The gist: Hatched as a plan to quickly inject cash to local businesses in need, the Lafayette Business Recovery Plan approved its first eight grant awards last week. The program is off to a slow start as the collaboration between LEDA and LCG wrangles with how to manage the onerous regulations that tether most of the $1 million grant pool sourced from federal housing money. The glacial pace means the program could fall well short of its ambitions, while housing needs, another use of the funding, continue to worsen.
Eight applicants have been approved so far for grants pulled from two different funding sources. That’s out of 944 applications received to date, according to numbers provided by LEDA. Many applicants dropped off when faced with large reporting and documentation requirements that come along with grant awards from the U.S. Department of Housing and Urban Development. Trouble with thorny regulations and pace jibe with early critiques voiced by housing advocates who opposed using the HUD dollars for grants to local businesses hurt by coronavirus. Awardees have not yet been notified, so LCG and LEDA would not identify them.
Only four applications totalling $26,000 were approved for HUD funding so far. The total pool from HUD is $852,000 in block grant funds aimed directly at the pandemic. LCG’s Community Development Department, understaffed and inexperienced with directly overseeing HUD business grants, has struggled to move applicants through. Staffers and Director Hollis Conway tell The Current most applications are lingering incomplete. A key problem is the HUD funds are reimbursements, not upfront awards, and they must cover historical expenses. That means many who answered the open call have asked for help on expenses HUD won’t cover, including the artists and low-income business owners the program was touted to help.
LCG formally contracted the HUD grant in July after some delays. Programs in other cities have been similarly delayed, waiting for HUD approval. Applications opened June 22, behind the original start date of June 1, but the money wasn’t technically available until the contract award was signed in July. The approval committee, which includes several prominent business and community leaders and council members, met Tuesday to approve the eight applications, which now await signoff from LCG’s lawyers.
Four of the applicants will receive money from LEDA. The total $1 million pool set up for the Lafayette Business Recovery Program includes $200,000 put up by the parish economic development agency. Those funds are not governed by the same restrictions that come along with the bulk of the award funds from HUD. And LEDA CEO Gregg Gothreaux says his organization will now move ahead of LCG’s meticulous pace to get more funds out the door.
“We will distribute all of LEDA’s funds for the Business Recovery Program in the next couple of weeks to businesses that are desperately in need of a lifeline,” Gothreaux says. “Then help LCG distribute its share with any info they need to work toward a successful distribution of their funds.”
LCG hopes to put a few more applicants before the approval committee in coming weeks. Around 100 made it through the first few steps, getting close enough for real consideration. Twenty-three were rejected outright, leaving 70 in the active pool, according to data provided by LCG. But even the eligibility of the handful most likely to be in front of that approval committee, projected to be eight or nine at this point, is unclear.
One of those applicants is a woman who received an SBA disaster loan and still hasn’t exhausted it, meaning accepting money from the HUD portion of the Business Recovery Program could be a duplication of benefits and require her to pay HUD money back, Community Development Planner Belle LeBlanc says. (LCG is ultimately on the hook for funds spent out of HUD’s designated scope.) Some small enterprises simply don’t have the kind of operational expenses the program is designed to cover.
“They don’t have operational expenses; there’s nothing for us to assist [them with],” LeBlanc says.
Staff members hesitate to say they won’t be able to spend all the money. They describe a “fluid” situation with most applicants, working over the phone or by email and combing through reams of required documents like bank statements, lease agreements and receipts for covered expenses. Applicants are given a soft, five-day deadline to turn around completed applications, and the staff tries to work with them, often finding some likely to qualify ultimately don’t. One applicant, Conway says, was hospitalized with coronavirus and went silent.
“We don’t want to predetermine [that we won’t be able to spend the money] and miss people. My very limited staff is having to go above and beyond to make that happen,” Conway adds. “We’re going 110%.” The application portal is still open. Applicants are also directed to the state’s business recovery program. Authorized with $275 million in funds awarded to Louisiana in the CARES Act, the state program overlaps with the local scope but has fewer hoops for small businesses to jump through.
Housing advocates criticized this very problem in how LCG planned to use the HUD funds. They argued in May that HUD regulations would severely limit the number of businesses that could ultimately be helped by the full $850,000 grant and lobbied for LCG to put the money toward rent and utility assistance. To expedite funding, HUD waived many of the typical requirements for housing programs, clearing an easier path for that use. Documents submitted to HUD to approve the program estimated between 250 and 350 businesses would be helped. Rhetoric from the mayor-president and program supporters made the case that the program could help hundreds of businesses and in turn hundreds more workers. Of the four businesses approved for HUD funding, 1.65 jobs — a HUD calculation based on full-time equivalent salary of $35,000 — have been retained.
Funding for emergency shelters appears to be running out. Louisiana Housing Corporation has asked housing agencies not to take on any more households in temporary shelter housing. In Acadiana, 341 households, including some with children, have been put up in a network of hotels. Acadiana has the largest population of families in emergency housing in the state. Louisiana is still sorting out the details of accepting extended and expanded unemployment benefits from the federal government, following a murky executive order from President Donald Trump. Temporary federal bans on evictions expired at the end of July. Trump has directed federal authorities to pursue extending the evictions without Congressional authorization, but, in practice, evictions have resumed.
There is regulatory urgency to move the HUD funds. HUD holds back funding allocations to ensure its program recipients are spending the money received. Community Development staff say HUD is unlikely to take the money away, but the funds do need to be moved before the end of the year.
Community Development is looking at other “options.” Making note of the dire housing need, Conway offered that one option is to redirect the funds to that purpose, in which case the money would be awarded in a chunk to an agency partner like Catholic Charities of Acadiana, which received $200,000 in assistance funds last month. He did not specify other options and could not commit to using unspent funds on housing.
“Those are conversations I would have with my boss,” Conway said, noting the need to move the money quickly both for the sake of emergency and to meet HUD requirements. “We would want to be part of the solution. I think there’s a way we can do that.”
The administration did not respond to a request for comment before press.