Strategies to Promote Affordable Commercial Space in Cities

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 agreed to 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, DC 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.

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