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Clearwater wants to give up to $5,000 to small businesses. Is it legal?

The City Council will decide how many businesses the city can help next week.
 
Jennifer Boychuk and Michael Boychuk pose behind the counter of Clearwater Beach's The Mint Fox Cookies & Ice Cream shop. The couple had to close their business in response to the COVID-19 outbreak, but they hope a new Clearwater small business grant could help them stay afloat.
Jennifer Boychuk and Michael Boychuk pose behind the counter of Clearwater Beach's The Mint Fox Cookies & Ice Cream shop. The couple had to close their business in response to the COVID-19 outbreak, but they hope a new Clearwater small business grant could help them stay afloat. [ Jennifer and Michael Boychuk ]
Published May 1, 2020|Updated May 1, 2020

CLEARWATER — The Mint Fox Cookies and Ice Cream sits on a prime stretch of Clearwater Beach’s Mandalay Avenue, a stone’s throw from the original Frenchy’s. Jennifer Boychuk and her husband, Michael, pay $4,500 per month in rent.

But this year, at the peak of what should be their most lucrative season, the Boychuks had had to shutter their store for weeks as the country grappled with an unprecedented pandemic.

The Boychuks are fortunate in some ways. They’ve saved some profits from 2019, so they’re able to ride out a few more uncertain months. But others are not so lucky.

The storefront of The Mint Fox Cookies & Ice Cream on Clearwater Beach.
The storefront of The Mint Fox Cookies & Ice Cream on Clearwater Beach. [ Jennifer and Michael Boychuk ]

The city of Clearwater announced last month that it wants to help buy more time for its smallest, most vulnerable businesses. The city is drafting a program that would give mom and pop shops up to $5,000 in grants.

But the city is facing a unique financial challenge: Just $800,000 of what officials hope to be a $4 million program is funded.

Whether the city can make up that gap is in part a legal question. The city could draw from its revenue from property taxes. However, the Florida Constitution says no municipality can “use its taxing power or credit to aid any corporation, association, partnership or person.”

Conversely, Florida’s statutes say: “the governing body of a municipality may expend public funds to attract and retain business enterprises.”

City Attorney Pam Akin said the issue boils down to a simple question: “What does it mean to ‘retain?’”

As many as 1,200 businesses in Clearwater are awaiting the city’s answer to that question.

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In response to the ongoing economic calamity, state and federal bodies have created a series of programs to help small businesses. The federal Small Business Administration announced it would give qualifying businesses an emergency advance of up to $10,000. The federal Paycheck Protection Program offered money to businesses in exchange for keeping employees on the payroll. The state of Florida offered emergency loans of up to $50,000.

But for an untold number of small businesses like The Mint Fox, those programs have been virtually inaccessible. The emergency advance program and the state’s bridge loan program are no longer accepting new applicants.

The Mint Fox employs just two people full time: Michael and Jennifer Boychuk. When the couple applied for the federal paycheck program, their bank, Truist, told them there were so many applicants, the bank would likely never get to theirs.

Kyle Terrance, a spokesman for Truist, wrote in an email that given the demand for loans, the bank cannot guarantee all qualified applicants will get paycheck protection loans. However, applications to the program “were handled without preference for larger or more affluent clients,” Terrance said.

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Clearwater’s loan program is geared toward businesses like The Mint Fox. The city is not alone in its effort. Pinellas County, Pasco County, Tampa and St. Petersburg have all announced similar small business grant programs in recent weeks.

Only businesses with 25 or fewer employees would be eligible for Clearwater’s funds. Publicly owned companies would be excluded. Any chain business with more than three locations in Clearwater couldn’t get the money.

The city grants would come in two forms. One, for brick-and-mortar businesses, would be for $2,500. The other, which either brick-and-mortar shops or home-based businesses could get, would be for an additional $2,500 — plus up to $1,000 in city-subsidized professional development.

The latter grant would funnel mom and pops to business groups — Amplify Clearwater, the local chamber of commerce, for example — to get connected to services such as accounting or web development. Once the small business has gotten its services, up to $1,000 of which would be paid for by Clearwater, it can qualify for the $2,500 grant. The business groups like Amplify get a 10 percent cut, up to $100, for connecting business with business.

The idea is to get money circulating between businesses, professional service providers and local business nonprofits, all of which are hurting, said Denise Sanderson, the city’s economic development director.

At an April City Council meeting, Council Member Hoyt Hamilton said he wasn’t sure the loans were large enough to truly help a struggling business.

“If this $2,500 is going to be the difference between being able to reopen or stay open or not, I’m not sure of the longevity of that business anyhow,” Hamilton said.

But Clearwater business owners insist the money would help.

“The federal government is already ignoring us,” said Lina Teixeira, the president of the Downtown Merchants Association. "I think it will be a positive message if the city does not.“

Hamilton said in an interview he supports the program in general, but he noted he didn’t want to make bad investments with taxpayer money — particularly not from the city’s general fund.

The City Council has the authority to amend, kill or approve the program, Akin said. City lawyers will ultimately craft legislative language around what the council prefers, she said. The next City Council meeting is set for May 7.

Sanderson said Clearwater will go forward with the grants even if the City Council doesn’t approve the requested $4 million in funding.

But less money in the program means fewer businesses get a potential lifeline.

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