A thousand eligible La Habra residents will receive $200 gift cards to spend at local businesses, a move that city officials say could bolster support for merchants who lost revenue during the pandemic.
The city is continuing to accept applications and the gift cards will be sent out to those residents who qualify for the subsidy.
The City Council voted unanimously in October to approve the “Dine and Shop Local Incentive Program.” The total amount of funds for the program is $200,000 along with an additional $20,000 for administrative costs, according to a city staff report.
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Participating businesses in La Habra will be automatically enrolled in this program.
The gift cards will be active for six months after being issued to the public, with the city able to reclaim any unused balances after the spending period.
Some small business owners voiced discontent with the lack of restrictions on what can be purchased with the gift cards. The city has placed no limitations on what can be bought, including alcohol and tobacco products.
Jeff Nunez, the owner of a La Habra cell-phone repair shop, One Stop Cellular, said funds should be allocated only toward essential small businesses in town.
“I would say anything between five and seven employees would be considered as a small local business,” Nunez said in a phone interview after the council decision. “Give nothing to chains of franchise locations, since they have funding from other investors that are put back into the business by stocks and shares.”
During the October meeting, Councilmember Steve Simonian also questioned the lack of restrictions on the purchases that can be made with the gift card.
“It will be up to the residents who applied for it,” responded Juddy Montenegro, the city’s economic development project manager. “They will receive the gift card and then they can use that to shop at any local business in La Habra. We didn’t discuss any specific prohibition of items that they’re going to purchase.”
Funds for the program were made available through the American Rescue Plan Act of 2021, or ARPA, adopted by the United States Congress and signed into law by President Joe Biden. A part of this funding was designed to assist local governments address the economic impacts associated with the pandemic.
La Habra received nearly $16 million from the act to use by the end of 2026, according to the staff report.
In January, the City Council approved allocation of the city’s rescue act money to provide assistance and support to residents and businesses that have been negatively affected by COVID-19, with the budget plan for Dine and Shop approved by the council in May.
Two other programs funded by the legislation were launched in August, with $500,000 allocated to the Bill Assistance Program, which helps lower-income individuals with rent, home-energy bills, medical bills, telephone service, prescription drug costs, and welfare. Another $300,000 was allocated for the Small Business Assistance Program, which provides small businesses resources to maintain payroll and cover overhead.
Councilmember Daren Nigsarian said he believes these programs will help spur economic growth.
“The city feels confident its ARPA funded programs will help address challenges posed by COVID-19 that are faced by our residents, businesses, and community partners,” Nigsarian said in an email interview.
City staff chose Giverrang as the gift card vendor after reviewing three possible vendors. Giverrang, based in Connecticut, is a gift card platform that produces community gift cards across the country.
The platform creates prepaid Mastercard cards developed with technology that allows the company to ‘lock’ each card so that it can only be spent at specific organizations in a given area.
The total implementation cost for integrating Giverrang with the Dine and Shop program is approximated at $11,650 which includes cost of cards and cost of activating and processing cards, according to the staff report. The remaining $8,350 will cover the transfer fees needed to retrieve unused gift card balances once they expire after six months of issuance, Montenegro said in an email interview.
La Habra resident Susan Pritchard spoke in support of the program during the October City Council meeting, but asked if an organization or philanthropy could cover the costs to implement the program to allow more funding to be allocated to residents.
“We’re spending a lot of money to give money out,” Pritchard said, “And I just didn’t know if there was another approach to the cost of giving that money out.”
All businesses that accept Mastercard can participate and do not need to manually enter card information or use a special app for gift card transactions.
If the cards aren’t used within six months of issuance, any unused balances from the gift cards will be retrieved – subject to a 7% transfer fee to Giverrang – by the city for reallocation to this program or other eligible American Rescue Plan Act programs and, according to the staff report.
Only select applicants who currently live within the La Habra city limits and have a gross household income not exceeding 65% of the area median income for Orange County are eligible. This means for a household of four individuals, annual household income cannot exceed $81,100. Applicants need to provide proof of income documentation to demonstrate household income, according to the staff report.
The city has established an online portal for residents to apply for a gift card on a first-come, first-serve basis. Residents can also visit the Community and Economic Development Department at City Hall for in-person assistance.