Vallejo City Council creates business loan program after no confidence vote on $245K economic plan

VALLEJO – The Vallejo City Council scrapped a spending proposal that was part of its recently adopted economic strategic plan and instead voted unanimously to use the funds for a low-interest loan program for Vallejo businesses on Monday.

The council reluctantly adopted the economic strategic plan on Dec. 17 after councilmembers and residents criticized it as inadequate and lacking specific actionable steps that the city had not already tried. 

The economic plan was created by the consultant group Economic Forensics & Analytics led by Sonoma State University economics professor Robert Eyler. After nearly three years spent developing the plan at a cost to the city of $245,000, councilmembers were not willing to approve an additional $355,000 in American Rescue Plan Act funding to extend the contract with Eyler’s group to carry out their plan’s recommendations.

“I was very disappointed in the presentation that was given both by the city staff as well as the contractor,” Councilmember Peter Bregenzer said, referring to the Dec. 17 presentation of the economic plan. “I thought it was a very cookie cutter report that he could have given to a number of cities across California. 

The proposed extension of the contract with Eyler would have allowed his firm to administer $355,000 in ARPA funding to develop a city-wide capital facilities master plan, develop a marketing plan, coordinate and deliver at least three pop-up events, implement a shop local campaign, and provide semi-annual reports to the council.

City staff had arranged to hold the Dec. 30  council meeting in order to meet an end of the year deadline to allocate ARPA funds. 

“I just think it's absurd that we would even consider giving another dime to his organization,” Bregenzer said. “And if the city came at the very last second like this to tie our hands and make sure that this was a gift given to him for something that he doesn't deserve, then I think that's a shame on the entire city. I would rather see this money go back to the federal [government] than to give one more dime to Dr. Eyler.”

Councilmember Mina Loera-Diaz also firmly expressed her lack of confidence in Eyler. “I am not in favor of extending a contract to Mr. Eyler, I'm very disappointed in the plan that we were presented,” she said. “It didn't give any new ideas. What was presented was stuff that anybody that lives in the city can tell that we need.”

Loera-Diaz said that the chamber of commerce had already implemented a shop local campaign that the city could have supported if they had not been waiting on the economic development plan. 

“I can give you 20 pop-ups this year for free,” she said. “People are dying to do pop ups. Give them a city property, and you will be full of pop-up folks wanting to sell their things.” She added that she would like to see the marketing plan done in-house or through a contract with another consultant and, perhaps, incorporating contributions from Vallejo’s youth. 

Loera-Diaz proposed an alternate plan to use the funds to create a revolving small business loan program, make facade improvement in the downtown and in business corridors throughout the city and to fund the purchase of software that aids businesses in finding suitable locations with appropriate zoning.

Loera-Diaz’s proposal raised concerns about a potential violation of the Brown Act, California’s public meeting law, because new proposals require a two-step process and agenda items must be noticed ahead of any public meeting.

City Attorney Veronica Nebb said that if the council were to reject the extension of Eyler’s contract it would qualify for a Brown Act exception, which allows a new item to be added to the meeting agenda if an immediate need arises after the agenda has been posted. But Nebb said that a new contract would have to be created by the end of the year.

Loera-Diaz said that Solano County Economic Development Corporation President Chris Rico already operates a similar program for the county that offers revolving loans with 6% interest and he said he would be willing to create a program to fit the city’s needs using the county program as a template.  

Mayor Robert McConnell said that he would like to exclude non-profits and sole proprietors because the intent of the program is to stimulate economic activity by supporting businesses that are likely to offer employment opportunities. He added that businesses should have had a business license in Vallejo during the pandemic to meet the economic recovery requirements of ARPA funding and that businesses should be able to demonstrate an ability to repay the loan beyond a simple verification of a 630 credit score. 

The council unanimously approved allocating the full amount of $355,000 to the loan program. 

According to Rico, the Solano Economic Development Corporation agreed to contract with Vallejo by folding in the funds to the county’s existing program which he said that a number of Vallejo businesses have already taken advantage of. 

Due to the last minute request for the contract, Rico said that the economic development corporation was only able to set up the program that matched the requirements of the existing county program. The funds will all be dedicated to Vallejo business with an administration fee of 10%.

The existing program requires a 630 credit score and businesses can receive a refund on the program’s $250 application fee if they work with the small business development center for a 60-day period to receive financial consulting and marketing strategy information.

Rico said that working with the small business development center provides tools and expertise that support business owners in successfully paying back the loans. 

“If you have a 630 credit score you are looking at 18% for a standard loan so it is not surprising that businesses have trouble paying that back because that money is expensive,” Rico said. “We are giving people with a 630 credit score loans at 6% which is unheard of.”

Since the funds will be folded into the existing program, Rico expects that the additional funding could be available to Vallejo businesses by the end of January. A flyer for the existing program is available here.