The city of Tracy could redirect some of the federal money that it gets through the U.S. Department of Housing and Urban Development toward small businesses that are struggling through the COVID-19 shutdown.

During the Tracy City Council’s May 5 meeting, economic development management analyst Barbara Harb reported that some of the Community Development Block Grant funding that comes to the city through HUD could meet federal guidelines as assistance for low- to moderate-income residents if it were used to support the small businesses that employ those people.

That means businesses could get loans between $5,000 and $20,000, depending on how many workers they employ, up to 20 people for the biggest loans, and in some cases those loans could be forgiven. Harb noted that about 3,000 businesses in town could qualify.

In all, the city could have nearly $764,000 to lend. It includes $305,833 in block grant money that could come to the city as part of the federal Coronavirus Aid, Relief and Economic Security Act. The CARES Act is a $2 trillion package passed by Congress in March that put $349 billion toward the Paycheck Protection Program, with another $300 billion approved for the Paycheck Protection Program at the end of April.

Harb noted that the CARES Act provided a separate $5 billion that could be distributed as Community Development Block Grants. Tracy’s part amounts to $305,833 for the city to use to support small businesses, with about $30,000 of that specifically to help out businesses that have fallen behind on utility bills during the COVID-19 shutdown. Harb noted that alternative uses for that money include homelessness prevention.

The city expects to get $89,023 as reimbursement for city staff time to manage federally funded projects, but that too could be redirected toward the small-business loans. HUD had also granted the city $218,925 toward a downtown façade improvement program, which also could be directed toward businesses that have been affected by the COVID-19 quarantine. An additional $150,000 was earmarked for downtown sidewalk improvements to comply with the Americans with Disabilities Act, but Harb noted that those projects could be postponed.

It's up to the council to decide whether some or all of this money should be directed toward small-business loans.

Councilwoman Rhodesia Ransom and Mayor Pro Tem Nancy Young supported the recommendation to direct $30,000 of the $305,833 from the CARES Act money toward utility bill relief, and Ransom suggested that the city put $100,000 toward homeless assistance and designate the rest, $175,883, for business loans. The staff reimbursement and façade improvement money will also be made available for business loans.

Council members Veronica Vargas and Dan Arriola agreed and wanted to make sure that the $150,000 already allocated for sidewalks would remain as funding specifically for the sidewalk improvements.

The council also agreed that the priority for the city’s loans should be businesses that did not already get Paycheck Protection Program loans.

“Small businesses are the backbone of our economy and we’ve got to take care of them,” Mayor Robert Rickman said. “It’s not because they don’t want to work. It’s because of the government telling them they can’t open up their businesses, and I think we have a duty to help those individuals out.”

The city also has an existing program for small businesses, the Grow Tracy Loan Program, which is supported by the National Development Council’s Grow America Fund. As of the start of May, that program had as much as $800,000 to lend to local businesses.

The council did not vote on the matter and will consider it again after City Manager Jenny Haruyama returns with a formal proposal.

Contact Bob Brownne at brownne@tracypress.com or 830-4227.

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