Tag: 2022-04-nn-feature

With historic federal investment incoming, regions must collaborate on planning

With historic federal investment incoming, regions must collaborate on planning

Editor’s note: This post was originally published on brookings.edu by Adie Tomer, Jennifer S. Vey, and Caroline George on March 10, 2022

Thanks to historic commitments by Congress and resilient local economies, the next five years have the potential to be a grand era of reinvestment in metropolitan America. The American Rescue Plan Act (ARP) and Infrastructure Investment and Jobs Act (IIJA) have committed billions of dollars for communities to modernize their infrastructure networks, ranging from older water systems to cutting-edge broadband. Meanwhile, the House and Senate are set to make big bets on innovation-focused growth centers and targeted industries. State and local budgets also performed better than expected through 2020 and 2021, leaving additional fiscal resources available for economic and community development.

Periods of intense investment like this don’t come around often. Communities and the country need projects and policies that deliver transformative, long-term value. That’s where planning comes into the picture.

Most metro areas already have established economic and workforce strategies, transportation plans, and comprehensive housing and land use plans to prioritize what industries to invest in, where to develop real estate, and what infrastructure is needed to connect them. But if metro areas can coordinate those long-range plans around common goals, the chances of delivering lasting value go up. If not, expensive projects could fail to maximize outcomes — or worse, end up working against one another. Either way, a generational opportunity would be wasted.

Unfortunately, there are few existing mechanisms or incentives to encourage this sort of coordination. Even though the federal government formally promotes regional economic strategy-building, there is no requirement that different plans talk to each other. Coordination also isn’t required between state and metropolitan plans, or between plans developed by neighboring jurisdictions within the same metro area. The situation gets considerably more complicated in the country’s largest metro areas, which are home to the most jurisdictions, the most diverse industries, and the widest array of investment alternatives.

The federal government helped start this next great wave of metropolitan capital investment, so it should ensure that investment will be used to best effect. We recommend Congress establish a new planning coordination program within the Economic Development Administration (EDA), which would support local governments and business organizations in metropolitan areas of at least 1 million people to formally integrate objectives and priority projects across multiple long-range plans. For a relative pittance compared to the costs of capital projects, the federal government can incentivize metropolitan partners to develop the coordination template America needs to make good on its investment ambitions.

The bones of America’s planning paradigm are strong. Cities, counties, and special-purpose governments like utilities use tools such as zoning codes and capital budgets to decide where public dollars are spent and attempt to influence where private investments occur. Metropolitan planning organizations and councils of government convene local governments to plan regional investments, particularly interjurisdictional transportation like highways and transit lines. The private and civic sectors play a role too, often working with local governments to design long-range economic development strategies, including how to deliver more inclusive career pathways, what big bets to make on innovative industries, or drafting master plans for specific districts.

The federal government is also an established partner in many planning exercises. Since 1991, federal surface transportation law mandates that metro areas designate a regional government to lead transportation planning and, at least every five years, develop a long-range transportation plan. Laws administered by the Department of Housing and Urban Development (HUD) mandate the creation of three- to five-year consolidated plans to qualify for agency grants. The Department of Commerce and the EDA use the certification of a Comprehensive Economic Development Strategy (CEDS) or equivalent plan every five years to qualify for a range of EDA grants. The Department of Labor funds workforce development boards to define and act on regional workforce priorities. And these are just a sampling of federal planning requirements.

Yet for all the planning taking place, there is often little coordination among these various processes, and the result is formal plans that often directly contradict one another. In some cases, those contradictions may occur between the local and regional levels. This is the case when a regional entity like the Association of Bay Area Governments in metropolitan San Francisco wants to build more housing, but locality after locality limits housing construction. In other instances, the conflict may be within different planning documents written by the same local government or regional entity; for example, most large American cities have been unable to match their land use and development practices to their climate goals. Even timing can be a conflict: A metro area’s major planning cycles can fall on different years, with different offices and staff leading them, making coordination all the more difficult.

