Econ 919 — Kenai aims to help residents help businesses

Apr 17, 2020

The city of Kenai is contemplating ways to help residents and businesses through the economic hardships caused by the coronavirus pandemic. At a council meeting Wednesday, city manager Paul Ostrander said he heard about a town in Oregon that is trying to boost businesses by rewarding people for shopping. 

“It would encourage people to go out and shop locally but also provide some benefit to our residents that are members of our utility,” Ostrander said.

The idea is for any city resident who spends $25 at a local business to get a $15 credit toward their city utility bill. Turn your receipts into the city and get up to a $75 credit for spending $125.

There are some wrinkles to iron out. Mayor Brian Gabriel had one. There are about 1,220 residences on city water and sewer but many more people who live in Kenai.

“I’m on a well, so I’m just wondering — not to say I’m going to be the one anonymously complaining to city hall but there might be other folks that do,” Ostrander said.

The city could write those folks a check from the general fund. And what about businesses or owners of rental properties who pay the utilities? Also eligible.

As for where people shop, the idea is to encourage spending at a locally owned business but the credit will be honored no matter where in Kenai the money is spent.

“What this is really about is supporting our locally owned, impacted businesses to help them through this time,” Ostrander said. “Yeah, there’s going to be some folks that just go out, spend $125 bucks on groceries at Walmart, submit their receipt and we’re going to provide the credit. But it’s not only just about this program, it’s about getting the message out that that’s important during this time.”

As for timing, the city is considering the month of May, possibly extending into June. If a business is not open yet, there’s the option of buying gift cards.

“During this period when they’re closed, in particular, there’s probably very little cash flow, so any cash flow at this time would be very beneficial. Extending the program to when they’re starting back up and maybe supplementing that cash flow makes some sense too,” Ostrander said.

It is a balancing act to provide a stimulus program when the city is taking a financial hit, as well. It wouldn’t make much sense for the city to cut its revenues if it would mean having to raise taxes or utility rates later.

But Ostrander says the balance of the utility fund is in the millions, since the city has been saving toward its five-year capital projects plan. The impact of this program to the utility fund is estimated at under $50,000.

Kenai stands to see federal stimulus money, as well. Under the federal CARES Act, the city will get $1.6 million to support the airport.

“That’s a game-changer for our airport with Ravn leaving, with the lounge being closed, with the bar being closed and with the number of deplaned passengers decreasing as much as it has,” Ostrander said. “This is really going to allow us to bridge that gap and keep the airport viable through this crisis.”

The council also passed a resolution supporting the $250 billion Coronavirus Community Relief Act, which is currently working its way through Congress. The bill would provide funds to local governments with populations under 500,000 to cover costs related to COVID-19 and to reimburse losses incurred from March through December.

It might mean as much as $6 million coming to Kenai if the Community Relief Act passes. Especially given that, the city council was in favor of the idea of a shop-local stimulus program.

Councilman Tim Navarre says he’ll look forward to the details worked out before May.

“I’m more excited if we got $6 million, how much we’d use for us but then how much we might use for helping out businesses or residents in our city,” Navarre said. “Just keeping their taxes down is going to help under these trying times.”