Who should receive a share of federal funds allocated to Crow Wing County for coronavirus relief, and how can those dollars be doled out most effectively?
The Crow Wing County Board Tuesday, July 21, grappled with these questions and more, including whether the $8 million in funding the county received from the Coronavirus Aid, Relief, and Economic Security Act — or CARES Act — should support broadband infrastructure or provide grants to nonprofits and private businesses. The relief funding would also be used to cover the financial impacts of response to COVID-19 by county government itself.
But with approximately 3,600 businesses in Crow Wing County — about 28% of which were directly subject to closure orders and likely 100% of which feel the impact of the coronavirus pandemic in one way or another — alongside more than 650 nonprofit organizations facing their own effects, $8 million isn’t a panacea.
“Think about the catastrophic impacts of COVID for businesses that had to shut down and how much revenue collectively was lost, just by those businesses,” County Administrator Tim Houle said. “If nothing else, if we looked at nothing else, what’s the catastrophic loss to our businesses that were closed on Memorial weekend? Eight million dollars will pale in comparison to the economic loss that we suffered.”
Houle presented a proposed framework for fund distribution to commissioners at Tuesday’s committee of the whole meeting. After $1.5 million expected to be applied toward reimbursing the county’s expenses, the proposal included $3 million toward grants for businesses, $1.5 million for broadband expansion and $1 million for nonprofits grants. An additional $1 million could be shifted to any of those categories depending on need.
Based on federal requirements, money from the Coronavirus Relief Fund can go toward expenses incurred due to the pandemic, but cannot cover lost revenues. To qualify, expenses must satisfy three elements outlined by the U.S. Department of the Treasury: the expenditures must be necessary and either directly or indirectly related to COVID-19 emergency response expenditures, must not be included in the county’s 2020 budget and they must be incurred between March 1 and Dec. 1 of this year. Those requirements also apply to any sub-recipients of the funds.
Houle said applying CARES Act funds toward broadband expansion could not only better equip residents for the new realities of virtual communication, it would be an investment outlasting the pandemic. With social distancing playing a major role in the response, the demand to connect virtually for distance learning or telework has increased dramatically.
Kristi Westbrock, CEO of CTC telecommunications company, told the board Tuesday overall peak bandwidth of internet served to CTC customers and all other wholesale customers jumped by 28% between February and March. The company established nearly 50 Wi-Fi hotspots throughout its service area and offered free internet upgrades to residential customers.
“There’s no time that we’ve ever seen such a demand for broadband services in our country but certainly in our county,” Westbrock said via a Microsoft Teams video conference call.
Westbrock said of approximately 26,300 Crow Wing County households, 9% are considered unserved with internet service.
Westbrock discussed details of several potential broadband projects, including establishing a connection for Camp Vanasek in Baxter and the surrounding area. The camp may be used as a distance learning center, depending on what the upcoming school year holds. Also proposed were expansions in the area of Forestview Middle School and a broad swath of land around Borden Lake in Garrison, including town halls for Garrison and Bay Lake townships. The latter project would bring broadband to 403 unserved locations and carries a price tag of $1.37 million.
Chairman Paul Koering asked Houle about whether spending CARES Act funds in this way would be permitted, noting a conversation with Houle that seemed to indicate otherwise. Houle acknowledged it was murky, but said language used in federal guidance was broad.
“There are broadband projects here that would be good projects in our community,” Houle said. “ … We have to make the case, I believe, that it is either is advancing distance learning for kids in schools, … it has to be about telework, people who are working remotely and advancing that, or telemedicine, people who are attending medical appointments virtually.”
Houle said if the board chose to allocate funds toward broadband, he would suggest it receive assurance the company would commit to repaying the funds should it be determined the use didn’t qualify. Westbrock agreed to this caveat but noted she would need an answer within a week to allow time for installation before the ground freezes.
Allocating funding toward nonprofit organizations was another of the suggestions forwarded to the board. Houle said community services staff already had conversations with a number of nonprofits in the health and human services sector to get a sense of how much funding they might need.
“It’s also a sector of the community that I think did not qualify for federal and state aid programs that was targeted towards private business,” Houle said. “So we’re suggesting that there could or should be a priority there.”
