grand River Avenue east to Hagadorn Road.
The DDA (on which Krueger sits) approved paying $10,000 to the Lansing Area Economic Partnership to administer the program. LEAP had conducted a regional program earlier this month that helped a few businesses that operate in East Lansing, including the Peanut Barrel, El Azteco, Eastminster Child Development Center, B/A Florist, and Mad Eagle boutique.
The earlier regional LEAP program had almost 2,000 applicants for 60 grants. In that case, a cohort of reviewers decided on the awardees after specific measures to weed out financial conflicts-of-interest among reviewers.
East Lansing’s Director of Planning Tom Fehrenbach told the DDA at the outset of the discussion that East Lansing’s DDA has about $324,000 in its project development fund that the authority could allocate for relief programs without needing City Council’s approval.
Fehrenbach had first proposed a $5,000 grant for 30 businesses with administration by LEAP. The final idea – to spread more money more widely, with $2,500 grants to 100 businesses – was proposed by DDA member Jill Rhode.
Noting that such funds are usually used for things like repairing sidewalks, Rhode asked, “What good are sidewalks if every building is empty?”
The DDA is expected to meet again this week to define eligibility criteria for the program. At Thursday’s meeting, several members made clear they wanted the money to go to independent, locally owned businesses, and not corporate outposts such as Target or CVS. Locally-owned franchise operations (like 7-Eleven) remained an open question.
DDA members were also generally in favor of giving money to businesses that had not already benefitted from federal, state, or regional emergency funding.
Even so, DDA member Jeff Smith said the program might inevitably end up “a bit of a lottery,” since about half of the businesses that operate in the DDA would not get any relief.
DDA member Luke Hackney, the owner of screen-printing business RetroDuck, believed all businesses that pay into the DDA millage should benefit from the grants. Hackney was the only DDA board member to vote against the new LEAP-coordinated program.
City Manager George Lahanas, on the DDA by virtue of his office, countered that the plight of businesses like Target are far different than local small businesses. Lahanas also said doing the grant program in-house would cost the City in staff time and take too long to get up and running.
Fehrenbach said LEAP could have the money allocated by May 15, and DDA Vice Chair Jim Croom said that was a major reason to hire LEAP: “This program needs to start now.”
City Council is expected to take up possible measures to help businesses throughout East Lansing, including potentially reducing or eliminating some licensing fees. Lahanas said he would recommend that Council waive business license fees up to about $2,000 per establishment.
DDA member Lynsey Clayton suggested that the City also remove permit fees for outdoor dining as restaurants and pubs look to reopen at least outside dining this summer. Right now, those with outdoor seating in public spaces are charged $50 per seat per season by the City of East Lansing.
As ELi has reported, the City of East Lansing recently received $289,000 in federal emergency Community Development Block Grant funding. Fehrenbach said at the DDA this past week that aid from that could be given to businesses, if it’s used to make payroll for workers with low or moderate incomes.
Council member Jessy Gregg told ELi last week that she wanted to find a way to shore up the finances of small businesses outside the DDA’s jurisdiction. “We just have to figure out where the money is coming from,” she said.
Gregg owns the boutique fabric shop Seams on Grove Street and did not apply for grant money to avoid perceptions of political favoritism from LEAP. Her business has been closed as non-essential except for mail orders and special deliveries.
At the DDA meeting, City staff also proposed a gift card program through which the DDA would buy up gift cards from businesses and then sell them in the summer to interested patrons. This proposal – a way for the DDA to essentially lend out money to businesses – was generally unpopular.
A more popular idea? Continuing free parking in city-owned lots and garages.
“Free parking all summer long may be a better use than a gift card,” said Rhode.
On Friday, Governor Gretchen Whitmer amended her orders to allow non-essential businesses to reopen for curbside pick-up and for delivery.
There’s no word yet on when the DDA will meet again. City Council is set to meet this Thursday, April 30, at 9 a.m. according to the City’s electronic meetings alert page.