Thursday, March 18, 2021

Lehigh and NorCo Team Up with $7.5M in Grants for Suffering Hospitality Industry

At a joint news conference on Wednesday, the Lehigh Valley's two county executives announced $7.5 million in grants for Lehigh Valley's suffering restaurants, bars and hotels. This program is available thanks to a block grant that went to each of the state's 67 counties. In the Lehigh Valley, the assistance will be administered by The Rising Tide. Applications may be made now, and until June 15. The maximum grant available is $10,000. 

According to a news release from Lehigh County, the application process actually opened on March 15. 

Eligibility is determined as follows:

• As stated on tax return, business has an industry classification starting with NAICS code 721: Accommodation or NAICS Code 722: Food Services and Drinking Places and is located in Northampton County and Lehigh County 

• Was in operation on February 15, 2020 and remains in operation, and does not intend to permanently cease operations within one year of the date of application 

• Experienced a reduction in revenue of at least 25% in gross receipts between comparable quarters in 2019 and 2020 

• Has fewer than 300 full-time equivalent employees 

• COVID-19 has had an adverse economic impact on the eligible business 

• Has a maximum tangible net worth of not more than $15 million 

• Business is not publicly traded 

I'd like to know what kind of administrative fee is being paid to Rising Tide. 

20 comments:

Chris Hudock -AED CACLV said...

The legislation allows the Rising Tide to earn a $500 fee for each application that is completed and reviewed. To offer support to more small businesses, we will only accept the fee if an application is also Funded. For those applications that we underwrite and are not funded, we are declining compensation. A previous program we administered resulted in 4 out of 5 applications not being funded due to the applicant not qualifying or insufficient funds. The income will be used to cover IT and staffing (we have added 5 temporary staff to underwrite the grants) expenses.

Anonymous said...

Why a third party administrator? Counties are already paying for DCED staff. Why couldn't they handle the applications? Instead, a portion of the money will be siphoned off for Rising Tide administrative costs.

Chris Hudock -AED CACLV said...

The legislation allows the Rising Tide to earn a $500 fee for each application that is completed and reviewed. To support more small businesses, we will only accept the fee if an application is also Funded. For those applications that we underwrite and are not funded, we have elected to forego compensation. A previous program we administered resulted in 4 out of 5 applications not being funded due to the applicant not qualifying or insufficient funds. The income will be used to cover IT and staffing (we have added 5 temporary staff to underwrite the grants) expenses.

Bernie O'Hare said...

Thanks Chris. That amounts to $375,000. I think that's a bit high. I suspect most of these will be funded. Your previous program was a loan program. This is a grant. If you reject most of the applications, I suspect there's something wrong with the program. There certainly was with the last state program you administered. I know of numerous minority owned businesses who waited months to be told No, with no further explanation. In contrast, the Chamber was great. The Chamber wrote off its fee completely for the small business grants, and this is very similar. I do not see what CACLV would not do so as well. The $375,000 could fund another 37.5 grants.

Are you going to actively solicit businesses to apply? I doubt many read the papers or this lousy blog.

I do compliment you for your own efforts. As I told you, I know numerous people who applied under that last state program. I was shocked by the number who dealt with you personally. All spoke highly of you even if they missed out. You are a dedicated professional who understands service, and I appreciate your transparency.

Bernie O'Hare said...

"Why a third party administrator? Counties are already paying for DCED staff. Why couldn't they handle the applications? Instead, a portion of the money will be siphoned off for Rising Tide administrative costs."

The counties already administer numerous programs and this is too much for them. The counties take administrative fees as well. Often they are substantial.

Anonymous said...

Chris Hudock deserves to be complimented for his prompt and transparent answer. The $500 fee along with the policy of only accepting a fee for funded applications is more than fair. Anyone who has ever worked on either private or public financing for small and medium sized businesses knows that there is often a wide range of financial experience involved with many of these business owners/managerial staff involved. It can take many hours of direct and supporting work just to complete such an application with no guarantee that the application will be funded. Generally one finds that smaller and less sophisticated businesses often have greater needs but have less access to the types of accounting services and internal employee expertise that make filing financial applications relatively easier to complete.

Anonymous said...

Bernie--what do you think is a reasonable fee for CACLV to manage this service? Chris said they are hiring 5 new people and need money for IT support. If the positions are full time, and include benefits, that will easily eat up about $200,000. I'm sure some of the funds are offsetting overhead--space, utilities, etc--as they should. Some of the money will go to offset his salary for managing the program, I'm sure. They may need new equipment--phones and computers, etc. They are already giving back, so to speak, by not taking the fee for applications that aren't funded. Your comment would have them do the program for free. That's unreasonable and unfair. Nonprofits should be able to charge reasonably to cover costs.

