Should the City give direct financial grants to local businesses? – An opinion

By Chip Ross
City Commissioner
June 3, 2020

Commissioner Chip Ross Photo by Stephan R Leimberg

Is It Enough?

Recently several Letters to the Editor appeared [in the News Leader] requesting the City to step up and fund small business relief. As a City Commissioner, on a board of five, I can only give my perspective on how the City Fernandina Beach has responded and is responding to the needs of our local community during the pandemic.

The entire community has been dealt a huge setback with the pandemic. With over 1,600 local businesses, greater than 12,000 permanent residents, and more than 1.2 million yearly island visitors, the City has the responsibility to serve all of its citizens’ and visitors’ needs for health and safety. Without adequate funding for maintaining critical infrastructure and services (police, fire, rescue, water, sewer, trash removal, roads), the City would no longer be able to provide a safe place to live, visit, or conduct business. Business recovery is far more challenging in an unsafe, unstable environment.

Safety of the community is critical during the pandemic and has become more costly with additional expenditures. Guaranteeing the health and safety of our first responders and law enforcement officers is paramount in allowing them to continue to serve the community. Safety costs have also increased with more residents and visitors moving outdoors. Due to a recent, unprecedented increase in the number of beach goers, the City is funding increased police and beach ranger presences at the beaches to ensure the safety of businesses, citizens, and visitors alike. The City continues to fund cleaning and safety personnel for the beaches and downtown. Without a safe, clean downtown and beach environment, tourists will not return to the island allowing a full recovery.

In an effort to help provide food security and stability to the lives of our residents, our unemployed, and our businesses, the City contributed over $240,000 to local food banks and other nonprofits to provide food security for laid off employees and other residents in need of assistance. As mental health cases surge due to job losses, the City supported mental health efforts with a $40,000 contribution to local nonprofits. To further ease economic pain, the City has also suspended all water disconnections and late fees for both residential and commercial users. At the next City Commission meeting a 14.5 % reduction in waste water charges will be proposed for both residential and commercial properties.

Our city has also heavily subsidized the downtown Main Street organization which has provided a daily flow of information for businesses regarding federal programs, their availability and requirements. It has provided signage for curbside pickup which was processed through City staff, and it provided daily marketing on social media and the Main Street website for downtown businesses. The group provided businesses with opportunities for discounted PPE, and a coordinated forum for businesses needing assistance and SBDC experts on the CARES Act programs. It sponsored and implemented a virtual Shrimp Festival weekend, sponsored and implemented marketing videos for several businesses, and sponsored a new “We Are Open” video. To meet the needs of new restaurant safety requirements, it developed a new temporary use process to allow businesses to utilize the City’s right of ways for additional seating. It has conducted two downtown surveys and one customer comfort survey. And it facilitated a connection between 3 downtown restaurants and the Council on Aging to provide meals for the COA’s Boots on the Ground program.

Recently a number of businesses have suggested that the City give direct financial grants to local businesses. For the last several years, the City has overestimated its expenses and underestimated its revenues in its budgeting process. As a result, the City’s finances are strong and stable with adequate reserves. However, due to the City’s proximity to surrounding bodies of water, our reserves are maintained to be available to repair critical infrastructure due to severe hurricane damage. Without available funds for critical infrastructure repair due to storm damage, residents would be unable to return, and no business could reopen. Even a modest grant of $1,000 per business would reduce the City’s reserves by $1.6 million dollars. If the City provided $5,000 to half the businesses located in the City, the City’s $4 million reserves would be gone.

The Nassau Chamber of Commerce made a number of requests to support small businesses. Four days after receiving the written request, the City Commission approved the Chamber’s request of $5,000 to fund the purchase of sanitizing/protective supplies. Other requests included waiving “all temporary sign and banner permits through 2020 to include fees and penalties”. In response, the Chamber has been advised that the City’s Land Development Code Section 5.04.13 states: “a temporary sign does not require a permit from the City”. Banners are allowed for Special Events with permission of the City Manager. Also, the City is presently in the process of developing the requested new temporary use of right of way process without fees for businesses to conduct outdoor dining in the City.

Recently the City has dredged, repaired and upgraded the Marina with a projected completion date for the end of July 2020. In the process, it has acquired a $15 million debt. The Marina was reconstructed partially at the urging of the local downtown business community to provide “foot traffic” for downtown merchants. As a result of rebuilding the Marina, the City provided 16 waterfront, small businesses with a tax subsidized venue. Commercial business slips pay rates equal to noncommercial slip fees. The businesses receive unlimited dockside fresh water usage, trash removal, and restroom facilities for their patrons.

