That the City Council:
A.  Consider and approve program guidelines, application and agreement for the proposed $200,000 Dine and Shop Local Incentive Program;

B.  Authorize staff to make minor modifications and revisions to the guidelines, application, and agreement, if necessary;

C.  Approve an additional $20,000 appropriation of American Rescue Plan Act funding for implementation costs related to the Dine and Shop Local Incentive Program; and,

D.  Approve and authorize the City Manager to execute an agreement with Giverrang in an amount not to exceed $220,000 for implementation of the proposed Dine and Shop Local Incentive Program.

Background
The American Rescue Plan Act of 2021 (ARPA) was adopted by the United States Congress and signed into law by President Biden on March 11, 2021.  ARPA is a $1.9 trillion federal economic stimulus package that provides a wide variety of public health and financial assistance programs intended to address the negative economic impacts created by the COVID-19 pandemic. A portion of ARPA funding specifically tailored to assist state, local, territorial, and tribal governments is the Coronavirus State and Local Fiscal Recovery Fund (SLFRF), a $350 billion appropriation that provides resources to help local governments, including thousands of cities, towns, and villages across the nation, to address the economic impacts associated with the pandemic.

La Habra’s ARPA entitlement is $15,828,149. Cities are required to obligate all funds received by December 31, 2024, and expend them by December 31, 2026.

Use of Funds
Pursuant to the ARPA Final Rule issued by the U.S. Treasury Department regarding the use of ARPA funds, local governments, such as the City of La Habra, enjoy some flexibility in how ARPA funds may be programmed, subject to key prohibitions laid out in the law. 
For example, funds may be used to:

On January 18, 2022, the City Council approved an allocation plan for the City's ARPA funds to provide assistance and support to La Habra residents and businesses who have been negatively affected by COVID-19.  On May 2, 2022, the City Council approved a budget appropriation in the amount of $1,172,300 for the following programs, as well as consultant costs to help develop and administer the programs:

Bill Assistance Program:                                    $500,000 
Small Business Assistance Program:                $300,000
Dine and Shop Local Incentive Program:          $200,000

Both the Bill Assistance Program (BAP) and the Small Business Assistance Program (SBAP) were launched on Monday, August 1, 2022. The guidelines and applications for these programs were made available on the City's website, social media platforms, and at the Community Development Department’s Economic Development and Housing Division. The process of submitting the applications and supporting documents is completed through an online portal.  As of Wednesday, September 21, 2022, the City has received 118 BAP applications and 85 SBAP applications. The launch of the proposed Dine and Shop Local Incentive Program (Dine and Shop) did not occur concurrently with these two programs as staff required additional time to develop program guidelines and determine which vendors could help effectively administer the program.

The purpose of Dine and Shop is to provide assistance to both La Habra households and local businesses by providing $200 gift cards to eligible residents that can be used to shop at local La Habra businesses.  In order to be eligible for the program, applicants must currently live within the La Habra city limits and have a gross household income that does not exceed 65% of the area median income for Orange County.  For a household of four individuals, this means annual household income cannot exceed $81,100.  In order to receive a gift card through this program, applicants must provide proof of income documentation such as pay stubs or bank statements to demonstrate household income. The proposed total amount of ARPA funds for Dine and Shop is $200,000, which will fund 1,000 gift cards valued at $200 each.

City staff researched various gift card platforms and met with three different vendors: Yiftee, Factor4, and Giverrang.  After careful review and consideration, staff determined that Giverrang is most qualified to assist the City with the implementation of Dine and Shop.  Giverrang makes community gift cards for communities across the U.S. Their cards are Mastercard prepaid cards that have been developed with technology that allows Giverrang to "lock" each card so that it can only be spent at specific merchants in a given area, or at all businesses in a specific city or county.  Giverrang’s technology allows them to launch tailor-made gift card programs for a specific community to encourage shopping at local businesses.

Under Dine and Shop, the City will purchase 1,000 plastic Mastercard gift cards from Giverrang valued at $200 each. These gift cards will be activated to specifically be used within city limits at most La Habra businesses that accept Mastercard.  In the event a resident receiving a Dine and Shop gift card attempts to make a purchase that is in an amount in excess of the remaining balance on the gift card, they will be able to pay the difference for that purchase with another form of payment if they so choose; however, it should be noted that businesses that use “Square” as their point of sales system may not be able to accept another form of payment to pay the remaining balance of a purchase. It will be advisable that residents who receive these gift cards track their card's balance and make purchases accordingly.

