As a constituent, an economic development professional serving our community, and a member of the National Small Business Association (NSBA), I thank you for your quick work to address the economic crisis communities are facing through the Coronavirus Aid Relief Economic Security (CARES) Act of 2020.
I ask that as you and your colleagues continue to address the crisis caused by COVID-19 that the federal response remains substantial, sustained, and swift.
We have never before faced a crisis of the scope and scale we are now confronted with; however, economic developers have a long history of leading during hardship. Indeed, many of our organizations were born from times of economic uncertainty and distress. Communities need professional economic developers engaging with businesses leaders, elected officials, and stakeholders to see us through this economic crisis. The coming economic recovery will be led by economic developers. But economic development organizations cannot do it alone — we need your help.
Through the extensive efforts the Brownsville Community Improvement Corporation (BCIC) has committed to, our community has been able to register over four hundred businesses from Brownsville, Texas to identify ongoing challenges as a result of COVID-19. In addition, our economic development group has been successful in implementing a key component program to assist businesses in accessing capital through the Small Business Administration (SBA) or community lenders. It is imperative that the federal government continues to provide financial assistance to the small business community and economic development organizations across the country. The demand for such assistance has far exceeded initial expectations and too many businesses are still left pending for assistance. We must continue to act together.
The next COVID-19 related aid packages must include additional resources for both economic development organizations and economic development programs. Specifically, I urge you to consider including the following provisions:
Eliminate all match requirements for grant funding available from the Economic Development Administration, including the $1.5 billion the agency received in the 3rd COVID-19 bill (CARES Act), the previous 3 fiscal years disaster and direct appropriations, and the next 3 fiscal years of disaster and direct appropriations.
- Most communities and organizations do not and will not have the resources necessary to meet any grant match requirements, thus reducing the efficacy of EDA’s considerable resources.
- Communities and organizations that do have the resources to meet a grant match requirement can surely find better uses for those resources at this time and for the foreseeable future.
- The CARES Act included several instances of match waivers and other waivers, so it is clear that Congress intends for federal agencies to have maximum flexibility to aid communities as quickly as possible.
- Regulatory flexibility is not enough. Statutory direction to waive match requirements will provide the absolute certainty communities, businesses, and economic development organizations need in a crisis.
- The $1.5 billion the agency is expected to receive should also include the need to increase capacity to existing economic development revolving funds for communities that will desperately need continued capital.
Establish and fund a formula grant program to keep economic development organizations working.
- Economic development organizations’ funding is in jeopardy, resulting in loss of staff and services to communities and businesses.
- Funding for economic development organizations can come from multiple sources: municipal funding, taxes, business, fees for services, foundations — all are or will soon be experiencing severe revenue losses, leading to similarly severe cuts to the programs they fund. There will be nowhere for economic development organizations to go to fill the gap.
- Economic development services are delivered through an array of public and non-profit entities. Formula grants should include all economic development entities, public and non-profit.
- A formula grant administered by the Economic Development Administration could rapidly deploy needed funding via two avenues: provide an immediate injection of funding for existing recipients of EDA funding and provide formula driven funding to the lead state-level economic development organization for distribution to local and regional economic development organizations.
- The purpose of the funding would be to support operations of economic development organizations, including payroll, benefits, utilities, mortgage and rent. This is consistent with eligible expenses in other federal COVID-19 response efforts.
Include a provision allowing for 501(c)(6) tax-exempt organizations — which includes many chambers of commerce and business councils that serve as their community’s lead economic development organization — to access all federal assistance available to nonprofit organizations, including SBA’s PPP.
- Congress clearly intended for nonprofit organizations to access this funding, a critical acknowledgement of the key role nonprofits play in our communities
- This funding is essential because it will allow many economic development organizations to access operational funding, which is needed to keep staff working to help our businesses and prepare for the recovery
- Without this critical gap funding, a critical loss of services and institutional knowledge will occur. This is an unacceptable risk and cannot be easily reversed.
Support reshoring medical equipment and pharmaceutical manufacturing to the United States.
- Create a Medical Equipment Manufacturing Initiative (MEMI) via the Economic Development Administration that provides forgivable loans to manufacturers to produce in-demand medical equipment such as Personal Protective Equipment and ventilators and trains and hires unemployed or underemployed workers.
- Reinstate and create new tax incentives that support reshoring medical equipment and pharmaceutical manufacturing to the United States and its territories.
- Invest in workforce development training programs to upskill manufacturing workers and create a talent pipeline to support medical equipment and pharmaceutical companies and put workers back to work.
Include ‘defederalization’ of Revolving Loan Funds in EDA’s portfolio that have exhibited best practices and outcomes for a period of 7 years.
- Defederalizing RLF’s will increase the efficiency and effectiveness of this program during and after the current crisis.
- Currently, EDA RLF operators must report on funding received from EDA “in perpetuity,” meaning that they must continue reporting on the funding forever, even if they made the loans decades ago. This is an unnecessarily burdensome requirement that costs time and money which RLF operators could instead be using to help small businesses and local organizations affected by this crisis.
- This reporting burden may also dissuade local RLF operators from being willing to make the kind of small loans that small businesses need most during this crisis.
- Making this change will further allow RLF’s to leverage funds with other funding sources, maximizing the economic potential of the initial federal investment.
Restore faith in our public health mechanisms’ ability to suppress, respond to, control, and contain future outbreaks.
- The most critical component, the one which all other efforts rely on succeeding, is defeating COVID-19 and restoring the conditions in which our economy may recover.
- Our economy will not fully recover, or even enter down a path to full recovery, until the public believes it is safe to once again venture out, carry on with their lives, and conduct commerce.
- Faith in our health systems is essential to achieving this restoration, and robust federal leadership and resources are needed to develop and deploy a vaccine, offer rapid and reliable testing, quickly trace contacts, create a visible national strategic stockpile of medical equipment and pharmaceuticals, shore up hospital’s capacity to respond, and provide a national framework for surging healthcare professionals in future outbreaks.
Thank you for your leadership and support during this trying time. I am confident that together, we will see this through; please do not hesitate to contact me if you have any questions.
Executive Director, Brownsville Community Improvement Corporation
Editor’s Note: The above guest column is based upon an open letter sent to Congressional leaders by Josh Mejia, executive director of the Brownsville Community Improvement Corporation. It appears in the Rio Grande Guardian with the author’s consent.