The Chamber also requested that the City suspend the monthly marina boat slip fees for small businesses registered in the City through 2020. To the best of my knowledge, the Marina has no intention of evicting any tenants for non-payment at this time. The 16 marina-based businesses utilize 15% of the rentable space. The marina is projected to lose more than $300,000 with an additional estimated $900,000 debt payment due in 2021. The taxpayers are already heavily subsidizing the Marina and its 16 businesses by paying the debt and the projected operating losses. The taxpayers in the City would essentially be paying more to support the Marina and its businesses if commercial rents were reduced or suspended.

It would seem that the Chamber’s request requiring a 20% preference for local businesses and mandating that purchases made outside Nassau County not exceed 25% of the City’s annual expenditures would significantly escalate the cost of procurement to the detriment of taxpayers. The City already makes an effort to buy locally. It has a local purchasing policy which states, “In order to stimulate business and economic activity within the Fernandina Beach area and for convenience, purchases shall be made from local merchants whenever their quotations represent the best value than any other received, provided all qualifications and requirements are met. Consideration of procurement costs (travel expense, personnel time shipping charges, etc.) may be taken into account in determining the best value and quality.”

The City Manager and staff are currently evaluating suspending the collection of the 2021 local business taxes. Most businesses are charged $52.50 for the business tax. The process is in place so that the City can monitor which businesses are entering and operating in the City and educate any new business about any City, State, or Federal regulations that might apply. This tax also funds sidewalk repairs, signs and lighting throughout the City. Last year the fund generated about $160,000.

The City is committed and focused on maintaining essential services in providing a safe, functional City for citizens to live, operate businesses, and visit during these economically challenging times. Without raising taxes, the City is committed to maintaining the delivery of essential services and amenities to all citizens that make Fernandina Beach a desirable place to live and operate a business.
As the pandemic and the economic consequences continue to unfold, additional avenues will need to explored by the City to assist citizens, non-profits, and local businesses to navigate and survive the hardships of the COVID-19 pandemic. If we all work together, we can move forward as a community and overcome the economic challenges that lie ahead.

If you have any further questions or concerns, I may be reached at [email protected] or 410-394-0220.

Newest Most Voted
Inline Feedbacks
View all comments

Mark Tomes
Noble Member
Mark Tomes(@mtomes)
3 years ago

Wow, I had no idea how much the city already helps local businesses. It is interesting how some people will decry any help to individual citizens but have their hands out ready to get money from the government when times get tough for their business. Time to stop this hypocrisy and work towards a true democratic socialism.

Donna Paz Kaufman
Donna Paz Kaufman (@guest_57774)
3 years ago

I appreciate the response by Commissioner Ross and would like to add one reality for consideration. Small businesses never will win when “value” is the top priority. Wall Street has funded large corporations to undercut the prices of small businesses, sometimes below our cost, to gain market share. Plus, most if not all of our locally owned businesses have paid more in taxes than large corporations like amazon. So, all of us must also ask about our core beliefs when it comes to keeping our local economies strong and diverse, contributing to local jobs, and keeping our community unique with products and services that are curated, not mass produced. Like all of life, this too is nuanced.

Betsie Huben
Betsie Huben(@betsie-huben)
3 years ago

Thank you Commissioner Ross for providing all these many details of what has gone on as the city has tried to help its residents get through the pandemic. No doubt, staying Safer at Home has made it much harder to see and appreciate what has been done. Thanks to all the commissioners for their continued hard work to identify problems and work to provide solutions during these hard times.

Steve Vogel
Steve Vogel(@stevedec)
3 years ago

Here’s what another city of similar size is doing. Up to $300,000 of low interest loans plus contributions from citizens.

Alexandra Reed Lajoux
Alexandra Reed Lajoux (@guest_57827)
3 years ago

Thank you, Commissioner Ross for this detailed and thoughtful summary regarding City support of local businesses. I see that you care. As such, I hope you will agree with me that the City needs to strengthen its so-called local purchasing policy. It states that “purchases shall be made from local merchants whenever their quotations represent the best value than any other received, provided all qualifications and requirements are met.” As such, that policy shows absolutely no local preference. It merely pits locals against all others vying to be “best.” Although procurement costs will be considered, that may not be enough to tip the balance in favor of local. Many national business intentionally undersell local merchants by offering free shipping, for example. Let us strengthen the policy to ensure that city contracts goes first and foremost to qualified local businesses. The City government must be financially prudent, but ultimately, it is not a business; it is a servant of the community.