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03/10/2021 - Meeting Materials SALT LAKE CITY BUSINESS ADVISORY BOARD Wednesday,March 10`h, 2021 8:30 a.m.— 10:00 a.m. This meeting will be an electronic meeting pursuant to Salt Lake City Emergency Proclamation No.2 of 2020 (2)(b). To access and participate in the meeting please visit: https://saltlakecity.webex.com/saltlakecity/j.php?MTID=mae9234167d6e7c53886beebaf9c30374 Meeting password: RcuMBFBn646 I, Kestrel Liedtke, Vice Chairperson of the Business Advisory Board,hereby determine that conducting the Business Advisory Board meeting at an anchor location presents a substantial risk to the health and safety of those who may be present at the anchor location. The World Health Organization,the President of the United States, the Governor of Utah,the Salt Lake County Health Department, Salt Lake County Mayor,and the Mayor of Salt Lake City have all recognized a global pandemic exists related to the new strain of the coronavirus, SARS-CoV-2. Due to the state of emergency caused by the global pandemic,I find that conducting a meeting at an anchor location under the current state of public health emergency constitutes a substantial risk to the health and safety of those who may be present at the location. AGENDA 1. Roll call 2. Announcements o City Council Announcements o Economic Development Announcements a. COVID Updates b. Dept of Economic Opportunity o Board Announcements a. Summary from last month's meeting-Kestrel 3. Approval of the minutes of the February 10t11,2021 meeting 4. Business Item A. Delivery Fee Discussion—Invited Guests,Econ Dev to moderate B. Off-Street Parking Ordinance—Wayne Mills and Casey Stewart, Planning Dept 5. Adjournment Mission:To foster an equitable and robust business ecosystem as ambassadors,advocates,and advisors. Core Values: o Commitment o Vision o Respect o Collaboration o Inclusivity o Impactful ERIN MENDENHALL :n ^� , i, BEN KOLENDAR MAYOR DIRECTOR 1 DEPARTMENT of ECONOMIC DEVELOPMENT BUSINESS ADVISORY BOARD STAFF MEMO DATE: March 10, 2021 ITEM#: 1 PREPARED BY: Roberta Reichgelt RE: Discussion on placing a fee cap on delivery services REQUESTED ACTION: Recommendation EXECUTIVE SUMMARY/ANALYSIS: The Department of Economic Development will hold a discussion on whether Salt Lake City should pursue a fee cap on delivery services. ATTACHMENTS:Article from Progressive Policy Institute dated 2/23/21, "Price Controls Won't Fix What's Ailing the Restaurant Industry." • CT radically. pragmatic Price Controls Won 't . .. Fix What's Ailing the r. Restaurant ALEC STAPP, DIRECTOR OF TECHNOLOGY POLICY AT PPI FEBRUARY 2021 11111 11111111 OE Orr @ppi 11 @progressivepolicyinstitute in/progressive-policy-institute • I • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY p1 0=h—el,. ` f I 1 ... _or . . kilio Price ConoIs I. ri • ALECSTAPPWont Fix 44 What's AiigPROGRESSIVE thtaura t ''POLICY INSTITUTE Industry • • . • • T 1� ti F i i • .1'1 •; _ , _ • • Jul ! , . . , J s- hil EXECUTIVE SUMMARY The restaurant industry is hurting. The industry has some big chains, but most restaurants are quintessentially small Between February and April of businesses. More than 9 in 10 restaurants last year, more than 6 million food have fewer than 50 employees. More than 7 in 10 restaurants are single-unit operations.3 service workers lost their jobs.' As Restaurants also offer lots of entry-level jobs for of December, more than 110,000 less-skilled workers (almost one-half of workers got their first job experience in a restaurant). restaurants had closed permanently There is almost no safe way to allow indoor or long-term.2 dining during an outbreak of a lethal, airborne, and highly contagious virus. Customers must remove their masks to eat and restaurant dining is traditionally done indoors with tightly packed groups of people. Some restaurants have chosen to remain open by relying on pickup and delivery orders instead of indoor dining, and for certain kinds of food, like pizza, this is a natural extension of their previous business model. For others, it's a difficult transition to figure out pricing and what types of food work for takeaway. Many restaurants rely on third party services for aggregating online orders and for fulfilling the delivery to customers. P2 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY Delivery services have been one of the few lease. Economists are also skeptical of vaguely sectors expanding during the pandemic, written price gouging laws or price controls providing work for those who need it and on essential medical supplies during a public helping many Americans stay safe during the health emergency. A much better solution, many pandemic. With the goal of helping restaurants, economists argue, is for the government to step some states and cities have temporarily capped in and pay the market rate (to encourage supply) the commissions these platforms can charge and redistribute the goods based on need. restaurants for delivery. These price controls are popular with elected officials because they There is a narrow range of circumstances look like a cost-free way to help struggling when price controls can be beneficial for social restaurants, but their costs are hidden, not welfare. In static and monopolistic markets, free, and will hit small restaurants and their price controls can make sense to prevent workers hardest. dominant incumbents from charging monopoly prices and harming consumers. A second While well-intentioned, imposing price controls exception to the rule is during a natural disaster will slow the economic recovery in a sector or other emergency. If supply is extremely that's among the hardest hit by COVID. To inelastic (meaning non-responsive to price understand why, it's important to know how changes) during a crisis,then price gouging laws these platforms work. Food delivery services can be beneficial on net. But to be clear, these are multi-sided markets, meaning the platform laws need to be precise and narrow in scope. owner is trying to connect multiple "sides" of If the emergency lasts beyond a few days or the market in mutually beneficial exchange. In weeks,then relaxing price controls might be this case,the business is trying to connect three necessary to encourage an increase in supply. groups: drivers, restaurants, and consumers. The balance of fees, commissions, and prices Neither of these exceptions applies to the food on all three sides of this market is set to achieve delivery market in this crisis. The market for a high volume of orders, meaning revenue for food delivery services is highly competitive (aggregate profits in the industry are negative4) restaurants and earnings for delivery drivers. and the current public health emergency has Price controls on one side of the market upset already lasted for more than a year. Instead, this delicate balance. we can expect price controls on food delivery In general, most economists view price to have the usual negative effect. And based controls as an ineffective and inefficient means on early data from the cities that have capped of achieving lower costs for underserved commissions,that's exactly what's happening.' groups. In a classic example, rent control Companies are shifting the costs from leads to underinvestment in construction restaurants to consumers in the form of higher and maintenance of housing. Landlords are fees, and because consumers are generally incentivized to convert their apartments into more sensitive to price increases,this is leading condos or let friends and family live in the to a reduction in output in these markets.' Fewer units. Under rent control, property owners often orders means less business for restaurants and charge a large upfront payment to secure a less income for drivers. P3 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY 1 There's a better way forward. The federal and businesses cash" sounds simple (and government can provide (and has provided) expensive), but the alternatives are much worse. direct bailouts of the businesses and their Providing no help to restaurants would force workers. Unemployed workers have received them to choose between closing permanently extended and bonus unemployment benefits. or staying open — thus exacerbating and These benefits should be continued for the prolonging the pandemic. Imposing price duration of the public health emergency. controls will likely lead to a reduction in output, Restaurants should receive grants and loans so harming consumers, drivers, and restaurants they can continue paying rent and other fixed in the process. The answer is for the federal costs while closed. These programs should government to help bridge the gap to the end of be funded to the level that every restaurant the pandemic by continuing and increasing its can benefit from them. "Just give people support for workers and businesses. P4 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY INTRODUCTION: RESTAURANTS NEED HELP The restaurant industry has been hit especially More than one in six restaurants have been hard by the pandemic. COVID-19 is an airborne forced to close permanently — about 110,000 respiratory illness that spreads most easily establishments — according to data from the when people are (1) indoors (2) unmasked (3) National Restaurant Association.' Small local and close together for an extended period of restaurants are doing much worse than large time. Unfortunately, that description matches chains, which have the advantages of"more restaurants perfectly, which is why many states capital, more leverage on lease terms, more forced them to close indoor dining during physical space, more geographic flexibility and various stages of the pandemic. It's not the fault prior expertise with drive-throughs, carryout and of restaurant owners or workers that they were delivery," according to the Wall Street Journal.8 unable to stay open, so policymakers have a duty to make them whole. U.S. RESTAURANT COMSUMER U.S. FOOD SERVICE SALES, SMALL U.S. BUSINESSES' DEFAULT SPENDING, CHANGE FROM CHANGE FROM PREVIOUS YEAR RATE ON LOANS AND LEASES PREVIOUS YEAR 20% 10% 10% 0- - 0 • II 1111 II II II 11 11 11 11 0 1 zo -10 10 � 40 20 20 60 30 3C FMAMJJ A 2010 2015 2020 2010 2 2020 • BIGGEST CHAINS* • CHAINS* • ACCOMMODATIONS AND FOOD SERVICES • SMALLEST INDEPENDENTS* • INDEPENDENTS' OVERALL *250 or more locations *Ten or more locations +One or two locations +One to nine locations Note:Sales are consumer retail selling price Sources:The NPD Group/CREST(consumer spending);Euromonitor International(sales);PayNet(default rate);Wall Street Journal P5 PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY SCHEDULED U.S. RESTAURANT U.S. PAYROLLS, CHANGE FROM U.S. FOOD SERVICE OUTLETS, EMPLOYEES, CHANGE FROM PREVIOUS YEAR CHANGE FROM PREVIOUS YEAR PREVIOUS YEAR 20% 20% 5.0% 0 — 0 — — 2.5 20 20. 0 k, . ■I1I1Ilhh1INI�� 40 40 2.5 60 60 5.0 2020 80 80 7.5 projections -100 -100 -10.0 MAMJ J AS 2010 2015 2020 2010 2015 2020 • CHAINS* • OVERALL • CHAINS* • INDEPENDENTS* I- FOOD SERVICES AND DRINKING PLACES INDEPENDENTS' *19 or more locations+One to nine locations Note:Payrolls are seasonally adjusted and figures for August and September are preliminary Sources:Hot Schedules(employees),Labor Department(payrolls);Euromonitor International(outlets);Wall Street Journal10 Understandably, federal, state, and local San Francisco was one of the first cities to governments are trying to support the restaurant institute a commission cap on meal delivery industry during this difficult time. The federal services, limiting the fees they can charge government supported restaurant workers with restaurants to 15 percent.13 Seattle, New York, extended and bonus unemployment benefits and Washington, D.C., and other cities soon followed it supported businesses through the Paycheck suit. As expected,the food delivery apps raised Protection Program (PPP) with $350 billion in consumer fees in response. DoorDash added a April 2020 and $284 billion in December 2020.11 $1.50 "Chicago Fee"to each order after the City Of course, state and local governments, most of Council capped restaurant commissions at 15 which have balanced budget rules12 (and none percent.14 Uber Eats added a $3 "City of Portland of which can print its own currency), are unable Ordinance" surcharge after the city imposed a to serve as lender or insurer of last resort. Good 10 percent commission cap.15 In Jersey City, in intentions — the desire to help local restaurants response to a 10 percent commission cap, Uber — have unfortunately led some states and cities Eats added a $3 fee and reduced the delivery to adopt a shortsighted and counterproductive range for restaurants.16 policy response: price controls. P6 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY To understand why these measures haven't response to price controls during World War achieved their stated aims, and why they II, hamburger meat producers started adding will likely continue to have unintended more fat to their burgers. Candy bar companies consequences, first we need to understand what made their packages smaller and used inferior price controls are and the limited contexts in ingredients. During WWI, consumers who which they are effective. wanted to buy wheat flour at official price often had to buy rye or potato flour too.18 WHY PRICE CONTROLS ARE USUALLY BAD A price control is a government mandate that Generally speaking, after rent control takes firms in a given market cannot charge more effect, landlords reduce their maintenance than a specified maximum price for a good or efforts on rent controlled apartments.19 They service (e.g., rent control for apartments) or they also pull rental units from the market and either cannot charge less than a specified minimum sell them as condos or let friends and family price for a good or service (e.g., minimum wage live in them. Landlords can also capture some for labor). Governments usually implement price of the original economic value of their rental controls with a noble aim of reducing costs of units by adding a fixed upfront payment to rental essential goods (e.g., shelter, fuel, food, etc.) for agreements. When airfare prices were set by low income people or supporting the revenues the Civil Aeronautics Board between 1938 and of a favored industry (e.g., price supports for 1985, airlines competed on other non-price farmers). dimensions, including improving the meal quality and increasing the frequency of flights and the Policymakers tend to justify the imposition of number of empty seats. a price control by arguing that the unrestrained forces of supply and demand will not ensure an The stricter the price controls are,the more equitable distribution of resources in essential likely bribes and other black market activity will markets. For politicians seeking to retain their substitute for previous white market activity. jobs, price controls have the added benefit of Even worse, the black market has higher prices being "off budget," meaning elected leaders don't than the legal market because sellers need to need to raise taxes to pay for them. While the be compensated for the risk of being caught costs of price controls may be unseen from a and punished by the authorities. Queuing and budgetary perspective, they are certainly not rationing are also extremely common under zero. Consumers, workers, and businesses are price controls. Hugh Rockoff, a professor of harmed by the lost output due to shortages economics at Rutgers University, explains how under a price ceiling and excessive output under price controls on oil had this effect in the 1970s: a price floor. Because