This is a missed opportunity. With so much complementarity between infrastructure, real estate, and economic and workforce development, making sure formal plans talk to one another can increase the odds that metropolitan development leads to agreed-upon outcomes—advancing particular industry sectors, for example, or enhancing local commercial corridors. That means ensuring that policies and strategies identified in these plans—focused on businesses, transit, land use, education, marketing, parks and public space, etc.—are aligned toward these specific ends.

Now is an ideal time to support this kind of coordination with federal incentives. The federal government knows this is a good idea — it’s why HUD, the EDA, the Environmental Protection Agency, and the Department of Transportation all run offices and programs to promote the concept. Even the Government Accountability Office has affirmed the need, particularly within economic development. The federal government also has the regulatory power to compel regional and local actors to work together across different disciplines. What regions require are the resources and staff time to help them do it — and the mandate to make it multiple people’s job. Now, with EDA reauthorization conversations starting in Congress, there is a legislative vehicle to address the need.

The new EDA planning coordination program we propose would provide grants to support staffing resources within those entities responsible for regional planning. Since CEDS already includes industrial and infrastructure goals, CEDS authors within a given metro area could be the primary recipient(s) and make sub-awards to transportation, housing, workforce, and other regional planning entities. The grants would cover staff time to regularly convene regional actors, coordinate with the public (including a steering committee), and revise formal plans. The core output of the program would be evidence of those revisions, including adjustments to overarching goals, capital projects, and other policies.

Ideally, Congress would help the EDA improve its staffing to support these new regional activities. Staff in the EDA’s regional offices are vital conduits for explaining how federal programs work, sharing best and failed practices from across the country, and communicating needs back to EDA headquarters. Likewise, the EDA’s Washington, D.C. office should receive more staffing to consolidate all the lessons and experiences into a common knowledge hub for nonparticipating regions, smaller places, or peers across the economic development and research communities.

Some metropolitan leaders are already experimenting with new ways to merge regional planning and major investments. In Kansas City, the bistate KC Rising initiative between Missouri and Kansas brings together the business, government, and civic communities to align their efforts around seven common pillars. And the multisectoral board of the Greater Portland Economic Development District in the Pacific Northwest used their CEDS process to formally adopt a new set of integrated values and principles. These are the kinds of emerging models that a new EDA program can support — and that the EDA should seek, collect, and share with other regions to inform their planning work.

Congress should finish the job it started when it approved historic levels of investment in metropolitan America by supporting a coordination program like the one recommended here. Planning is far cheaper than capital projects or tax incentives — and it is money well spent if it ensures physical investments lead to better projects with better outcomes that advance regional prosperity, resiliency, and opportunity.

Adie Tomer is a Senior Fellow at Brookings Metro. Jennifer S. Vey is a Senior Fellow at Brookings Metro and Director of the Anne T. and Robert M. Bass Center for Transformative Placemaking. Caroline George is a Senior Research Assistant at Brookings Metro.

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The adaptive reuse of commercial space as housing in California

The adaptive reuse of commercial space as housing in California

From PD&R Edge, HUD, March 7, 2022

Demand for office and retail space in commercial buildings is declining with the transition from brick-and-mortar shopping to ecommerce and the increasing appeal of remote work, both of which have been accelerated by the Covid-19 pandemic. At the same time, the affordable housing crisis has led policymakers, advocates, and planners to consider commercial space as a new tool in California’s larger strategy to increase housing supply.

To understand the viability and conditions surrounding commercial space conversion, the Terner Center for Housing Innovation at UC Berkeley released two studies and hosted a webinar in November 2021 to discuss the findings. The event, “Converting Commercial Lands to Housing: Potential Impact and Promising Models” (one-hour video here), featured a panel moderated by managing director Ben Metcalf. The panelists included Diana Jahns, resident of a commercial-to-residential housing project; Elliot Kwon, graduate student researcher at the Terner Center; Andrew Cussen, developer at Regency Centers; and Tom Pace, director of community development for the City of Sacramento, California.

