Local Initiatives Support Corporation

Transcription

1 Local Initiatives Support Corporation

2 Since 1996, Local Initiatives Support Corporation (LISC), the National Trust for Historic Preservation s National Main Street Center (NMSC), and community development corporations have been working together to revitalize urban neighborhood business districts. LISC and NMSC created a four-year demonstration program building on NMSC s Main Street approach, which when applied to beleaguered neighborhood business districts in cities across the country, nearly always translated into success. In this paper, we describe the techniques that LISC and NMSC used, the results they achieved, and how LISC plans to build on this experience to help revitalize business districts in urban neighborhoods around the country.

3 A Road Map to Revitalizing Urban Neighborhood Business Districts How LISC and Community Development Corporations Are Strengthening Neighborhood Markets in the Nation s Inner-Cities Written by Neil Carlson and Local Initiatives Support Corporation Published by Local Initiatives Support Corporation October 2003 Acknowledgments LISC wishes to thank State Farm Insurance Companies, the U.S. Department of Housing and Urban Development, and Living Cities: The National Community Development Initiative for funding this publication. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained herein. Such interpretations do not necessarily reflect the views of State Farm Insurance Companies, the federal government, or Living Cities. 1

4 Frankford Avenue, Philadelphia. THE STORY OF FRANKFORD AVENUE It was a quintessential tale of urban decline in late 20th-century America. A once-vital neighborhood loses its commercial base, property values decline, residents begin to leave, buildings and streets fall into disrepair. But what separates Philadelphia s Frankford neighborhood from its counterparts elsewhere is how it s managed not just to rebound, but to rebuild by revitalizing its commercial corridor, Frankford Avenue. LISC and NMSC focused on Frankford Avenue and five other sites to determine whether careful planning and business development assistance could reverse the fortunes of those communities. Working with Frankford Community Development Corporation a local group representing three area churches LISC and NMSC helped business owners, property owners, residents, elected officials, and nonprofit groups plan a revitalized business district. LISC and NMSC provided expertise, consultation, training, resource materials, and money to get the district back on its feet. Frankford Community Development Corporation offered grassroots leadership and volunteers. Today, that plan is becoming a reality. Within the first four years, commercial vacancy rates dropped from 40 to 17 percent. Thirty new businesses opened, creating 281 additional jobs. Private investments have topped $9.7 million, including $1.3 million for Frankford Hospital s new billing department and $2 million for a Walgreens pharmacy. Façade improvements at more than 170 businesses, better lighting, and new sidewalks breathed life into the street. A simultaneous improvement in safety and cleanliness instilled pride in residents and made the neighborhood more welcoming to outsiders. What happened on Frankford Avenue, and in the five other commercial districts where LISC and NMSC worked, demonstrates that by applying many of the same community development principles to commercial revitalization that for years have been applied to residential revitalization, neighborhood business districts can indeed rebound. THE DEMONSTRATION PROGRAM By 1996, the National Main Street Center had enjoyed several years of success revitalizing small-town commercial districts through its Main Street approach. That approach proved to be an effective methodology for envisioning, planning, and executing business district revitalization by addressing political, economic, physical, and social issues critical to neighborhood transformation in small towns. That year, LISC forged a partnership with NMSC to create the Neighborhood Main Street Initiative made possible by funding from the Pew Charitable Trusts to help community development corporations (CDCs) rebuild business districts in urban areas. The partners selected nonprofits working to develop commercial corridors in six cities Frankford Community Development Corporation in the Frankford Avenue neighborhood (Philadelphia, Pa.); Old Town Commercial Association in the Old Town neighborhood (Lansing, Mich.); Unity Council in the Fruitvale neighborhood (Oakland, Calif.); Greater Elmwood Neighborhood Services in the Southside/Broad Street neighborhood (Providence, R.I.); Main Street 25 in the Church Hill neighborhood (Richmond, Va.); and Martin Luther King Jr. Housing Development Association in the Upper Tacoma neighborhood (Tacoma, Wash.) as demonstration sites for an adapted Main Street model focused on urban neighborhood business districts. They enlisted CDCs with strong records of commercial development and community participation to spearhead the revitalization efforts, and helped recruit local residents with backgrounds in economic development, community organizing, small business development, and real estate and urban development to help. 2