Anonymous said...

It costs a lot of money to get money spent. The feds get a cut, the state gets a cut, and the local agency/NGO gets a cut. What's left goes to those who need help, maybe.

Bernie O'Hare said...

"Bernie--what do you think is a reasonable fee for CACLV to manage this service? "

The same fee that the Chamber charged. Zero. I agree with the compliments aimed at Hudock. I nevertheless think they should waive all fees and get the $ where it is needed. Overhead costs would be there anyway. Hiring new people would be only temporary and those people would be screwed once the $ is spent.

Anonymous said...

The legislation that granted the award of this money said it could not be administered by the county. So there is that element as well.

Anonymous said...

As usual, Bernie, you're being unreasonable. Overhead is always there, and it always has to be paid for. All grant or other funding sources should pay their share of the overhead. If that happens, there is more overall for programming. It's pretty easy to sit back and expect people to give away services for free when you have really have no idea or experience running an agency budget.

Bernie O'Hare said...

Funny how the Chamber of Commerce was able to administer what really was a larger program that went thru several rounds with no fee and no complaints about overhead. You are defending this excess bc you hate to see honest criticism of an Alan Jennings organization. Too bad. Unlike the Chamber, his organization exists to help those who've been negatively impacted. I wish he showed some of the same service spirit that the Chamber did. Same for the admin fees being gobbled up by counties and local governments.

Michael Drabenstott said...

Forgive me if my public-school math is wrong, but $375,000 out of $7.5 million is 5%, meaning that 95% of the money is going to businesses. Charity Watch would give that 95% ratio an A+. >>CharityWatch considers a charity to be highly efficient when our end calculations produce a Program Percentage of 75% or greater << I realize it's not a direct comparison -- they're administering an program rather than creating and managing one -- but it's helpful perspective. Given the amount of work that's involved, the need to hire qualified temp people (no easy task), and the pain of working with state gov't in Harrisburg, the $375,000 seems reasonable.
https://www.charitywatch.org/our-charity-rating-process

Bernie O'Hare said...

There is nothing wrong with your math, Michael. I understand your argument. But as I've noted several times now, the Chamber was able to distribute a larger sum of money to more businesses with no administrative fee at all. The Chamber exists primarily as a cheerleader for business, not as a service organization like CACLV. Thus, and especially in the context of the pandemic, I consider this admin fee too high. in fact, I think it is time to scrutinize the admin fees local governments award to themselves for numerous programs. In addition, I question whether Rising Tide is being given carte blanche in deciding how this money is doled out. For reasons of transparency, County Council should approve awards and there should be a public disclosure of which grants are approved and rejected.

Anonymous said...

CACLV does a great job trying to justify their administrative costs. They live off the public dole.

Chris Hudock -AED CACLV said...

The previous program that I alluded to was the commonwealth-wide grant program administered by the CDFI Network, it was not the loan program you mention. The Rising Tide was 1 of 17 CDFI's that administered the grant program. It was this grant program that found 4 out of 5 applicants not being funded for various reasons, not the loan program. It is based on this past experience and the greater degree of underwriting that is required to qualify one for this grant, that we anticipate a significant number of applicants not being funded.


Anonymous said...

Everyone sucks up the cash.. The Chamber got great taxpayer funded PR from what they did. It also helped them do some recruiting. Also Northampton County got some money to help tenets. They made sure they sucked up a lot of it for "administrative expenses" Up to 20%. I know you love anything the county boss does but lets remember that the Chamber did not do this out of the goodness of their little hearts.

Anonymous said...

I lose contracts for less than 5%. It's no small sum and before that 5% at street level, others got their cut. Spending exists to employ spenders, mostly. The rest goes to the intended recipients.

Bernie O'Hare said...

"The previous program that I alluded to was the commonwealth-wide grant program administered by the CDFI Network, it was not the loan program you mention. The Rising Tide was 1 of 17 CDFI's that administered the grant program. It was this grant program that found 4 out of 5 applicants not being funded for various reasons, not the loan program. It is based on this past experience and the greater degree of underwriting that is required to qualify one for this grant, that we anticipate a significant number of applicants not being funded."

That is the one to which I alluded. I am aware of two minority-owned (and women-owned) businesses who applied, waited for months and were rejected. I am also aware that both of these owners spoke to you and considered you highly helpful. This seems far more straightforward and it seems the eligibility requirements are very straightforward. If you anticipate most applications will be rejected, this is no lifeline but a disgrace.

As I understand things, you are saying this will be far more labor intensive and accept that explanation as a justification for the admin fee.

Thanks.

Anonymous said...

So why is McClure grabbing 20%