Image of adaptive reuse of commercial space
Adaptive reuse of commercial space can be appealing to housing developers given common building features, such as high ceilings and large windows that are suitable for loft apartments, which is the case for Warehouse Artist Lofts. Photo credit: Jarrod Affonso

Distribution of commercial land conversions in California

Issi Romem, a Terner Center fellow, presented the findings from the first study, “Strip Malls to Homes: An Analysis of Commercial to Residential Conversions in California,” which offers data on existing conversions across California and models the future of conversions under current policies and development practices. A key finding is that commercial land is ubiquitous, with locations in wealthy and poor areas and the downtowns and peripheries of cities. More specifically, the data show that in the state’s four major metropolitan areas — Los Angeles, San Francisco, Sacramento, and San Diego — the conversion rate is higher at the city center and tapers off as distance from the center increases.

Gathering data from 2014 and 2019, the researchers estimate that 10 percent of new housing was constructed on commercial land, with Los Angeles accounting for almost three quarters of these conversions. The researchers and panelists agree that the larger percentage in Los Angeles is due to more permissive legislation, and marketing of the new legislation to developers.

Adaptive reuse of commercial buildings as housing

Although demolitions are the most common type of commercial conversions, panelists were interested in how to encourage developers to choose adaptive reuse of buildings, a more environmentally sustainable option that avoids demolition waste and carbon emissions. The second paper, “Adaptive Reuse Challenges and Opportunities in California,” coauthored by Kwon, found that architectural design, legislative constraints, and economic feasibility are the top three factors affecting adaptive reuse potential. The original building design determines how many units can be included. Many commercial developments were built in the mid-20th century and have design features common to that era that limit the natural lighting and ventilation needed for suitable living space. The high ceilings common to these buildings, however, are an attractive feature that make adaptive reuse ideal for lofts that can serve as live-work residences.

The panelists acknowledged that legislation for rezoning is important to help or encourage housing developers to repurpose commercial space. For example, Los Angeles’ adaptive reuse ordinance, passed in 1999, helped expedite regulation and clarify building and zoning codes. Pace compares the timing of Los Angeles’ legislation with that of Sacramento, whose legislation for by-right conversions was not passed until 2013. Although both cities had active legislation during the study period, Pace argues that Sacramento’s housing produced from commercial space significantly lags Los Angeles because time and effective marketing are needed to see the impact of policy changes.

Image of Warehouse Artist Lofts (WAL)
Warehouse Artist Lofts (WAL) is a commercial to residential housing conversion that offers artist lofts, where residents can live and work remotely in one space. Photo credit: Jarrod Affonso

The panelists also weighed in on the topic of economic feasibility for the future of commercial conversions. Pace explains that in Sacramento, commercial conversions to nonresidential uses are sometimes more desirable because bringing a building up to code for residential use generates higher developmental impact fees. He suggests that state or local jurisdictions eliminate or waive these fees to encourage adaptive reuse for housing. To increase conversions to high-density developments in specific locations, the state can fund needed infrastructure improvements that result from repurposing commercial space. This funding is especially important in high-demand areas, where developers are more motivated to convert existing buildings into larger structures.

Emerging trends, limitations, and opportunities of commercial to residential conversions

Romem argues that even with more permissive legislation, the models show that housing produced on commercial lands would account for only 4 percent of California’s Regional Housing Needs Assessment allocations in the Los Angeles and San Francisco metropolitan regions. Cussen points out that developers may find it more financially advantageous to convert commercial properties into hotel space, package distribution centers, or other industrial uses. Because of this tendency, policymakers and strategists should not rely on converting commercial land as the only housing solution.

Another threat is that the concentration of commercial buildings at the neighborhood level has implications for the geography of wealth distribution following conversions to apartments, which the Sacramento and Los Angeles legislation specifically targets. Romem and colleagues found that, although commercial buildings are located throughout the city, they exist in clusters, and they caution that relying too heavily on conversions as a housing solution [that] could lead to class divisions in which the wealthy live in low-density, single-family residential zones, and the less affluent reside in high-density commercial corridors.