controls prevent the price system As Fiona Scott Morton, a professor of from rationing the available supply, some economics at Yale University, wrote, "If other mechanism must take its place. government prevents firms from competing A queue, once a familiar sight in the over price,firms will compete on whatever controlled economies of Eastern Europe, dimensions are open to them"17 And there are is one possibility. When the United States a multitude of dimensions beyond price. In set maximum prices for gasoline in 1973 P1 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY 0 0 1 and 1979, dealers sold gas on a first-come- And here are the results: first-served basis, and drivers had to wait in long lines to buy gasoline, receiving in the RESPONSES process a taste of life in the Soviet Union.2o 80% Henry Bourne, an early twentieth century 60°x° 49% economist, perhaps summed it up best when 40% .32% describing price controls in France during the 20% French Revolution:210% 2% 7% 2% 7% It was the honest merchant who became ,2 2 2 cn v o o C Cl 01 Ql C pl -C o 03 the victim of the law. His less scrupulous Q o 2 cu o compeer refused to succumb. The butcher z in weighing meats added more scraps than RESPONSES WEIGHTED BY EACH EXPERT'S CONFIDENCE before...other shopkeepers sold second- 80%. rate goods at the maximum [price].... The common people complained that they were 600x0 57% 43% buying pear juice for wine,the oil of poppies 40% for olive oil, ashes for pepper, and starch 20% for sugar. 0% 1% 4% 0% >a N C 0) >N Indeed, price controls do not make competitive L C a, 0) o) C o co pressures magically go away; they merely get �, Q o co sublimated into other dimensions of competition A 2014 survey asked about surge pricing:23 — and those who abide by the spirit of the law are punished the most. The aforementioned Using surge pricing to allocate transportation problems are why economists dislike price services — such as Uber does with its cars controls and favor market clearing price — raises consumer welfare through various mechanisms. The Initiative on Global Markets potential channels, such as increasing the (IGM) regularly surveys a group of leading supply of those services, allocating them to economists on various questions of public people who desire them the most, and reducing interest. The questions related to different kinds search and queuing costs. of price controls have been quite lop-sided. A 2012 survey about rent control asked the RESPONSES following question:22 8o°,° Local ordinances that limit rent increases 60% for some rental housing units, such as in 39% 41% 40% New York and San Francisco, have had a positive impact over the past three decades 20°/ "" 9% 4° 4° on the amount and quality of broadly o°° o% 2% >,a) d) C a) T d) C affordable rental housing in cities that have ,2 2 .� o 0) opo < a, m o � a 0) used them. 0 0 o C6 V) p Cn =p O z PS .141/11 PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY RESPONSES WEIGHTED BY EACH EXPERT'S CONFIDENCE THE EXCEPTIONS WHEN PRICE CONTROLS ARE GOOD There are two general exceptions when the 80% benefits of price controls might outweigh the 60% 47% costs. First, in markets with natural monopolies 40% 38% and static competition, price controls can prevent dominant incumbents from harming 20% 8% 0,/0 6% consumers by charging monopoly prices (and o°'° restricting output). This is generally how utilities o c a a = a regulation works in the US. Electricity, natural Q 0 (p o05 4c73o gas, water, and sewage are examples of natural A 2020 survey points to an alternative monopolies. It would be highly inefficient to lay mechanism for achieving the efficiency benefits two sets of water, gas, or sewage pipes to every of high prices without incurring the distribution house. Similarly, it wouldn't make sense to have costs: two electrical grids that connect to every house. Governments should buy essential medical There are also low risks to investment efficiency supplies at what would have been the market by imposing price controls on these services. price and redistribute according to need rather We have very likely reached the end of history than ability to pay. in terms of innovation in water, sewage, and natural gas. Firms don't need the incentive RESPONSES of large monopoly profits to invest in water innovation because it's just water. The optimal 80% number of competitors in these markets is 60% likely one. Utility regulators work closely with 47% 40% these companies to set prices that allow the 23% 19%, firms to recover their fixed costs while earning a 20% 7% 2% 2% reasonable but not extortionate profit. a 0, w v a o o As Noah Smith, a columnist for Bloomberg, E � 0 0, 01 0, 0 0, C o cu Q 05 o 05 o o c pointed out recently, economists have warmed o 0'E, z to one other type of price control over the last few decades: the minimum wage.24 RESPONSES WEIGHTED BY EACH EXPERT'S CONFIDENCE 80% 67% 60% 40% 19% 20% 11% 0% . 3% 0% T N N 0 N >,4) 0cap 0) 0) 0 cap Q 0 (73 a P9 .11111 I PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY CHANGING OPINION AMONG ECONOMISTS This isn't the case in all labor markets, of course. Do minimum wages substantially lower employment Urban markets have much more competition among low-wage workers? for low wage workers than rural markets. And economists are still worried that a national 1978 AEA Member Survey: 90%agreed minimum wage of$15 per hour might lower 1992 AEA Member Survey: 72°i agreed employment in many states.26 But modest 2000 AEA Member Survey:- 46%agreed minimum wage increases are a price control 2013 IGM Panel($9/hr): _ 34%agreed that economists feel increasingly comfortable supporting. 2015 IGM Panel($15/hr): - 26%agreed The other axis to consider in addition to And this shift has occurred for the same competition is time. Is the price control reason economists are less worried about price permanent or temporary? In the event of natural controls in utilities markets: lack of competition. disasters and public emergencies, price controls Empirical evidence has started to pile showing (such as price gouging laws) can be reasonable. significant monopsony power in labor markets, The normal reason policymakers should allow particularly in rural areas.25 As this annotated prices to spike in response to surging demand is chart from Noah Smith shows, when a firm to incentivize more supply to enter the market. has monopsony power in a local labor market, But in a period of days or a couple of weeks a minimum wage can actually increase during a disaster, supply may essentially be fixed employment. (due to lack of outside access to the affected market). For very limited periods of time, caps on prices can ensure that a fixed quantity of supply is not allocated merely on willingness to pay (which is often a function of wealth as much as MINIMUM WAGE AND MONOPSONY preferences). H Employment without The Company's PRICE CONTROLS AND MULTI-SIDED PLATFORMS g marginal cost Before we examine how price controls are likely minimum wage T to affect the food delivery market, let's first review the basic business models in question Employment with here, because they are distinct from traditional minimum wage Imaginary labor supply markets with only one type of customer. Food curve Minimum delivery apps are operating what are known as wage level multi-sided platforms or markets. Full employment What's a multi-sided platform? First it's important to understand network +Wage without The Company's minimum wage marginal effects. There are direct network effects and revenue Number of people employed indirect network effects. Direct network effects are when a product becomes more valuable P10 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY to an individual user as more total users start ANALOG NETWORK EFFECTS MARKET MAP using it. The telephone is the classic example. A