Unalaska Approves CARES Act Grant Applications For Businesses Previously Denied By City

Aug 15, 2020

 

Credit Berett Wilber/KUCB

The City of Unalaska has approved the grant applications of six local businesses whose requests for CARES Act funding were previously denied by the city. It also partially approved the application from a local nonprofit organization whose original request for funding was considered outside the scope of the federal grant program. 

"The initial application process had specific parameters," said J.R. Pearson, assistant city manager. "The intent was hoping to catch most of those needing CARES Act relief. But still, based on discussions with staff and council, we all knew it would not catch everyone needing some sort of assistance. But it was the most logical, consistent process we were able to develop at the time."

Officials from the city's Planning Department said they initially denied 10 of the 98 applications submitted by local businesses and nonprofits for not meeting those parameters.

Two applicants were denied because they submitted applications past the city's noon deadline on July 24. Four applicants were denied because they are new businesses and had no tax returns from 2018 or 2019 to calculate aid based on the city's funding formula. One business was denied because it was already closed in March and reopened in June under new ownership. One local business applicant was denied because it didn't have a city business license issued prior to the City Council's deadline of March 12 — which is when the city opened its Emergency Operations Center in response to the coronavirus. And two applicants (one business and one nonprofit) were denied because they are not in the scope of the CARES Act, according to the Planning Department.  

However, at a City Council meeting Tuesday night, denied applicants were invited to appeal the city's decision, and after some lengthy debate among councilmembers, the council voted to approve the applications of the two businesses that applied late, as well as the four businesses with no tax returns or income prior to 2020. 

"It kind of went back and forth in the meeting a little bit, working things out. And most of it was that the funding distribution for the CARES Act is very very challenging," said Pearson. "The problem is really finding solutions that are equitable, consistent, and can be clearly and logically explained. So much of the back and forth in the meeting was focused on wanting consistency in the way things would be awarded." 

The two late applicants — Elizabeth Janitorial Services and Harbor Rental — were ultimately awarded, but councilors were reluctant to do so, because they didn't want their action to set a precedent to accept late applications, according to Pearson. 

"The intent here was to get this money out to the businesses that are in need at this time," said City Councilor Shari Coleman during the meeting. "I know we had a deadline, but we still have money on the table. It was my opinion that had we not had any money still left in the 40 percent [of CARES Act funds allocated to support local businesses and nonprofits], that these people wouldn't be reconsidered. But since we do, I think we continue with the intent of providing them with the financial help they were asking for." 

In a tie vote among the six councilmembers, councilors Coleman, Dennis Robinson, and Alejandro "Bong" Tungul supported an amendment to grant funds to the two late applicants. Councilors Dave Gregory, Thomas Bell, and Darin Nicholson did not support the amendment. Mayor Vince Tutiakoff Sr. broke the tie by voting in favor. 

"I believe the people had good intentions. And those who didn't file and would want to file now, I'm sorry, but the council will not take any further applications," said Mayor Tutiakoff.

For the four new businesses that had city business licenses prior to the council's deadline, but no tax returns or income prior to this year — Aleutian Excursions, Fish On Charters, Only In Dutch, and Runs Silent, Runs Deep — councilors decided the businesses would qualify for aid under the city's stratified schedule, which runs from June through the end of the year, if they submit city sales tax reports showing income in the first and second quarters of 2020. They will not be awarded funding for the mandated closure period for non-essential businesses, which ran from March through May. 

"The amount of revenues received during the first and second quarters is the amount that we're going to base the [funding] tiers off of," said Homka. "We're not going to try to say 'then multiply that [amount] by two other quarters which would be their whole income for the year,' and that type of thing. That's the set amount. I just want to be clear on that." 

The City Council also denied the original $591,000 funding request from the International Longshore and Warehouse Union Unit 223, a 501(c)(5) nonprofit, saying the application was not within the scope of the CARES Act, despite a lengthy appeal by Jeff Hancock, vice president of the Alaska Longshore Division in Unalaska/Dutch Harbor. 

The ILWU applied to reimburse its 137 members for an unpaid 14-day quarantine period mandated by union leadership, despite its workers being considered an essential workforce, and therefore exempt from Unalaska's mandated two-week quarantine. 

After some discussion, councilors denied the union's request to reimburse its individual members, saying the loss must be to the entity applying for funding. 

"If we open up Pandora's box and start issuing out large sums of money to employees or people because they had to quarantine and all that — everybody's had hardship over this and everybody would feel that they were due," said councilmember Nicholson. 

Councilors did ultimately vote to award the ILWU for lost or potentially lost membership dues in a 4-0 vote, with councilmembers Bell and Robinson abstaining because they are members of the organization. 

 

"The original request was to award the actual and potential lost revenue to ILWU employees due to travel quarantine requirements, but that wasn't really what we were looking at as part of the CARES Act award scope," Pearson said. "But the council believed that we could look at that as unrealized or lost membership dues, in the amount of five percent of the requested grant amount."

The ILWU doesn't pay its members directly, but dispatches labor to the employers who pay the individuals' payroll, said Hancock. The union makes five percent of its members' gross wages, which, he said, would be approximately $30,000 for the two-week quarantine period at 80 hours straight time for 137 people. 

"The loss to our organization would be five percent of the potential earnings," said Hancock. "That's what's collected off the payroll that is dispersed when someone does go to work. That's five percent in dues."

Hancock told KUCB in a statement that at this point, ILWU is looking into whether or not it can legally accept the funds for lost or potentially lost membership dues.

"We recognize the complex nature of administering the large sums of money that the city staff is charged with handling," Hancock said. "The overall goal of the funds is to get it circulating as broadly as possible within local economies to help offset the greater expenses of preparations for pandemic safety and lost revenues. We feel as though our original request would have buoyed that effort."

Three other applicants — Dutch Harbor Restaurant, Jerry's Housing, and the F/V Aleutian Spirit — were denied in full. And Bering Shai Pedwell Transportation's request for additional funds beyond its original awarded amount was also denied. 

"This has been a very very challenging process, trying to get through it," said Pearson. "The city is trying to apply things consistently and equitably, and we understand that we can't make everyone whole. But this is trying to help as much as possible. It's very difficult, and has kept a few people up at night trying to figure this out."

Meanwhile, the Rasmuson Foundation is awarding the city a $50,000 grant through the Municipal Arts and Culture Matching Grant Program. The money is for The Museum of The Aleutians and Unalaska Community Broadcasting (KUCB).

The program is designed to supplement awards from municipalities to arts and culture nonprofits based on the value of CARES Act funding awarded by city governments. 

In order to be eligible for the funds, the organizations were required to meet two criteria: they must have been a viable nonprofit entity within the municipality on March 1, 2020; and must have a mission to advance, support, educate, or celebrate arts and culture.

Funding is disbursed as a 1:1 grant for the first $20,000, and a 1:2 grant for the remainder match, up to $50,000. Using the Rasmuson Foundation's formula, MOTA will be awarded $30,000.

Additionally, through a joint letter of support from the Planning Department, the Aleutian Arts Council, and MOTA, the Rasmuson Foundation awarded $20,000 to KUCB, recognizing their "past, present, and future commitments to the arts and culture, especially during this time of social distancing," according to a statement from the Planning Department.