If policymakers are intentional about where adaptive reuse can occur, however, an opportunity exists to revitalize these commercial corridors, which often are also transit corridors. Pace emphasizes the benefit of placing housing where neighborhood resources, such as grocery stores and public transportation, are within walking distance, such as in Sacramento’s WAL, an affordable mixed-use, mixed-income residential building where Jahns resides and works from home as an artist. WAL is a successful adaptive reuse project that aligns with changing needs around the demands for remote work, but it also showcases the role of conversions in meeting affordable housing needs while creating a sense of community at the neighborhood level.

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Find your niche, be strategic, then go for it!
Alex Hinds

Find your niche, be strategic, then go for it!

A guide for students graduating in urban planning

By Alex Hinds

A version of this article previously appeared in “FOCUS 18: Journal of the City and Regional Planning Department, Cal Poly San Luis Obispo,” December 2021.

After being hammered by the Great Recession, Covid-19, a destabilized climate, wildfires, floods, racial and socioeconomic inequities, and potential insurrection, the field for planners, community development specialists, and design professionals has expanded to reflect new realities.

As emerging professionals, you will be far less tethered to either working as a public sector arbiter of often outdated rules or working for the private sector, largely following an outmoded playbook. Planning, its rules, and our behaviors are becoming smarter, fairer, and better. So are retooling to address the compelling issues of the day, tracking what is working (or not), and adapting accordingly.

Despite the very unfortunate circumstances of the past two years, we have seen many promising adaptations, such as enabling more outdoor eating activities and an increased acceptance of working from home offices over the Internet — for those fortunate enough to do so. At the same time, soft skills — active listening, conflict resolution, and cross-cultural empathy — are being increasingly recognized as essential if we are to reach out and engage with each other through an equity-oriented lens.

Are you about to graduate? If so, you will want to carefully consider various internships and whether you will be best suited to work in the public, private, or nonprofit sectors. Ask yourself: Are you looking to land a behind the scene, steady career? Are you after a good pension? Do you trust a mostly market-driven, non-profit, or regulatory approach? Are you hell-bent on changing the rules from the inside? However you answer, most opportunities are likely to be very demanding, and your big career break is likely to come later than sooner.

My big career break came 30 years ago, after stumbling upon San Luis Obispo’s awesome Thursday evening farmers’ market. Higuera Street was closed to cars and abuzz with people buying and selling local food and produce, listening to live music, and hawking their varied beliefs, all just a short walk away from SLO County’s Planning and Building Department offices. Hmm, what a cool place, I thought. A few months later I was driving down from Lake County to begin work as SLO County’s new Director of Planning and Building.

It’s been more than 20 years since I worked for San Luis Obispo County and as a part-time planning instructor at Cal Poly SLO. I benefitted immensely from a learning-by-doing experience in both places and reluctantly moved to new challenges and opportunities elsewhere.

Landing and succeeding at a dream job doesn’t just happen. I suggest researching the local issues and expectations of a position and the place before applying for the job. And avoid long, wordy cover letters and cookie-cutter résumés. Organize your cover letter and résumé to showcase your ability to do the work and achieve the outcomes the employer is seeking. Often the first job out of school is the hardest to land, so be flexible on the location and position.

Time flies, and I have morphed from a young planner/advocate into a planning elder. Perhaps some of what I learned along the way will prove helpful as you seek your niche in the planning profession.

  • Play to your strengths. Where appropriate, volunteer to work above your pay grade.
  • Planning and community development is a team sport. Be respectful to all, and generous with praise.
  • Strive to innovatively address compelling issues and characterize desirable outcomes.
  • Keep current with science as we transition away from fossil fuels. Update policies, codes, and programs accordingly.
  • Pursue awards that showcase your (and your team’s) best work. They help inform the profession.
  • Maintain your credibility and encourage widespread public participation by reaching out and listening to all people, including the underrepresented.
  • Accelerate your learning. Consider purposeful international travel and collaboration, when it’s again safe to do so.