telephone is only valuable insofar as it can be used to call other people who also own telephones. Indirect network effects are when 11W consumers derive value from a distinct group = Marketplaces of users on a platform. For example, consider u shopping malls. The shopping mall owner needs to appeal to tenants to ensure the mall has lots of attractive stores for shoppers. But stores z Media only want to sign lease agreements for space W _ in shopping malls with lots of shoppers. The o 3 Z O shopping mall owner is in a sense a matchmaker J Communications for these two groups. Newspapers and Networks magazines are another example from the analog era. Advertisers want to advertise in publications Low High with a lot of readers and readers want to read DIRECT NETWORK EFFECTS engaging content at a low cost. Publishers bring readers and advertisers together in a mutually beneficial exchange. DIGITAL NETWORK EFFECTS MARKET MAP Digital markets often have these indirect network effects,too. For example, drivers want to drive on ride-hailing apps with lots of riders and riders want to ride on ride-hailing apps with u, Marketplaces Platforms (eBay,Amazon, (Android,Windows, lots of drivers. It's Uber and Lyft's job to set = Uber,Airbnb,etc.) Nintendo,ios,etc.) the price schedule (the commission it charges drivers, incentives it offers drivers and riders) at o Social Media the optimal level. The same is true for operating „ (Twitter,,Facebook, Reddit,etc.) systems. App developers want to develop apps for platforms with lots of users and users want Data 0 3 Communications to use platforms with lots of apps. Ditto for J Networks Networks (Netflix,Google, (WhatsApp video game consoles: video game developers etc) Snapchat,etc.) want to develop games for consoles with lots of gamers; garners want to buy consoles with Low High lots of games. The charts to the right show which products and services have direct network DIRECT NETWORK EFFECTS effects, indirect network effects, or both. P11 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY One of the most important questions for the Changes on one side of a multi-sided market owner of a multi-sided platform is how to set ripple throughout the other sides. the prices on each side of the market. Economic research shows that the platform owner should While the research literature on multi sided charge lower prices to the side of the market platforms offers some insight about what might that has relatively elastic demand (meaning happen in the event of a price control on one consumers are sensitive to price changes and side of food delivery platforms, we can also will change their quantity demanded sharply) just look at real world evidence to see what's and higher prices to the side of the market that happening. According to a recent article in has relatively inelastic demand.27 The most Protocol: elastic side should pay the lowest price, and On May 7, Jersey City capped delivery app often it makes sense to charge them below-cost fees charged to restaurants at 10%, instead prices ("free shipping" or"free delivery"). That's of the typical 15%to 30% many such the "subsidy" side of the platform. The side with platforms take. The next day, Uber Eats the lower elasticity of demand is the "money" added a $3 delivery fee to local orders for side. Generally speaking, consumers have a customers and reduced the delivery radius higher elasticity of demand and suppliers (e.g., of Jersey City's restaurants. drivers, merchants, developers, hosts, etc.) have Now, fewer people are ordering from the a lower elasticity of demand. restaurants via Uber Eats and instead are What are the likely effects of a price control on shifting to other platforms, the company a multi-sided platform? and the town's mayor both confirmed to Research from Rob Seamans and Feng Zhu Protocol.29 studied how Craigslist's entry into various local markets affected the classified ads business of When cities or states impose a price control local publishers.28 Remember, newspapers are on the commissions delivery apps can charge also operating multi-sided markets. They need restaurants, they are unknowingly destroying the to attract a large number of readers so they delicate balance platform owners have struck can then attract a large number of advertisers. to attract enough consumers and suppliers on Most classified ads on Craigslist are free, so its the platform to make the economics work. In market entry represented a marked increase cases where the government hasn't capped in competition on one side of the publisher's commissions and fees across all sides of the market. For publishers,this leads to "a decrease platform, the first step for the app owner is to of 20.7 percent in classified-ad rates, an increase raise fees on consumers to make up for the lost revenue from the restaurant. But as mentioned of 3.3 percent in subscription prices, a decrease earlier, the consumer side has a higher elasticity of 4.4 percent in circulation, an increase of 16.5 percent in differentiation, and a decrease of 3.1 of demand than the restaurant side, so an percent in display-ad rates."The authors go on equivalent price increase will disproportionately to show that "these affected newspapers are decrease demand on that side of the market. less likely to make their content available online." Poorly designed price controls can also have a disparate impact on different business models in P12 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY the same market. In the food delivery business, in-house to avoid the caps (because there for example,there are two common business are no commissions in a vertically integrated models with starkly different cost structures. company). Some companies merely aggregate online orders and leave the restaurant to handle final So, what is the likely effect of these commission delivery on its own. The commissions for these caps? Higher consumer fees. Longer wait times. services tend to be 15 percent or lower because Lower quality service. Reduced restaurant the costs are much lower than full delivery and delivery zone coverage. A switch from full services. Other services are full stack — they service delivery apps to aggregators. And an handle the transaction from the beginning of the increased incentive for the largest restaurant order until it's been delivered to the customer. chains to vertically integrate with delivery These services charge higher commission rates services. (up to 30 percent) because paying drivers for Lastly, it's important to note that neither of the their time and expenses is much more costly two exceptions for the general rule against price than merely aggregating online orders. Naive controls hold in this case. First, food delivery commission caps favor the aggregators over service markets are highly competitive.32 Most of the full stack delivery service providers because the companies in this market haven't been able the cap is usually non-binding on the low-cost to reliably turn a profit yet. As Eric Fruits, the business model. But that low-cost business chief economist at the International Center for model is also less innovative. Full service Law and Economics, noted, delivery platforms are reducing transaction Much attention is paid to the'Big Four' costs low enough to bring an entire new category of restaurants into the delivery market. — DoorDash, Grubhub, Uber Eats, and Postmates. But, these platform delivery Price controls would also disproportionately hurt services are part of the larger food service small restaurants. Large chains like McDonald's delivery market, of which platforms account negotiate commission rates as low as 15 for about half of the industry's revenues. percent with delivery platforms because they Pizza accounts for the largest share of can offer a high, steady volume