Participating businesses in La Habra do not have to sign-up or pre-register with Giverrang to be able to accept gift cards.  There is also no special app required, nor are businesses required to manually enter card information, which was a requirement specified by the other gift card vendor respondents. Gift cards issued to eligible residents through Giverrang will be valid for six months, after which they expire and can no longer be used. Once cards expire, the City will be able to retrieve any unused balances from issued cards, subject to a seven percent (7%) transfer fee. For example, if a total of $10,000 is left unspent after six months among all the cards that were issued by the City, the 7% fee would total $700, payable to Giverrang, with $9,300 returned to the City for reallocation to this or other eligible ARPA programs. 

Staff recommends selecting Giverrang over the other prospective gift card vendors for several reasons. First, Factor4 required an app for businesses to download in order to register their business as a gift card participant. Only businesses that registered using their app could accept gift cards, which staff believes would have created an unnecessary burden on businesses and potentially limited their participation in the program. In contrast, Yiftee only provided online gift cards, which would either be emailed or sent via text to eligible recipients, and which then would need to be printed and taken to a business for use, and that business would then have to manually input the gift card number. Again, this seemed to create undue burdens on both the gift card recipients and the businesses who would take the payments. While conducting a survey among La Habra businesses for Dine and Shop, City staff learned that most businesses require an actual physical card in order to accept payment. Lastly, Yiftee does not allow partial payment authorization and, like Factor4, Yiftee also requires businesses to opt into their program. Giverrang was able to provide a gift card program that was more simple to administer and allowed for a payment system that was familiar to businesses. 

The total cost of implementing Dine and Shop through Giverrang is estimated at $211,650 and the breakdowns of costs is as follows:

If approved by Council, staff will order 200 gift cards at a time based on the number of eligible applicants filing to participate in the program, as well as to manage gift card balances more efficiently to ensure cards are being fully utilized prior to their expiration dates. This process will allow staff to better track and retrieve unused balances after cards expire. Staff has provided the proposed Dine and Shop program guidelines and application as attachments to this staff report, and the City Attorney's Office has reviewed the agreement with Giverrang. In the event the City Council approves the program, staff would solicit applications beginning November 7, 2022.  All applications will be accepted on a "first-come, first-serve" basis through an online portal or in person through the Community and Economic Development Department at City Hall.  Staff proposes that any appeals to application decisions for this program be submitted in writing within 15 days of notification of the decision for final determination by the City's Planning Commission.

On May 2, 2022, the City Council approved an ARPA budget appropriation in the amount of $1,172,300, which included $200,000 for the Dine and Shop Program. Staff recommends an additional $20,000 appropriation of ARPA funds for the Dine and Shop program to cover vendor implementation costs, potential recovery fees for unused balance transfers, and other incidental costs, so that the full $200,000 ARPA budget previously approved by Council can be applied to program benefits. 

GENERAL PLAN RELEVANCE

Goal LU 2: Land Use Diversity and Choices for Residents

Policy: LU. 2.2: Places to Shop. Provide for, and encourage, the development of a broad range of uses in La Habra’s commercial centers and corridors that reduce the need to travel to adjoining communities, and which subsequently capture a greater share of local spending.

Goal ED 1: Competitive Strength and Diversification

Policy: ED. 1.1 Consumer Demand. Explore opportunities to increase the competitive role of the City’s retail sector to serve both the community and the larger base of consumers in surrounding communities.

CITY COUNCIL GOALS & OBJECTIVES:  

Use of ARPA funds for this purpose satisfies the following City of La Habra Goals and Objectives:

Goal 5 - Development Activity and Business Assistance:

Objective D: Continue to improve the City business retention and expansion program.

Objective F: Encourage the Development Community to support community programs, activities, and events as good corporate partners.

Goal 6 - Community Outreach and Civic Engagement:

Objective E: Build and maintain partnerships and collaborations with other local government agencies, the business community, local nonprofit organizations, and the faith-based community.