Council approves SAVES resolution to rescue vital businesses

City Council unanimously approved a resolution Thursday night directing the city manager to bring back viable funding options by Oct. 1 to help sustain the city’s service sector through the ongoing economic pressures of Covid-19.

All the Council members, Mayor Pro Tem Delia Garza and Mayor Steve Adler joined as co-sponsors of the Save Austin’s Vital Economic Sectors (SAVES) resolution. The resolution directs the city to explore a wide variety of funding sources that could contribute to support local music and arts venues, bars, restaurants and child care centers, as well as the many professionals and organizations that help sustain those industries.

“This is an attempt to get a significant amount of resources that are necessary to actually save businesses,” Adler said after Council’s vote. “But it’s just not saving businesses; it’s saving businesses that would otherwise fail. It’s more than that: It’s intended to address those that have the greatest multiplier effect … those that would be the hardest to replace and that would not be replaced within the marketplace if they were gone … those whose loss would be an irreparable harm to civic infrastructure.”

Council members proposed many temporary funding options to consider while the service industry recovers. In particular, the resolution directs the city manager to bring an ordinance that reallocates revenue from temporary use of right-of-way fees, alley and street vacation sales, and fees from encroachment agreements into a designated business preservation fund that would last for two years.

While dollars in the business preservation fund would be divided among restaurants, bars, child care providers, and music and arts venues, Nakia Reynoso, musician and president of Austin Texas Musicians, spoke to the need for a separate dedicated live music venue preservation fund.

“Austin isn’t the small business capital of the world,” Reynoso said. “Other businesses aren’t driving billions of tourism dollars to the city’s bank accounts. It wasn’t just any small businesses that made Austin a beacon to the rest of the world. It was the musicians creating music in live music venues that sent that signal out. But that signal is dying. Our music venues are out of time.”

Speaking on the child care industry, Cathy McHorse, vice president of Success By 6 Coalition, said between $12 million and $15 million will be necessary over the next year to sustain businesses that were already fragile prior to Covid-19. Without those funds, McHorse said, the industry may see permanent closure of up to 50 percent of child care programs.

“It’s important to remind you that returning to the status quo results in an unstable and inequitable system as affordable high-quality care,” McHorse said. “Covid has exacerbated the existing issues by exposing the fragility of the child care sector that survives on razor-thin margins, with staff that (are) predominantly women of color that earn poverty-level wages.”

Between the fees and payments in the proposed business preservation fund, Council Member Kathie Tovo’s office estimates the sources could generate around $30 million for SAVES, with the majority of the revenue generated by alley and street vacation sales and encroachment fees from downtown development agreements.

In response to a memo from Robert Spillar, director of the Transportation Department, Tovo proposed to cap the amount of money reallocated from temporary use of right-of-way fees at $1 million. According to Spillar, the roughly $8 million in annual revenue from those fees is “critical to the success” of the transportation program and is directly reinvested in roadway maintenance, operation of traffic signals, signs and markings, design and construction of bicycle and pedestrian projects, Vision Zero, transportation demand management and department administration.

If that revenue were lost, Spillar said the department would likely need to cut current service levels and increase its transportation user fee. He offered two alternative solutions: if the city were to reallocate the use of right-of-way fees, the department could save costs elsewhere by pausing the requirement of transferring parking revenue into the Great Streets Fund, or delaying $1.5 million in capital projects until the 2020 bond passes or fails.

Regarding the other sources of Tovo’s proposed business preservation fund, Denise Lucas, director of the Development Services Department, posted a memo stating that the fees are tied to essential city services. “Like other city fees, to the extent that these fees are for services performed by the city, they are based on the cost to provide the services and are not in excess of those costs.”

The SAVES resolution directs the city manager to study these and other potential sources of funding and highlight any potential issues or solutions during Council’s work session on Tuesday, Sept. 29.

Photo made available through a Creative Commons license.

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