of orders as well restaurant-to-consumer delivery.33 as their own large marketing budgets.30 Smaller He goes on to point out that restaurants can restaurants are riskier partners and therefore also always offer their own delivery service, pay higher commission rates — meaning price which serves as a check on the market power of controls would disproportionately impact small third party food delivery apps. And restaurants restaurants. Commission caps might also lead also have the option of apps like ChowNow, to more vertical integration between restaurant Tock, and Olo that offer online ordering as well chains and delivery services. Some large chains at substantially lower commissions, largely like Domino's Pizza already employ their own because they do not offer delivery. delivery drivers.31 If enough cities and states implement price controls on third party delivery Second,the pandemic is a chronic rather than services, then more chains with high order acute public health emergency. It is now entering volumes might decide to bring delivery services its second year and we are still months away P13 • 1 PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY from readily available vaccinations for all groups. support comes in the form of lower interest Price controls would reduce supply at a time rates and guaranteed loans for businesses and when people desperately need delivery services state and local governments. to maintain social distancing. Deficit spending will need to be paid for in CONCLUSION: A BETTER WAY FORWARD the future, either via inflation or taxes. But While bailouts are never uncontroversial, bailing deficit-spending during a crisis is consistent out the restaurant industry is an easy call. There with welfare-enhancing public policy. Income is no moral hazard risk as there was with the has diminishing marginal returns. In a time of bank bailouts in 2008, when it was reasonable crisis, we want to be able to borrow against our to worry that bailed out financial firms would collective future income, which is exactly what increase their risky behavior in the future deficit spending allows us to do. knowing that they would be bailed out in the Just give people money — don't mess with event of a crisis. In this case, restaurants won't prices. change their behavior in the future in a way that increases the odds of a deadly pandemic. A viral pandemic is a perfect example of an exogenous shock — an Act of God (or"force majeure" as insurance contracts put it). By definition, the pandemic affects everyone. Private insurance markets don't work for pandemics as well as they do for fires or natural disasters because a pandemic occurs everywhere all at once. The private insurance provider would be forced to pay out to all its insured entities simultaneously. Normally, a majority of an insurer's clients would be unaffected by an event and their premiums would be used to finance payouts for those harmed. In the case of a pandemic, everyone is harmed. The federal government is the appropriate entity for collectively insuring the population against these kinds of macro-level risks. Using its fiscal and monetary capacity,the government can efficiently insure the entire population across time. Fiscal support comes in the form of deficit- financed spending (we're effectively borrowing from our future, richer selves) and monetary P14 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY ei References 1 "All Employees,Food Services and Drinking Places."FRED,February 5,2021.https://fred.stlouisfed.org/series/CES7072200001. 2 Gonzalez,Carolina"Restaurant Closings Top 110,000 With Industry in'Free Fall,"Bloomberg,accessed February 2021,https://www. bloomberg.com/news/articles/2020-12-07/over-110-000-restaurants-have-closed-with-sector-in-free-fall. 3 "2020 State of the Industry Factbook."National Restaurant Association,accessed February 2021,https://restaurant.org/downloads/ pdfs/research/soi/2020-state-of-the-industry-factbook.pdf. 4 Savitz,Eric J."Demand Soars for Food Delivery Companies,but They're Still Not Profitable."Barron's,May 22,2020,https://www.barrons. com/articles/demand-soars-for-food-delivery-companies-theyre-stil l-not-profitable-51590183967. 5 Tebor,Celine."Restaurants,city say food delivery apps aren't complying with Portland's 10%commission cap."The Oregonian,July 24, 2020,https://www.oregonlive.com/food/2020/07/restaurants-city-say-delivery-apps-anent-complying-with-portlands-l0-commission- cap.html. 6 Selvam,Ashok."DoorDash Creates'Chicago Fee'in Response to City's Third-Party Cap."Eater Chicago,December 9,2020,https:// chicago.eater.com/2020/12/9/22165233/doordash-chicago-fee-third-party-cap-customers. 7 Hartmans,Avery."Roughly 17%of US restaurants have permanently shut down since the start of the pandemic as industry leaders warn of an'unprecedented economic decline'."Business Insider,December 7,2020,https://www.businessinsider.com/thousands-us- restaurants-closed-coronavirus-pandemic-2020-12. 8 Haddon,Heather."McDonald's,Chipotle and Domino's Are Booming During Coronavirus While Your Neighborhood Restaurant Struggles." The Wall Street Journal,October 12,2020,https://www.wsj.com/articles/mcdonalds-chipotle-and-dominos-are-feasting-during- coronavirus-while-your-neighborhood-restaurant-fasts-11602302431. 9 Haddon,Heather."McDonald's,Chipotle and Domino's Are Booming During Coronavirus While Your Neighborhood Restaurant Struggles." The Wall Street Journal,October 12,2020,https://www.wsj.com/articles/mcdonalds-chipotle-and-dominos-are-feasting-during- coronavirus-while-your-neighborhood-restaurant-fasts-11602302431. 10 Haddon,Heather."McDonald's,Chipotle and Domino's Are Booming During Coronavirus While Your Neighborhood Restaurant Struggles." The Wall Street Journal,October 12,2020,https://www.wsj.com/articles/mcdonalds-chipotle-and-dominos-are-feasting-during- coronavirus-while-your-neighborhood-restaurant-fasts-11602302431. 11 Sutton,Ryan."How the$900 Billion Stimulus Helps—But Mostly Fails—Restaurants and Workers."Eater New York,December 21, 2020,https://ny.eater.com/2020/12/21/22187791/covid-restaurants-stimulus-package-impact-new-york-nyc. 12 Reuben,Kim and Megan Randall."Balanced Budget Requirements:How States Limit Deficit Spending."Urban Institute,November 27, 2017,https://www.urban.org/research/publication/balanced-budget-requirements. 13 Batey,Eve."San Francisco Emergency Order Says Delivery Apps Must Cap Restaurant Fees at 15 Percent."Eater San Francisco,April 10, 2020,https://sf.eater.com/2020/4/10/21216546/san-francisco-delivery-cap-doordash-grubhub-uber-eats-postmates-caviar. 14 Selvam,Ashok."DoorDash Creates'Chicago Fee'in Response to City's Third-Party Cap."Eater Chicago,December 9,2020,https:// chicago.eater.com/2020/12/9/22165233/doordash-chicago-fee-third-party-cap-customers. 15 Tebor,Celine."Restaurants,city say food delivery apps aren't complying with Portland's 10%commission cap."The Oregonian,July 24, 2020,https://www.oregonlive.com/food/2020/07/restaurants-city-say-delivery-apps-anent-complying-with-portlands-l0-commission- cap.html. 16 Carson,Biz."Delivery companies are fighting city commission caps.Does anybody win?"protocol,May 20,2020,https://www.protocol. com/delivery-commission-caps-uber-eats-grubhub. P15 • PRICE CONTROLS WON'T FIX WHAT'S AILING THE RESTAURANT INDUSTRY 17 Scott Morton,Fiona."The Problems of Price Controls."Cato Institute,June 20,2001,https://www.cato.org/commentary/problems-price- controls. 18 Rockoff,Hugh."Price Controls."The Library of Economics and Liberty,accessed February 2021,https://www.econlib.org/library/Enc/ PriceControls.html. 19 Sims,David P."Out of control:What can we learn from the end of Massachusetts rent control?"Journal of Urban Economics, January 2007,Volume 61,Issue 1,129-151,doi:10.1016/j.jue.2006.06.004.https://www.sciencedirect.com/science/article/abs/pii/ S0094119006000635. 