Downtown Tucson’s Path to Recovery

Gift Cards, Grants Aim to Keep Businesses Afloat

By Mary Minor Davis

Faced with a potentially dramatic COVID-19 economic fallout, Downtown Tucson Partnership and Rio Nuevo implemented several innovative programs to support small businesses, especially those important to the success of downtown.

At press time, Arizona faced a 12.6% unemployment rate, with more than 600,000 unemployment filings as of late May. Some business reopenings are uncertain, but local efforts are working to preserve the pre-pandemic progress downtown Tucson had achieved.

Downtown Partnership 

When restaurants and businesses closed, Kathleen Ericksen, CEO of Downtown Tucson Partnership, came up with an innovative gift card program that has exceeded expectations and drawn interest from other cities.

Under the DTP Gift Card Program, people purchased a gift card to one of more than 60 participating businesses for $25 and received $35 of benefit. A local sponsor covered the $10 difference of $12,500 for 1,000 cards and administrative and postage fees. The program has received $75,000 in sponsorships since it began.

These local sponsorship dollars and the community’s support resulted in raising $300,000 after several rounds, said Ericksen.

“Downtown Tucson was one of the first to launch this program, and we’ve talked to a half-dozen other cities asking how the program works,” she said. What’s unique about our program is the success and the profound impact on small businesses.”

The cards in the initial sale sold out in just under 24 hours, then sold out in less than 15 minutes in the last five rounds. “The community response has been incredible,” she said. DTP plans to continue with this type of program after businesses reopen. “I can see this type of promotion working in the future to help businesses through the tougher months of the summer, or as a holiday promotion.”

Rio Nuevo Grant Program

As the pandemic set in, the board of directors of the Rio Nuevo tax increment finance district wanted to find a way to assist district businesses. Chair Fletcher McCusker said even with government loans to help with personnel costs, businesses were entering summer. “It wasn’t going to be survivable for a small business,” he said.

On April 8, the board voted to allocate up to $2.5 million in small business grants to district businesses. Within two weeks, 103 applicants had grant checks in hand. 

“I kept thinking about the businesses,” said Mark Irvin, board vice chair and secretary. “They’re the backbone of what we’ve been able to build downtown.”

Irvin, who served on the selection committee with McCusker and board member Jannie Cox, said they wanted a process that got applicants a “yes.” The only requirements were the business had to be within the district boundaries and pay a sales tax. Grants of $5,000 to $50,000 were awarded based on a percentage of annual revenue. All who qualified received a grant.

The Rio Nuevo board also considered grants for service businesses and nonprofits in a second round, but later decided the budget wasn’t sustainable. 

“Rio Nuevo is sales tax-dependent,” McCusker explained. “It became obvious to us that Rio Nuevo’s cash flow could just crash. We decided it wasn’t prudent for us to distribute any more funds. It was a tough decision.”

“We had already committed cash on hand,” Cox added. ”We reserved cash for projects that hadn’t come to fruition yet, so we used those funds to provide the first round of grants.”  

“Beneath the green clouds and the dark clouds you find silver linings, and I think what the district did falls within the silver linings,” Irvin said. “I’m very proud of how quickly we came together to approve this and how quickly we were able to put the checks in the mail.”

Jo Schneider, owner of downtown restaurant La Cocina, received a $10,000 grant to pay her property taxes. Although her restaurant closed, Schneider wanted to help her industry and started the Feed the People Who Feed Us program, providing meals three days a week to laid-off employees in the food and beverage industry. Several of the 70 employees she laid off came back to volunteer.

“When the federal government makes you feel like a number, Rio Nuevo put a personal spin on this that humanizes what is happening,” Schneider said. “It has meant so much in our lives.”