STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of February 28, 2023
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Continuation of Yiftee Digital Gift Card Program
RECOMMENDED ACTION:
Staff recommends that the City Council adopt a resolution approving the first amendment to an agreement with the Yiftee Digital Gift Card program in the amount of $75,000 to continue the Shop Local/Gift Card program funded by the American Rescue Plan Act (ARPA), and amend the FY 22-23 budget increasing its appropriation by $75,000.
EXECUTIVE SUMMARY:
On April 26, 2022, the City Council authorized the City Manager to execute an agreement with Yiftee for a Shop Local/Gift Card program for $65,000. At the last Council meeting, the City Council expressed a desire to extend the program and add an additional $75,000 due to the success of the pilot program.
BACKGROUND:
The American Rescue Plan Act (ARPA) provides relief to local governments and enables them to lay the foundation for a robust economic recovery. The one-time infusion of funds is welcomed as it will help mitigate losses incurred in the community during the pandemic, which has extended for almost two years. The sooner a recovery plan is developed, the faster the City can stabilize operations, get the local economy back on track, and support those in the community most impacted by the pandemic.
The Yiftee Community Digital Gift Card program is a cost-effective way to stimulate the local economy and assist small businesses in recovery. It also provides additional savings to residents who shop locally.
Yiftee has no set-up or monthly costs, and the additional $75,000 of ARPA monies will pay for:
The $1+5% eDelivery fee (purchaser fee) plus a $1 bonus gift fee per card.
A bonus gift card to incentivize the use of the program and provide a benefit to all community members.
Branding costs associated with the development of the “shop local Hercules” campaign.
Marketing costs for advertisement and promotion of the program and related point-of-sale signage and posters for participating businesses.
Shop Local Program Bonus Gift Incentive
Many communities are integrating a bonus gift incentive to the community to encourage the success of their programs, amplify the infusion of dollars into the local economy and provide incentives to shop locally. Typically, community digital gift card programs have a resident buy a gift card (for example) valued at $50, with the initial investment from the resident being $25. Then they receive a ‘purchase bonus’ amount of another $25 paid by the city through ARPA funding. In other words, it is ‘buy one and get one free’ for residents. Hercules has the discretion to set the level of incentive appropriate to our community, in addition to limits on purchases per customer. Staff is proposing the following incentive system to pilot with the Program, which will be available to all purchasers of community gift cards:
Buy a gift card valued at greater than $5 and receive a bonus gift card equal to the value purchased, with a maximum purchase limit of $250 per card with the promotion.
A limit of 5 cards per customer.
The Gift Card (original purchase amount) does not expire. Still, the staff recommends that the bonus gift card expire six months (120 days) after purchase (any expired unspent bonus gift funds would be returned to the City for redistribution after a restocking fee).
The City will pay all purchasing and delivery fees while funds remain (first come, first serve).
Eligible Businesses
Staff is recommending the continuation of the following parameters for business participation:
Is a for-profit business in one of the following categories:
Retail
Restaurant/Cafe
Personal Services are limited to the following only:
hair stylists
barbers
estheticians
massage therapists
gyms
nail salons
dry cleaners
tanning salons
pet groomers
fitness/specialty studios including martial arts, yoga, dance, and music Operates from a physical storefront (home-based businesses are not eligible) Maintains a current City business license
Has no open code enforcement actions
Has 20 or fewer full time equivalent employees as of December 1, 2021 Is either independently owned/operated or a locally-owned chain (i.e., local outlets of chains or franchises headquartered outside of Hercules are not eligible) FISCAL IMPACT:
Funds are available and will be appropriated in the ARPA fund under expenditure account #353-3005-611.90-00 (Project No. ARP218) for this proposed first amendment to the existing agreement. The proposed first amendment increases the total contract amount under this agreement by $75,000, for a total amount of $140,000.
ATTACHMENTS:
Resolution
First Amendment to the original agreement
Original Agreement