20 Rockoff,Hugh."Price Controls."The Library of Economics and Liberty,accessed February 2021,https://www.econlib.org/library/Enc/ PriceControls.html. 21 Bourne,Henry."Food Control and Price-Fixing in Revolutionary France"The University of Chicago Press Journals,Journal of Political Economy,March 1919,https://www.jstor.org/stable/pdf/1820673.pdf. 22 "Rent Control."Chicago Booth I The Initiative on Global Markets,February 7,2012.https://www.igmchicago.org/surveys/rent-control/. 23 "Surge Pricing."Chicago Booth I The Initiative on Global Markets,January 13,2014.https://www.igmchicago.org/surveys/surge-pricing/. 24 Smith,Noah."Why$15 minimum wage is pretty safe"Substack,January 15,2021,https://noahpinion.substack.com/p/why-15- m i n i m u m-wa ge-i s-pretty-safe. 25 Bahn,Kate."Understanding the importance of monopsony power in the U.S.labor market."Washington Center for Equitable Growth,July 5,2018,https://equitablegrowth.org/understanding-the-importance-of-monopsony-power in the u s labor market/. 26 "The U.S.Minimum Wage"Chicago Booth I The Initiative on Global Markets,February 2,2021,https://www.igmchicago.org/surveys/the- us-minimum-wage/. 27 Krueger,Malte."(PDF)The Elasticity Pricing Rule for Two-Sided Markets:A Note."ResearchGate,January 2009.https://www. researchgate.net/publication/46508155_The_Elasticity_Pricing_Rule_for_Two-sided_MarketsANote. 28 eamans,Robert,and Feng Zhu."Responses to Entry in Multi-Sided Markets:The Impact of Craigslist on Local Newspapers."SSRN.NET Institute Working Paper No.10-11,October 24,2010.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1694622. 29 Carson,Biz."Delivery companies are fighting city commission caps.Does anybody win?"protocol,May 20,2020,https://www.protocol. com/delivery-commission-caps-uber-eats-grubhub. 30 Maze,Jonathan."McDonald's Works to Make Delivery Profitable for Franchisees."Restaurant Business,April 26,2019,https:// www.restaurantbusinessonline.com/financing/mcdonalds-works-make-delivery-profitable-franchisees#::text=Sources%20tell%20 Restaurant%20Business°%o20that,to%20as%2Olow%20as%2015%25.&text=McDonald's%20could°%o20also%20bring°%o20in,burger%20 giant%20and%20Uber%20Eats.. 31 Taylor,Rachel."Domino's Bets Big on Delivery Drivers."QSR Magazine,February 2019,https://www.gsrmagazine.com/finance/dominos- bets-big-del ivery-drivers. 32 Fruits,Eric."Uber/Grubhub:Pandemic Profiteering,Merger Moratoriums,and Rising Concentration...Or Not"Truth on the Market, May 15,2020,https://truthonthemarket.com/2020/05/15/uber-grubhub-pandemic-profiteering-merger-moratoriums-and-rising- concentration-or-not/. 33 Fruits,Eric."Uber/Grubhub:Pandemic Profiteering,Merger Moratoriums,and Rising Concentration...Or Not"Truth on the Market, May 15,2020,https://truthonthemarket.com/2020/05/15/uber-grubhub-pandemic-profiteering-merger-moratoriums-and-rising- concentration-or-not/. P16 • The Progressive Policy Institute is a catalyst for policy innovation © 2021 PROGRESSIVE POLICY INSTITUTE and political reform based in Washington, D.C. Its mission is to create ALL RIGHTS RESERVED. radically pragmatic ideas for moving America beyond ideological and partisan deadlock. PROGRESSIVE POLICY INSTITUTE 1200 New Hampshire Ave NW, Founded in 1989, PPI started as the intellectual home of the New Suite 575 Washington, DC 20036 Democrats and earned a reputation as President Bill Clinton's"idea mill." Many of its mold-breaking ideas have been translated into public Tel 202.525.3926 policy and law and have influenced international efforts to modernize Fax 202.525.3941 progressive politics. info@ppionline.org Today, PPI is developing fresh proposals for stimulating U.S. economic progressivepolicy.org innovation and growth;equipping all Americans with the skills and assets that social mobility in the knowledge economy requires; modernizing an overly bureaucratic and centralized public sector; and defending liberal democracy in a dangerous world. SALT LAKE CITY BUSINESS ADVISORY BOARD Wednesday,February 10th,2021 8:30 a.m.— 10:00 a.m. Chairperson Piccoli read the following statement: I, Darin Piccoli,Chairperson of the Business Advisory Board,hereby determine that conducting the Business Advisory Board meeting at an anchor location presents a substantial risk to the health and safety of those who may be present at the anchor location. The World Health Organization,the President of the United States,the Governor of Utah,the Salt Lake County Health Department, Salt Lake County Mayor, and the Mayor of Salt Lake City have all recognized a global pandemic exists related to the new strain of the coronavirus, SARS-CoV-2. Due to the state of emergency caused by the global pandemic,I fmd that conducting a meeting at an anchor location under the current state of public health emergency constitutes a substantial risk to the health and safety of those who may be present at the location. MINUTES 1. Roll call The following members of the Business Advisory Board were present: Darin Piccoli, Chair Abudujannah Soud JD Smith Jeff Carleton Sue Rice John Lair Karen Gunn Angela Brown Alfonso Brito The following members of the Business Advisory Board were absent: Kestrel Liedtke,Vice-Chair Also Present: Rachel Molinari,Department of Economic Development; Ben Kolendar, Department of Economic Development; Roberta Reichgelt, Department of Economic Development; Will Wright, Department of Economic Development; Peter Makowski,Department of Economic Development; Clark Cahoon,Department of Economic Development;Allison Rowland, Salt Lake City Council Office; Tony Milner, Salt Lake City Housing and Neighborhoods; Chief Brown, Salt Lake City Police Department(SLCPD); Edward Bennett, Suazo Center; Derek Deitsch,Downtown Alliance; and Kristen Lavelett, Local First Utah 2. Announcements City Council Announcements Ms.Rowland did not have any announcements for the Board but asked if any member had questions. • Mr. Deitsch asked if the Board could receive an update on the Redevelopment Agency's (RDA) project involving the Utah Theater. Ms. Rowland said the RDA signed an agreement with the developer, Hines,and that the project is now in the administration's hands. She said the RDA Board would have to go through a long process to make any changes to what was agreed upon in the original contract and that Hines would need to go back in front of the RDA Board to make any changes as well. Mr. Deitsch asked if BAB could also receive more details on RDA projects in general at later meetings. Ms. Reichgelt said that she would ask RDA staff to provide project updates as they pertain to BAB business so that the Board could have more information on what is happing in the City. Economic Development Announcements • Director Kolendar said the job posting for Economic Development Deputy Director is now live. He explained that the candidate's ability to speak Spanish will be highly weighed in the decision. Ms.Reichgelt stated that a candidate was selected for the Building Services Liaison, a position previously held by Georg Ott. The internal employee will start on February 22,2021. • Director Kolendar said the Department of Economic Development is looking at its internal policy and procedures and making changes so that the Department is equitable in its hiring practices. He said the Department is one step ahead of the City in terms of restructuring its policy and that he would share the draft policy with the Board. • Director Kolendar stated that the Mayor's 2021 Plan/Report Card was now available at the link: https://www.slc.gov/wp-content/up loads/2021/01/2021-Plan.pdf • Director Kolendar provided an overview on Covid updates statewide. He said that the State's primary focus is continuing the vaccine rollout and that the number of reported cases has gone down dramatically. The downtick in cases will provide opportunities to slowly add to the economic activity of the state. He also said there is an outstanding concern on mutations of virus and if there will be any uptick in cases due to any Superbowl gatherings. He told the Board that the Biden administration's 1.9 trillion stimulus package is going through the approval process and that he would send everyone a high-level overview of what is included in that package after the meeting. • Director Kolendar stated that the Department had previously taken the request for an increase in the Arts Council's Capital Improvement Program(CIP)funding to the City Council and the Council required some amendments including a maintenance report and ordinance suggestions which the Department recently presented as part of that process. He explained that the end goal was to increase the funding for the arts from 1%to 1.5%as part of the CIP funding,which encompasses nearly 7%of the general fund budget, and the Council provided support for the allocation through a straw poll. Director Kolendar said that allocation is expected to be included in the next fiscal year's budget. 