Among the organizations already expressing a need were Lutheran Social Service, Bridges of Hope, CareerForce, Salvation Army, Mid-Minnesota Women’s Center, Crisis Line and Referral Service and Wellness in the Woods.
Kim Rollins, executive director of the Lakes Area United Way, said the sooner the board can define the qualifications for CARES grants the better. She said the effects of the pandemic on the community are becoming more noticeable as time goes on. She said a recent grant application round for nonprofits yielded a dramatic increase in applicants.
“There’s a big need out there, especially looking at the impacts nonprofits have incurred through COVID-19,” Rollins said. “ … The back end of this, we’re just starting to see the effects of COVID-19 now and I think it’s going to be a continuation through this year and next year.”
Commissioner Bill Brekken asked whether food shelves were experiencing an uptick in use. Rollins said they were, and this need could grow further if the additional $600 in monthly unemployment benefits was discontinued. Community Services Director Kara Terry said she recently met with the Crow Wing Energized food coalition and discussed the potential for a centralized location for food shelves to pick up donations — an example of a project that could be funded with CARES Act dollars.
A significant part of Tuesday’s conversation centered on relief for businesses. Tyler Glynn, executive director of the Brainerd Lakes Area Economic Development Corp., asked the board to consider what criteria it would like to require for grant applications, including which businesses would qualify and how much each business may be eligible to receive.
Glynn reviewed 12 applications prepared by other local governments and found some commonalities — all 12 excluded businesses providing professional services, such as legal offices, and eight of 12 excluded agricultural production businesses. He said while the board could focus on the 28% of businesses subject to closure orders, there was also the opportunity to consider expenses incurred by other businesses to safely remain open. Setting a cap on the number of employees could provide targeted relief to small businesses, but Glynn also pointed to large businesses in the county that experienced significant hardship, such as Grand View Lodge and Breezy Point Resort.
“When we aren’t looking at revenue and revenue loss, but we’re looking at, you know, do we take into consideration the amount of money that some of these businesses had to incur to safely get their doors open when they could, I would look and say those are expenses certainly that pass the smell test, pass the eye test and all of that,” Glynn said. “But that also brings into question the size of the grants we would like to give out.”
Commissioner Steve Barrows asked Glynn whether he’d had conversations with area landlords about the impacts on their businesses. Barrows said he’d heard about landlords unable to pay their mortgages due to not receiving rent, and banks tacking those costs on to the end of the mortgage rather than providing relief.
Glynn said he’d spoken with two major landlords in the area who wondered whether they would be eligible for CARES Act grants. He said two of the applications he reviewed excluded landlords. Because rent would be considered revenue and revenue replacement isn’t an option for CARES funding, Glynn said it was a tricky area.
Terry noted rental assistance provided through community services would be paid directly to landlords, and Houle said Crow Wing County Housing and Redevelopment Authority was interested in acquiring different grant funds for rental assistance. Houle said it was important for the county to be cognizant of not doubling up relief efforts being provided elsewhere. He also noted it would be worth including in the application process whether businesses received relief from other sources and to what extent.
Prompted by a short turnaround time forwarded by Westbrock on the broadband projects and a desire for further conversation about eligibility criteria and grant priorities, the county board agreed to schedule a special committee of the whole meeting for Monday, July 27, ahead of its regular meeting Tuesday.
Commissioners said they’d like members of the public to share input on how they’d like to see the funds distributed.
“I would feel more comfortable if we were to get more information and look at some of the applications and have another special meeting to be able to discuss this,” Brekken said. Other commissioners agreed. Commissioner Doug Houge did not attend Tuesday’s meeting.
To contact commissioners
Have thoughts to share on CARES Act funding?
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District 1, Paul Koering: firstname.lastname@example.org or 218-851-9954.
District 2, Bill Brekken: email@example.com or 218-232-0257.
District 3, Steve Barrows: firstname.lastname@example.org or 218-820-8199.
District 4, Rosemary Franzen: email@example.com, cellphone 218-820-7640 or home phone 218-829-8021.
District 5, Doug Houge: firstname.lastname@example.org, 218-330-0734 or 218-851-5145.
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