Alex Hinds is the International Co-Director for APA California – Northern Section. He previously co-founded and worked for the Center for Sustainable Communities at Sonoma State University (SSU) and was a planning lecturer at SSU and at Cal Poly, SLO. From 1984 to 2008, he served successively as Planning Director for Lake County, Planning and Building Director for San Luis Obispo County, and Community Development Agency Director for Marin County. Hinds led the award-winning 2007 Marin Countywide Plan update with its trendsetting sustainability and climate implementation programs. You can reach him at alexhindsmarin@icloud.com.

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Strategies to promote affordable commercial space in cities

Strategies to promote affordable commercial space in cities

When it comes to helping small businesses find and develop commercial space in which they can succeed and thrive, affordability, accessibility, and supporting collaboration are key.

By Patricia Voltolini, Melissa Kim, David M. Greenberg, Julia Duranti-Martinez, and Michelle Harati in Next City, March 14, 2022

The following is an excerpt fromEquitable Pathways to Small Business Recovery: An All-Hands Approach,” a playbook that offers a framework for paving equitable pathways to small business success, and concrete strategies for supporting capital access, small business capacity, and commercial real estate. This project is a collaboration between Local Initiatives Support Corporation (LISC) and Next City, supported by the Bill and Melinda Gates Foundation. Download a complete copy of the playbook to read more.

Even prior to the pandemic, finding affordable commercial space posed significant challenges to small businesses. The Institute for Local Self-Reliance found that average commercial rent increases can range from 7 percent to 26 percent annually, with higher increases in dense, walkable neighborhoods. Among the reasons for skyrocketing commercial rents is the preference among many real estate developers and lenders for a single large tenant — often national chains. In this environment, small business revenues frequently cannot keep pace with rising rents, and purchasing commercial buildings — which can help protect tenants from sudden rent increases — is also often prohibitively expensive for small businesses.

Many small businesses that managed to remain open through the pandemic are struggling to pay rent. The Federal Reserve found that 43 percent of small employer firms experienced challenges paying rent in 2020, with BIPOC-owned firms more likely to report difficulties than white-owned firms. Though no national estimate of commercial rent arrears exists, recent research suggests that 46 percent of businesses with annual revenues under $100,000 are one or more months behind on rent, compared to 36 percent of larger firms. Commercial rent arrears have the potential to set off a wave of evictions of BIPOC tenants, with devastating effects on the finances of individual entrepreneurs and the communities that depend on their services.

The pandemic has also rapidly accelerated a decade-long rise in commercial vacancies propelled by online retail and shifts to online and home-based work in some industries. In addition to these challenges, hot-market cities such as New York and San Francisco already struggled with high storefront vacancies resulting from property warehousing, where building owners hold properties empty in the hope of eventually securing high-paying tenants. In the wake of COVID-19 closures, retail vacancies nationwide are projected to rise, with significant implications for commercial corridors and business districts. Pervasive vacancies are linked with decreased property values, trash accumulation, pests, and fire risks. Particularly along commercial corridors, high rates of vacancies can reduce foot traffic and sales for remaining businesses, contributing to more closures.

In contrast, practitioners noted that in many rural areas, commercial space is often scarce, and the few available buildings often require substantial rehabilitation and environmental remediation — costs that are out of reach for entrepreneurs with limited capital. These challenges are further compounded for tribal nations, where centuries of federal policy depriving Native communities of their lands have both limited development and created complexities in land tenure and permitting requirements that make it difficult for entrepreneurs to secure commercial leases or use land as collateral for loans.

With federal CARES Act and American Rescue Plan Act funds, as well as potential new investments in physical and human infrastructure outlined in the $1 trillion Infrastructure Investment and Jobs Act and $3.5 trillion Congressional budget proposal, local governments have an opportunity to advance transformative policies that fight commercial displacement, preserve existing spaces, and develop new affordable spaces and community ownership opportunities for BIPOC-owned small businesses.