3. Approval of the minutes of the January 13th,2021 meeting Ms.Brown made a motion to approve the minutes from January 13,2021 meeting.Ms. Rice seconded the motion. Upon roll call,the motion passed unanimously. 4. Business Item A. Crime Impact on Small Business—Chief Brown, Salt Lake City Police Department (SLCPD), Chief Director Kolendar said he appreciated Chief Brown joining the meeting to speak with the Board. Chief Brown provided an overview of his personal and professional background. He said that he has been with SLCPD for 30 years and has been Chief for the last 5 years. Chief Brown said that he wanted to discuss the status of crime, SLCPD's plan for the increase in crime, and its role with those experiencing homeless. Chief Brown stated that on January 5,2021 he held a press conference with Mayor Mendenhall and others to announce SLCPD's significant policy reforms related to the PD's use of force,body cameras, and search and seizure policies. He stated that violent crime has increased 21%in Salt Lake City which accounts for 287 more victims of crimes in 2020. He recognized that as businesses owners,the Board is sensitive to the increased numbers because when crime is up, fear is also up. He recognized the Mayor's strong leadership and ability to work with SLCPD to come up with a crime reduction plan. The plans objective is to reduce overall crime in SLC by 10%,reduce violent crime by 5%, and to reduce property crime by 10%. The plan also includes the creation of a violent crime taskforce,that partners with federal agencies to apprehend the most violent criminals in Salt Lake City. Chief Brown stated that the criminal justice system shut down as a result of Covid and the jail's capacity has had to be lowered from 2,800 to under 1,000 because the spread of Covid. One of the biggest hurdles for SLCPD is the amount of times it has to release arrested persons(APs)because of capacity. Many times people who committed felonies are being released and are then rearrested within 24hours.He explained that these individuals would normally be held until their trial,but no jury trials have been held in 8 months. This situation creates a revolving door situation in the criminal justice system. Chief Brown said since May 30,2020,when George Floyd lost his life,it has spurred a demand for police reform nationwide. He said he wants the community to know that SLCPD has heard those demands and has taken the issues to heart and be proactive in its reforms and approach to in order to gain the trust back from the community.However,he said that it has not stopped the people from protesting and that there have been over 290 protests leading up to the presidential inauguration. As a result, SLCPD must staff all the protests to make sure people are safe to express their first amendment rights. Chief Brown also stated that 67 officers resigned or retired in 2020. With less officers to patrol and respond to calls it impacts the community and the crime rates. Ms.Rice mentioned the bill currently being discussed in the legislature that would do away with permits for carrying guns and asked if that would make the PD's job harder. Chief Brown said as an organization the SLCPD is opposed that bill. He went on to say that SLC and the rest of the state of Utah have different views on guns and that it would be one more hurdle and probably problematic for the PD's officers to face. Mr. Carleton asked whether the revolving jail applies to violent criminals or if those people are being held in jail. Chief Brown said that House Bill 206,which deals with bail and pretrial release went into effect on October 1,2020. The legislation was designed to eliminate the disparity between those who have the financial means to post bail and be released, as opposed to those who have limited means and remain in jail solely based on their financial situation. He said that violent criminals are starting to be held longer, but the issue is with the jury system and if no trials are taking place,he doesn't know how long these individuals can be held. Mr.Bennett said that he has heard from Suazo Business Center clients that response times for westside calls about homeless or disruptions to businesses is very slow or nonexistent, even for 911 calls. Chief Brown said there are multiple factors effecting the response time. The lack of workforce from those who retired,quit,or on leave due to Covid or other types of leave has definitely had an impact. He added that service calls have increased in 2020 by 16,000 which also accounts for the slower response times. Chief Brown explained that there are currentlyl 8 new recruits out on parole duty,and an additional 38 more officers on parole. Chief Brown also said that Pioneer Patrol Bureau has the most proactive bike squad in the City.As a result of these changes,Chief Brown said he hopes they will be more responsive to calls in the future. Chairperson Piccoli asked Chief Brown to explain what SLCPD is doing for those experiencing homelessness. Chief Brown said that someone experiencing homeless,mental health or addiction is not a crime and thinks that with the Mayor's new Community Commitment Plan in place it will help people who are struggling.He explained that SLCPD has 10 social workers under manager Jessica Waters who all work in the Public Safety building under a co-responder model and can assist officers with getting those experiencing homelessness into treatment. Chief Brown encouraged BAB members to continue to call SLPD so that it will have the data available on a map and can direct services based on that data. Ms.Reichgelt said there have been many inquiries about homelessness and crime so the department will distribute a list of resources and phone numbers to call as well as other helpful information for business owners, including recommendations such as putting up no trespassing signs. B. HUD CARES Grant Program for Small Business—Tony Milner, HAND Mr. Milner provided a status report on the CARES Act funding that was earmarked for small business relief He stated stat the Department of Housing and Neighborhoods (HAND)is responsible for administering the US Department of Housing and Urban Development (HUD),Community Development Block Grant (CDBG),and the Coronavirus Aid,Relief,and Economic Security Act(CARES)funding for the City. He explained that while the funding was meant as a Covid relief package,all the funding still had to go towards HUD eligible activities and meet the requirements of serving low income communities and populations in Salt Lake City. Mr.Milner said HAND worked to put together to recommended categories,including small business relief,to present to Council for the available CBDG grants. He said that the competitive application process was