Castle Rock took measures to get small business owners and town residents some financial relief during the COVID-19 pandemic at an emergency meeting on March 30 and will discuss getting additional …
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Castle Rock took measures to get small business owners and town residents some financial relief during the COVID-19 pandemic at an emergency meeting on March 30 and will discuss getting additional aid for the community in the near future.
Council unanimously approved two programs March 30. The first will provide small businesses and at-risk residents with relief on water bills. The second will help qualified small businesses get loans as they wait for relief from the state and federal government, which might not come until some businesses have depleted reserves, councilmembers said.
Water Director Mark Marlowe said social distancing, the governor's stay-at-home order and other measures all translate to local impacts on businesses and residents.
“So, what we wanted to do was develop some programs to provide some assistance to the town's customers during this time that we've just never seen, certainly in my lifetime,” he said.
The water department's small business program will provide a three-month credit on water bills, based on the average small business bill at this time of year. That's about $500 a month.
For qualifying businesses, a $1,500 credit will be applied to their account. Half will be a grant the business does not need to repay, and half will work similarly to a microloan. Businesses will begin repaying $750 of the credit three months after it was issued, interest-free and over the span of 12 months. Marlowe said that equals out to an additional $62.50 on the monthly bill.
The residential program works similarly. The Help & Hope Center, formerly the Douglas/Elbert Task Force, will determine which residents qualify for the program. Those who do will receive a three-month credit on their account. The average residential water bill this time of year is $100, so residents would receive a $300 credit.
Half of the credit will act as a grant and the remainder will be paid back like a microloan. For residents, paying back the $150 loan at zero interest over 12 months equates to an additional $12.50 on his or her water bill, Marlowe said.
Marlowe said staff is still working with the Hope and Help Center to determine parameters for who qualifies to enter the program.
“The idea is they would qualify the customer based on need and then provide us with a list and we would just handle it administratively,” he said.
If businesses and residents use less water than the what the credit covers, it can extend longer than three months. Similarly, if they use more than was it covers, it could be used up sooner than three months.
Council approved amending the budget and appropriating $800,000 from the Rate Revenue Stabilization Fund to support the programs. This year the fund holds $1.2 million, Marlowe said.
The town will allocate $500,000 to the small business program and $200,000 for the residential program. The remaining $100,000 will cover costs to waive fees and avoid shutting customers' water off during the pandemic.
“As council knows, we have not been charging — for two to three weeks now — disconnect fees, late fees, not-sufficient-fund fees, and we're proposing to continue that through June 30,” Marlowe said.
The town is launching its small business loan program in collaboration with the Castle Rock Economic Development Council and using the platform KIVA, an international nonprofit originally founded to help underserved communities and small business startups. KIVA allows businesses to raise funds through crowdsourcing.
The KIVA loan program can serve up to 100 small businesses in town. Businesses can pursue a loan of up to $15,000 at 0% interest for three years. The town's Economic Development Fund will provide $1,000 of the loan. The town will provide an additional $1,000 grant to the businesses if they raise $13,000 in the crowdsourcing program.
With KIVA, a business first applies for a loan and then goes through an underwriting and approval process. Once approved, a business enters a fundraising stage, in which lenders from across the globe can view the campaign online and choose to crowdfund the loan at increments of $25 or more.
The borrower then repays the loan and lenders can use it to fund new loans, donate or withdraw the money from their KIVA account. KIVA is an all-or-nothing program, said EDC President and CEO Frank Gray. If a business does not meet its goal, the money flows back to investors.
Frank Gray and Mayor Jason Gray likened the program to a bridge loan — something businesses can use while waiting for other assistance programs like SBA loans, or Small Business Administration loan.
“If you were waiting on your SBA loan, you could get this loan in the meantime and then you could use these funds, and then as your SBA loan came in you could pay these funds back right away,” Mayor Gray said, which Frank Gray confirmed.
It is unclear how quickly a business can access funds from the KIVA program, and it may vary.
“We think we've got an interesting program,” Frank Gray said. “The proposal we have before you tonight is kind of a different and innovative way to approach economic development, and I think drastic times call sometimes for some drastic measures.”
A survey of roughly 2,000 businesses found most operations anticipate reserves will run out within four to six weeks.
Gray and the EDC originally proposed creating a $50,000 program, but Town Manager Dave Corliss recommended amending that to $200,000, which council approved.
“That's four times the amount of money that was presented in Frank's program but it's a significant investment in the small businesses,” Corliss said.
The town's Economic Development Fund has approximately $2 million budgeted this year, Corliss said, although at least half is set aside for other town projects, like future phases on the Sturm Collaboration Campus development.
Both the water bill program and the KIVA program are first-come, first-serve.
Based on the number of small business water accounts, the town estimates there are at least an approximate 300 small businesses in Castle Rock, meaning the KIVA program can serve roughly a third of them.
Several councilmembers made urgent pleas for the town to find additional ways to get businesses and residents assistance in the coming weeks, and fast.
Mayor Pro Tem Jason Bower noted residents' desire for a small-town feel in Castle Rock and frustration among some, according to town surveys, toward the number of franchises in town. Small businesses add to the character of Castle Rock and losing them would lead to “a dramatic change to our community and it is going to affect the residents greatly,” Bower said.
“If we're talking about 300-some businesses, that money is going to be gone quick, and I'm telling you, a thousand bucks isn't going to make an impact,” Bower said.
Councilmember James Townsend urged council to take action on March 30 and continue discussions about other ways to provide the community relief.
“We don't want to pass up good for perfect,” he said. “I think we really should take a look at passing this for now.”
Councilmember Jess Loban echoed Bower and moved to have the council hold a study session to explore more aid and relief for small businesses.
“This is fundamentally transforming what we have as a community,” Loban said, “and we have to be able to do something to stop the bleeding. We are in triage right now.”
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