Los Gatos Options for Economic Recovery and Community Vitality in Response to COVID-19

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May 24, 2020


Re: Options for economic recovery and community vitality in response to COVID-19


Dear Honorable Mayor and Council Members,

At the upcoming special council meeting on May 26, you will be discussing various options to help our local business community survive and rebuild from the devasting impact of the COVID-19 crisis.

Without a vibrant and healthy local business community, much of the charm and uniqueness of Los Gatos would be lost. And, let us not forget their role in helping generate $8m of revenue in the form of sales tax. With that in mind, we request the Council seriously consider the following recommendations:


  1. Immediately establish a General Fund Committed Reserve totaling $2 million for Economic Recovery Programs to be developed by the Chamber of Commerce. Ultimate approval of specific programs will be determined by the Council.

We agree with the Staff’s assessment that the order of magnitude of investment required to create meaningful economic recovery and community vitality programs post COVID 19 could approach $2m. By establishing a $2m Committed Reserve today, the Council is publicly stating that these funds can only be used for the purpose of providing economic recovery and promoting community vitality for our local businesses. Furthermore, it gives the Chamber of Commerce the certainty it is seeking to ensure that money is available to fund specific recovery programs they recommend. The actual use of funds will be governed by these programs and must be approved by Council.

Given the shortness of time, it is not reasonable for the Chamber to fully develop specific programs by the time of this meeting.  By establishing the reserve today, no money is spent.  It is simply reserved and provides the Council with the future flexibility it is seeking to approve future specific programs. This newly created reserve will be similar in status to the budget stabilization reserve, catastrophic reserve and the CALPERS/OPEB reserve. The Council used this exact approach when it created the committed reserve for the Almond Grove Street Project.

If the funds are not fully spent, the Council, at its sole discretion, can repurpose these funds to other projects. We see no downside and strongly suggest that the Council establish this new reserve now. To drive home the seriousness of the challenge many of our local businesses are facing, we are attaching a report by JP Morgan Chase and Company which details the lack of cash that these small businesses have. Their survey of over 597,000 businesses showed that half of all small businesses hold a cash buffer large enough to support 27 days of their typical outflows. With the SIP order now going on for over 80 days, one can only imagine the economic distress these small businesses are facing.

To fund the $2m committed reserve we also agree with the Staff’s recommendation to repurpose the $1,972,384 Downtown Streetscape project, plus an additional $27,616 from the Surplus Property Reserve which currently has $1,200,000 available. We disagree with the Staff’s recommendation to use any funds from the Parking Study capital project given the strategic importance of that study and that other sources are readily available.

On the other hand, the Downtown Streetscape project has no detail project plan, no detail project cost estimate, and no specific delivery date. On that basis alone it is not a capital project, but rather a “placeholder” for a future project. It is difficult to conceive a better use for these funds than to be repurposed to help stimulate our local businesses.

Additionally, the Council might recall that the original sourcing for the Downtown Streetscape capital project came by reallocating $1m from the General Fund Capital/Special Project Reserve and $972,384 from the Internal Service Fund – Vehicle Maintenance. If at the time this decision was made the Council was aware of the impact of COVID 19 on our business community, we are certain that instead of establishing a Downtown Streetscape project, the Council would have prudently established the $2m Economic Recovery Reserve we are suggesting. Now is the time to do exactly that.


  1. The Town should immediately halt all Town mandated financial burdens on small businesses

For a business with little to no revenue, the prospect of paying taxes, licensing fees or other Town fees poses a significant threat to their ability to remain open and pay their employees. The Town has the authority through a resolution to suspend these financial burdens. We recommend that the Council take the action to suspend payment for these fees for all of FY 21.


  1. The Town should explore creating a local relief fund like the fund created by the City of Los Altos

This recommendation could be one of the specific projects recommended by the Chamber of Commerce. The idea is to replicate the program that the City of Los Altos recently adopted. Spring boarding off other good ideas has always accelerated progress in businesses and communities.

To mitigate the impact of COVID-19 on Los Altos small businesses and their employees, the Los Altos City Council committed up to $250,000 in one-time funds to create a Small Business Assistance Grant Program. The Los Altos Community Foundation and Los Altos Chamber of Commerce will work to raise additional funds to provide funds to more businesses.

The program is well defined with specific eligibility requirements and program timelines. The City of Los Altos is almost identical in size as Los Gatos and their staff has been able to administer this project. We recommend that the Council direct Staff to work with the Chamber of Commerce to investigate the possibility of creating a similar program for the Town of Los Gatos.

Every day the news only gets worse about the economic devastation of small businesses across the country. We do not want to watch this town die a slow and painful demise.  We believe that the Town has the financial resources to assist our local business who contribute to and help define our Town. The merchants, led by the Chamber and its board, should be viewed as partners with the common goal of preserving the unique character of Los Gatos for subsequent generations.

Thank you for your consideration of these recommendations.


Los Gatos Community Alliance

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