ADDRESS COMMERCIAL RENT BURDEN FOR SMALL BUSINESSES

To stave off commercial evictions, some cities provided commercial rent relief as part of their emergency small business assistance during the pandemic. For example, the City of Pittsburgh provided grants of up to $3,000 to landlords who agreed to reduce rents for 3-6 months for commercial tenants. The State of Oregon used a portion of its federal CARES Act allocation and state general funds to commit $100 million for small business support statewide, including commercial rent relief. Property owners were eligible to receive up to $100,000 per commercial tenant, conditioned on forgiving all back rent and fees and not evicting commercial tenants after receiving funds. In northwestern Ohio, the Greater Toledo Small Business Stabilization Fund leveraged public, private, and philanthropic dollars to provide emergency grants of up to $10,000 for small businesses to pay operating costs incurred during the pandemic, including rent.

Dinette world image
Dinette World. Photo: Brian Crawford, CC by 2.0

Some cities are considering longer-term solutions to curb high commercial rents and vacant property warehousing. The New York City Council passed legislation in 2019 to create a vacant storefront registry and recently held a hearing on commercial rent regulation, a longtime priority for advocates fighting small business displacement. Just before the pandemic, San Francisco voters approved a ballot measure to impose a tax on commercial properties kept vacant for more than six months, while Washington, D.C., has had a similar law in place for nearly a decade that applies to both commercial and residential properties.

Along with commercial rent relief and anti-vacancy measures, cohort members noted many opportunities for local governments to support the wide spectrum of space needs small businesses have throughout their life cycles, from providing free temporary access to public space to facilitating permanent ownership of commercial buildings, as described below.

PROVIDE ACCESS TO FREE SPACES AND POP-UP MARKETS FOR BIPOC-OWNED MICRO-ENTERPRISES

Temporary space can help entrepreneurs build an initial client base and grow their business as they transition to a longer-term lease or permanent space. To support this early-stage entrepreneurship, local governments can work with community partners to identify and access free spaces, and provide grants to coordinating organizations. For example, Duluth’s American Indian Community Housing Organization hosts the Indigenous Food & Art Market in the One Roof Community Housing parking lot. As one cohort member described, “Our Indigenous entrepreneurs started with a winter market, and from there, we have seen those businesses really start to grow and to develop.” A similar initiative in Portland, Oregon, the Portland Indigenous Marketplace, has supported Indigenous artists and entrepreneurs with a collaborative, culturally respectful environment and free vendor space at local nonprofit parking lots. After a year of successful events, the organization received a grant from the county government and incorporated as a nonprofit, and transitioned to hosting virtual marketplaces during the pandemic.

SUPPORT COMMERCIAL BUILDING ACQUISITION BY COMMUNITY-SERVING, BIPOC SMALL BUSINESSES AND NONPROFIT PARTNERS, INCLUDING SMALL BUSINESS INCUBATORS AND COLLABORATIVES

Cohort members described opportunities to support nonprofit partners and small businesses in purchasing commercial spaces as a long-term solution to commercial displacement. The Mission Economic Development Agency (MEDA) in San Francisco, for example, has used funding from the City of San Francisco Small Sites program to support both affordable housing and commercial and cultural preservation efforts in the Mission District, a historically Latinx neighborhood experiencing rapid gentrification. So far, MEDA has preserved 100,000 square feet of commercial space in the District, which it rents out at below-market rates to neighborhood businesses and organizations. The organization is now exploring ways to help small businesses directly acquire their own spaces, as part of a community ownership and wealth-building strategy.

Local governments can also support the development of small business incubators that provide below-market rents, shared common spaces, and access to support services. The Beaver Street Enterprise Center in Jacksonville provides offices to 48 small businesses at below-market rents, including access to free event and meeting spaces. As a nonprofit, Beaver Street offers flexibility to small businesses experiencing cash-flow problems and did not evict any tenants during the pandemic. The organization also provides free coaching, trainings, and networking events to its tenants as well as a broader network of entrepreneurs. Change Labs, a Native-led nonprofit based in the Navajo and Hopi nations, leads a small business incubator that supports Native entrepreneurs on tribal lands. The program creates annual cohorts of 20 entrepreneurs that receive intensive coaching, mentoring, and peer support, along with co-working and meeting spaces. Entrepreneurs who complete the program are also eligible for a $10,000 loan to seed their business.

