Deanna Lorson: “This press release was not issued by city staff.”
COVID-19 has, “…unleashed an economic war on our city. We must go on the offensive and support struggling businesses and the thousands of employees they support.”
With that, Oceanside city councilman Christopher Rodriguez unveiled his plan to pull out $3 million from city coffers and disperse it to 150 to 300 local businesses in “gap funding micro loans.” The businesses selected would each get between $10,000 and $20,000. The plan was unveiled at an emergency April 1 city council meeting organized by Rodriguez two days earlier.
Christopher Rodriguez: “We’re not lending money to randomness.”
At that meeting, City Clerk Zeb Navarro said 76 people contacted the city in support of the small business loan program, while two were against.
Those who wrote in support included the owners of a South Oceanside clothing store/coffee shop called Captain’s Grounds, and a downtown store called Oceanside Jewelers which buys and resells gold, coins and jewelry. “We’re all waiting for something to happen,” says Oceanside Jewelers owner Chad Elliott. He says he’s heard nothing back from two different loan providers connected with the SBA (Small Business Association). “Meanwhile the landlord keeps calling, wanting his rent. If this [loan program] happens first, great.”
Oceanside Jewelers owner Chad Elliott: “We’re all waiting for something to happen.”
Rodriguez did not share the details of his program until the day of the meeting. His plan says businesses are supposed to pay back the loan in 24 months. Veterans are given priority as are businesses with more employees. “We’re not lending money to randomness,” Rodriguez said at the meeting.
Councilman Jack Feller did not like the surprise. “This is a total blindsight to me to have people talking about this before we even had a meeting. It was totally inappropriate to get emails on this Monday morning. Where did this come from?”
Rodriguez advanced the plan himself through the chamber of commerce and the Mainstreet Business Association.
Feller seemed miffed that he was not offered the same bailout opportunity over his Port of Subs sandwich business. “I wish in 1996 when we were coming out of that great depression there would have been somebody to have the foresight to save me $80,000 to move out of a vacant center.”
Feller raised the obvious question: should the city, an entity which does not normally provide business loans, now be distributing money to businesses who are claiming to be on the brink of survival? “We cannot in good faith give money to people without getting our return in investment. If they fail, will we be suing these people?...I would hate to be in that position. We’re going after people for a $50 parking ticket. This is a lot more serious.”
One local businesswoman who wrote in in support of Rodriguez's proposed loan program indicated she understood this program would have a lower qualifying credit threshold than that used by the Small Business Association. In a letter to the city, she explained that her credit score does not reach the SBA loan threshold: “I support the effort to provide micro-loans to the Oceanside business community. There are many business owners like me with credit scores who did not meet the small business requirement…since we are not homeowners and don’t receive the benefit of that.”
At that April 1 meeting, the city council voted to have staff come back at its April 22 meeting with ideas about how or if a city-sponsored small business loan program could be implemented. On the day after the meeting Rodriguez on his own sent out a press release headlined: “City of Oceanside moves toward $3 million relief fund for small business.” Later that day Oceanside city manager Deanna Lorson stated: “This press release was not issued by city staff.”
At the April 1 meeting, Lorson said her staff would come back to the April 22 meeting with ideas on the loan program. But she expressed concerns that city staff is currently turning in “…12 hours a day, seven days a week working on COVID issues. I don’t have time to get very in-depth on this…” Rodriguez said the chamber of commerce and the Mainstreet Oceanside business association could help screen applicants. But Lorson did not seem too keen on that idea. “If we’re going to extend city funds, it needs to have city staff doing final review and approval.”
“Ultimately, I think we need to protect our city’s ability to provide our core services,” says Lorson who added the city will have to be looking at possible departmental budget cuts because of plummeting sales tax income. Property tax income she said may also be delayed. “Transit Occupancy Tax will be very close to zero since virtually all hotels aren’t operating.” Lorson also said the quarter-million dollars a month that traditionally come from business license fees will be greatly sidelined. “We normally get about $100,000 a month in [Ocean’s Eleven Casino] card room revenue and that’s now down to zero...tenants in the harbor pay $231,000 a month and many have asked for rent relief.”
The only other North County city to approve a COVID-19 related business loan program is San Marcos, a city that has twice the amount in reserves than Oceanside, notes Lorson.
On Monday Richard Rider, chairman of San Diego Tax Fighters says that day’s headlines make it clear what Oceanside should do. “The city of San Diego, Mayor Faulconer, gave $7 million to businesses. Now San Diego is laying off/furloughing 800 employees because the tax revenue won’t be coming in. The city of Oceanside should have learned from that. Or apparently at least one of its councilmen should have.”
Rider, an oft-quoted fiscal watchdog, suggests Oceanside or any other city should no more be distributing small business loans than banks should be providing police protection. “Cities are not tasked with the obligation to be a lending agency for businesses. There are no grounds for this. But it has become the compulsion of politicians to do something to show that they are leading. And it’s easy to look like you are leading when you are giving away OPM – other people’s money. It’s insane for a city that is having trouble paying its own bills while its helicoptering money to small businesses.”
Policeman-turned-Oceanside city councilman Ryan Keim admits “There is a real chance we will simply not be able to do this.” He says he attended a meeting of some 20 local restaurant owners who gave him “dire” stories of survival. “It gave me a sense of urgency…What if we lose half our hotels and half our restaurants but save our workers? Those are things we need to look at. These are tough policy decisions. Mistakes will probably be made.”