Shop Local: Lemon Grove Gets a New Makeover on an Old Adage with a Gift Card Program

Only have the money to buy a taco? Two are available now.

Staring at furniture that doubles your budget? Anyway, go get your wallet.

Lemon Grove leaders have approved the use of federal relief funds to buy and distribute gift cards that can only be used at local businesses amid concerns that inflation and the lingering effects of the pandemic could lead to lacklustre holiday shopping.

The novel move, part of a series of proposals from cities across the country, raises a once unimaginable question: What to do with all this extra money?

Experts say Lemon Grove’s plans should have a positive, if modest, impact on the local economy.

“I think it’s a good idea,” said Alan King, an associate professor of economics at the University of San Diego.

Lemon Grove will match up to $150 spent on digital gift cards, meaning someone who spends their $150 will end up spending $300.

The City Council voted 3-1 Tuesday to create the Shop Local digital gift card program, funded with $150,000 from the American Rescue Program Act.

Employees must now contact business owners to sign up, and the program should launch on the Saturday after Thanksgiving, known as Small Business Saturday.

In total, the city has received more than $6 million in funding from the federal government, and a deadline to distribute and use that money in the coming years is approaching.

Other cities have a similar situation. Research shows that even without federal aid, local governments have generally performed well financially in recent years.

“The rescue package greatly exceeds the needs of the states,” said Jeffrey Clemens, an associate professor of economics at the University of California, San Diego.

Leaders responded differently to surpluses.

Orange County Supervisor Katrina Foley recently handed out $100 gas cards. La Mesa is offering grants to entrepreneurs willing to open new stores. Other gift card programs have been launched in Murrieta and Oakley.

“Businesses are still recovering from the pandemic,” Lemon Grove city manager Lydia Romero told city council. “It’s a win for the city, a win for the store, a win for the people who use the gift card.”

Hundreds of thousands of dollars represent a fraction of local spending. Five years ago, retail sales in the city exceeded $619 million, according to the most recent data from the U.S. Census.

Limiting the size of the program could be a good thing, said Clemens, an economist at the University of California, San Diego. Otherwise, a surge in shopping could cause businesses to push up prices further, he said.

Each Lemon Grove resident is eligible for a card that they can access from their mobile phone. According to city records, only businesses owned by independent rather than outside companies can participate.

Cannabis, liquor and tobacco stores will be excluded.

Focusing on small businesses makes sense because they innovate faster and collectively employ more people, said Frank Marshall, associate dean of the Fermanian School of Business at Point Loma Nazarene University.

“They are the lifeblood of every developed country,” he said.

The Lemon Grove funding will also include marketing costs overseen by the East County Chamber of Commerce and fees collected by Menlo Park, Calif.-based Yiftee, which will operate the project, officials said.

In addition, up to $12,500 will go to outside consultants HDL Companies.

The only MP who voted against the plan, Liana LeBaron, said she was concerned about HDL’s involvement.

The Brea-based group has been the subject of criticism from other media outlets, including The Voice of San Diego and MJBizDaily, for its handling of marijuana licensing, especially in Chula Vista.

The city manager responded that Lemon Grove had good experience working with HdL to review local sales tax receipts as well as other financial services.

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