INVEST IN COMMUNITY OWNERSHIP MODELS SUCH AS COOPERATIVES AND COMMERCIAL COMMUNITY LAND TRUSTS

Community ownership models balance anti-displacement goals with wealth-building strategies, and foster meaningful community decision-making over development. Often used for permanently affordable housing, community land trusts (CLTs) can also steward commercial properties and lease spaces at below-market rents to small businesses. The Rondo Commercial Land Trust Project in St. Paul, Minnesota, offers over 9,000 square feet of affordable commercial space, and seeks to retain, stabilize, and promote small, BIPOC- owned businesses along a major commercial corridor in the historically Black Rondo neighborhood. The CLT currently has six commercial tenants, includes affordable housing in its portfolio, and shoulders a larger share of costs than typical commercial property owners.

Commercial real estate or investment cooperatives can also offer affordable space to small businesses while providing wealth-building and leadership opportunities to BIPOC community members. The East Bay Permanent Real Estate Cooperative (EBPREC) is piloting a mixed-use development with 6,000 square feet of commercial space at below-market rents for BIPOC-owned startups, with a focus on arts and cultural spaces, as part of a community-led effort to revitalize a historically Black cultural and economic corridor in West Oakland, California. As the EBPREC’s first commercial acquisition, the project will be cooperatively owned and financially supported by community shareholders. The Community Investment Trust (CIT) in Portland, Oregon, is pursuing a similar model by providing opportunities for low- to moderate-income residents to own commercial real estate collectively in their neighborhoods. The CIT’s first project was an underutilized commercial retail mall in southeast Portland that was only 66 percent occupied. Since the CIT’s acquisition, the mall is now 95 percent leased and houses over 25 mostly BIPOC-owned small businesses and nonprofits.

HOW DO WE GET THERE?

The following principles apply to all of the strategies listed here for promoting affordable commercial space in cities.

Be intentional

Practitioners emphasized that commercial rent relief should be targeted to small, locally owned businesses in sectors hardest hit by the pandemic. Pittsburgh limited its commercial rental assistance grants to locally owned commercial tenants with 15 or fewer employees, while Oregon’s program focused on businesses with fewer than 100 employees. The Greater Toledo Small Business Stabilization Fund focused its grantmaking on hard-hit industries like retail, food and drink, and child care, as well as BIPOC-, women-, and veteran-owned businesses and those located in low- and moderate-income Census Tracts.

Second Street, Eureka image
Second Street, Eureka, California. Photo: Jan Kronsell, June 2006

Local governments can also work with community partners to map available commercial spaces that suit a variety of small business needs, including underutilized city-owned sites, and develop criteria for development and disposition that prioritize BIPOC-owned small businesses and commercial corridors in BIPOC neighborhoods. For example, the Mission Economic Development Agency (MEDA) rents its commercial space in San Francisco’s Mission District to small businesses based on four criteria: social impact, commitment to local hiring, offering affordable products/services, and local ownership. MEDA’s business development team and CDFI work with each prospective commercial tenant to develop business models and occupancy agreements that suit their needs.

Be inclusive in strategy development and implementation

Local governments can collaborate with BIPOC entrepreneurs and community-based organizations that know their neighborhoods to identify potential spaces, assess the range of small business tenancy needs, and work with partners to support commercial development models that are responsive to the community’s needs. MEDA convenes a 20-organization collaborative that partners with the City of San Francisco to develop comprehensive community development initiatives in the Mission District that prioritize anti-displacement and cultural placekeeping of longtime Latinx residents, small businesses, and community-serving organizations.