open to community partners that would provide a program to administer funding to businesses needing relief funds,rather than to the community directly, which is a HUD requirement, for the month of November. Mr.Milner said HAND staff has tried to advertise it to the Suazo Business Center,Utah Microloan Enterprise Fund, minority chambers as well as the SLC Chamber and Department of Economic Development.He admitted that they could have done a better job with the promotion of the grant availability and will make sure to include the BAB in any future funding allocations. Director Kolendar said it is a shared responsibility between the two departments to make sure the information is getting to business owners in Salt Lake City and especially for funding that would not typically be on their radars. He expressed that he wanted to be completely transparent with the BAB and will do better to bring them information in a timelier manner. Mr.Milner said that after soliciting for application,they received fewer than expected and had$468,000 in unrequested funding. He explained that the Council provided a list of priorities that it would like to fund with the remaining money and will finalize those recommendation at an upcoming meeting. He also explained that HAND set aside a line item of$500,000 for small business grants and received 1 eligible application from the International Rescue Committee for$150,000 and they will be serving about 30 small businesses food entrepreneurs,mostly women and minority owned startups through the Spice Kitchen. He said they also received an application from the City's Sustainability Department in conjunction with the United Way, International Rescue Committee, and Comunidades Unidas to provide 30,000 food boxes for the communities effected most by Covid,which includes the Westside of Salt Lake City as well as the Brown and Latinx communities. He explained that the food is being purchased at wholesale from local providers,including New Roots and other organizations that benefit the local refugee communities.Mr.Milner announced that the Council gave direction for Nourish to Flourish to receive funding to partner with non-profit organizations to provide 42,000 meals to the community through restaurants including Trio, Pulp Lifestyle Kitchen,Diversion, and Moochies. Chairperson Piccoli asked about the total allocation of funding and the requirements for applying. Mr. Milner said there was a total of$7.1 million in CARES Act dollars through HUD,about$3.6 million in CDBG funding,and$760,000 for small businesses relief awarded to the City. Mr. Milner said the application period is closed and it is up to the City Council to make their final decisions. Chairperson Piccoli also asked if community councils could apply for any of the funding that was available. Mr.Milner said that funding is typically for non profits but that if a for-profit business applied, they could then administer the funding to other non-profit businesses. Mr.Rice asked what HUD considered a small business and if it is in line with the Small Busines Administration's (SBA)definition of less than 500 employees. Mr.Milner said that HUD defines a small business as a business with less than 50 employees and reiterated that HUD funds can only go towards underserved communities and minorities. Ms.Rice also asked if there were any opportunities to provide assistance to those filling out applications because the process can be daunting for small business owners. Mr. Milner said HAND put together a how-to guidebook on its website and provided online trainings with staff available to answer the applicant's questions. Mr.Brito asked how the Board could receive updates on when new funding is available.Mr. Milner said they currently have an email group and Ms.Reichgelt said that she would provide all the BAB's emails to Mr.Milner to add to that list to keep them in the loop to receive updates. C. Letter to BAB from Chair&Vice Chair—Darin Piccoli &Kestrel Liedtke Chairperson Piccoli read the letter that he and Vice-Chair Liedtke wrote that outlined their goals and objectives to meet the BAB's charge over the next year. He explained that he and Vice-Chair Liedtke were seeking endorsement from the wider Board prior to sending the letter to Council and the Administration. Chairperson Piccoli said the Board would request the Department of Economic Development bring City items to the Board more in advance so that they can give their input and use the opportunity to use its voice more on City business. Ms.Rowland said the Council would welcome the BAB having a more active role but would need to work out the timing issues for when Council needs information on items being presented beforehand. Vice-Chair Piccoli said the BAB would start by focusing on the work session agenda emails and meet with Ms.Reichgelt on Fridays in the future to so that Board members are accustomed to the Council process and meetings. Chairperson Piccoli asked for a motion to approve the letter. Mr. Smith made a motion to approve the letter. Mr.Lair seconded the motion.Upon roll call,the motion passed unanimously D. DED Policy and Name Change—Ben Kolendar,DED Director Director Kolendar explained that the Department is seeking input and feedback regarding a department ordinance and policy update. He said the revisions seek to change the name of the department to the Department of Economic Opportunity. The revisions also seek to clarify the programs and functions that take place within the Department as well as to highlight the overall purpose of those programs and functions. He said that he plans to present the proposed changes to the Arts Council Board,the Human Rights Commission,as well as the BAB. Director Kolendar said since the Department's creation in 2016,it has made a lot of progress in terms of investment in the City and hosting high level events including the United Nations event. He said the department's future focus would be towards economic activities that support equity in human and social capital and increasing the tax base as well as embedding public art in the City's infrastructure and increasing the overall participation in arts and cultural activities. He also mentioned raising the opportunity index score (https://opportunityindex.org/)through the department objectives. Mr.Bennett said the function the department will serve makes sense to him,but he did not know if a name change was necessary to achieve that unless the goal was to be the first to make that change. He said the term Economic Development is already a very recognized name throughout the State and Country. Director Kolendar said that a trend is starting across other organizations in the State to think about a name change and gave the example of on Economic Development group in Florida that has already made the change. He explained that when you hear the term economic development you typically focus on the development of things and the intent is to switch that focus to human and social capital. Mr. Deitsch said he had similar feelings as Mr. Bennett but said that as long as the Department is prepared to explain what Economic Opportunity means then it should not be a problem. Director Kolendar agreed and said it would be a great opportunity to explain to its partners and others what they do as a department. Ms.Reichgelt said that it was important to clarify that the RDA is no longer under the Department of Economic Development. Director Kolendar said that change was more administrative in nature than anything else and that the two departments will still work together closely. 5. Adjournment There being no further business,the meeting was adjourned. Darin Piccoli, Chairperson This document and the recording constitute the official minutes of the Economic Development Business Advisory Board meeting held February 10,2021.