Practitioners also emphasized that these collective efforts are most impactful when they provide meaningful leadership and community ownership opportunities for BIPOC entrepreneurs and community stakeholders. For example, the Community Investment Trust in Portland, Oregon, began by surveying low and moderate-income residents in East Portland about their financial preferences, which identified real estate investment as a priority. The coordinating organization, Mercy Corps, then convened a larger team of volunteers and pro bono technical assistance providers to work with residents on building out the investment trust model and to identify a suitable site for the trust’s first acquisition. Shareholders build equity through investing $10-$100 per month in the CIT, and must reside in the project’s neighboring zip codes, which helps keep wealth and decision-making power in the community.

Ensure program accessibility

Noting the challenges that BIPOC-owned small businesses experienced in accessing PPP funds, practitioners emphasized that local governments should prioritize getting commercial rental assistance and other emergency small business funding out the door quickly. Developing application questions and requirements that are not overly burdensome, having enough staff who are trained in analyzing applications efficiently and can support applicants throughout the process, and using accessible technology are all critical components of infrastructure for disbursing funds. Partnerships can help provide this infrastructure. The Greater Toledo Small Business Stabilization Fund pooled resources from KeyBank and Jumpstart, CARES Act Emergency Block Grant funds via the City of Toledo, the Toledo-Lucas County Port Authority, and ProMedica, while LISC Toledo managed the application and grant distribution process. LISC Toledo offered the short grant application in 14 languages, and did not require any documentation from applicants unless they were selected for awards.

Even when local governments commit resources to small businesses for commercial acquisition and space improvements, practitioners noted that BIPOC- owned small businesses rarely have the capital to front the costs for this work and wait for local governments to reimburse them. Providing up-front financing and having dedicated, knowledgeable staff who can accompany small businesses through the acquisition or rehabilitation process are critical for ensuring access.

Level the playing field by addressing capacity needs for deployment

Practitioners identified a need for more public funding to support acquisition and rehabilitation, and to subsidize below-market rents for commercial spaces. Said one cohort member:

So many banks and funders are interested in funding programs, which is good—programs are important. But space is important too. We have space that we need to build out; we could make more space. It’s a matter of getting the funding for that.

Acquisition and rehabilitation financing is just as important in rural areas and smaller towns as it is in hot-market cities. Practitioners shared that many rural areas do not have much available commercial space, and existing structures may require significant rehabilitation and environmental remediation in order to be usable. Practitioners recommended that local governments combine federal SBA funding, New Markets and other tax credits, and American Rescue Plan funds, as well as create their own acquisition funds for nonprofit partners. In smaller towns, practitioners suggested a pooled fund at the county or multi-county level. In addition to providing financing and technical assistance, local governments could consider opportunity-to-purchase policies for commercial properties, similar to residential opportunity-to-purchase policies in place in Washington, D.C. and San Francisco, which give tenants a first shot at buying their building when landlords sell.

Practitioners also emphasized the importance of resources for staff and support services alongside funding for space. The value that community partners can offer goes beyond affordable rents to providing a supportive environment for entrepreneurs to stabilize and grow their businesses. As one practitioner illustrates:

The incubator setting is one where you have access to space, support, and safety under the same roof. And it’s really important as it allows entrepreneurs to automatically access the ongoing resources that are provided in the space and learn continuously while also allowing the TA [technical assistance] provider to remain on top of what the small businesses’ needs are so it can respond appropriately.

Set up a monitoring process with accountability mechanisms

In addition to tracking indicators that capture the extent to which commercial rent relief and affordable commercial space are actually reaching hardest-hit BIPOC-owned small businesses, practitioners recommended including criteria that evaluate broader community benefit, community ownership, and wealth-building opportunities.

This article was originally published in Next City, March 14, 2022. Republished with permission.

The authors work at Local Initiatives Support Corporation (LISC). They are Patricia Voltolini, a Senior Research Associate; Melissa Kim, the Senior Program Officer for Capacity Building; David M. Greenberg, Vice President of Knowlege Management and Strategy; Julia Duranti-Martinez, Program Officer for Capacity and Research; and Michelle Harati, Senior Program Officer, LISC Policy.

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