5 Within four years, results were apparent in aggregate numbers, 398 new businesses; 1,490 new jobs; and $35.7 million of public and private investment. Sources pumped more than $3 million into the demonstration program 50 percent from LISC and NMSC and the remaining half from local resources, including $1 million from municipal governments. During the demonstration period, LISC and NMSC offered intensive, on-site expertise and training for CDC staff, business and property owners, and community residents. Encouraged by the early successes of the demonstration, LISC expanded its outreach in 1999 with generous support from State Farm Insurance Companies to a number of other LISC cities, linking the business district revitalization with other national LISC services, including community safety and commercial real estate development. By the end of 2000, LISC had assumed responsibility for nearly all aspects of the demonstration program and had expanded from the six original sites to 28 neighborhood business districts in 16 LISC cities, generating an additional 102 new or expanded businesses; 451 new jobs; and $17.9 million in new public and private investment. BUILDING AN INFRASTRUCTURE FOR COMMERCIAL REVITALIZATION The LISC and NMSC business district revitalization premise was simple: healthy urban neighborhoods begin with decent, affordable housing, but their stability depends on a robust mix of businesses groceries, drugstores, coffee shops, restaurants, barbershops, hardware stores, and a variety of services. To achieve this mix, business owners, residents, politicians, policymakers, and police must organize around a common vision for neighborhood business Creating a Vision in Fruitvale district revitalization, and then develop a strategy to realize that vision. Working with a local CDC in each site, LISC and NMSC helped form leadership teams to recruit volunteers and commercial district managers, and identify potential committee members with backgrounds in economic development, community organizing, small business development, real estate, and urban redevelopment. The creation of a strong volunteerled leadership team provided the programs with two key elements: local oversight and community leadership. In Fruitvale, the design committee looked at its thriving network of Latino-owned businesses, restaurants, and cultural institutions, and envisioned ethnically and culturally diverse groups of people working together, responding to a regional Latino-oriented market. They saw a bustling shopping area that was safe, clean, and green. Using charettes and architectural models, the committee proposed storefronts that were inviting and attractive, and a neighborhood that was a fun and convenient place to visit, with ample shopping, tasty eateries, entertainment, and employment and business development opportunities for local residents. Día de los Muertos Festival, Fruitvale, Oakland. While committees provided broad guidance, the neighborhood business district manager assumed responsibility for day-to-day program administration. Part politician, part organizer, part business and real estate incubator, the best managers balanced business skills (real estate development, marketing, finance) with community politics and cross-cultural communications. They had to be as comfortable in the boardroom as in the corner barbershop. With the leadership in place, each community identified its assets a vibrant history in arts and music, a rich mix of cultures and businesses, a particularly strong business sector, historical buildings, access to rivers or parks and created a revitalization plan based on those assets. LISC and NMSC then helped committees conduct training and planning workshops, recognize market opportunities, identify the appropriate business mix and real estate development opportunities, and engage local government. 3

6 IMPACT OF URBAN NEIGHBORHOOD BUSINESS DISTRICT REVITALIZATION EFFORTS To measure whether the LISC/NMSC approach actually worked, the partners hired Marketek, a market research firm, to conduct an economic impact assessment in each demonstration site. In five of the six demonstration sites, the results revealed significant improvements in vacancy rates; business retention, expansion, and attraction; aesthetic appeal; pedestrian flow; and neighborhood image. LISC has also collected impact data from 13 expansion sites. Old Town - Lansing, Mich. (Old Town Commercial Association) First-floor building occupancy rates rose from 80 percent in 1996 to 90 percent in Several key redevelopment projects occurred, including the $5 million relocation of the Lansing Convention and Visitors Bureau to a renovated 30,000-square-foot building on the Grand River. Old Town Lansing became a destination, not just a business district, through marketing its arts community niche and special events, such as Jazzfest and the Festival of the Sun. Demonstration Site Results ( ) Net New Net New Public/Private Demonstration Site Businesses Jobs Investment Upper Tacoma/Tacoma, WA $10,006,290 Fruitvale/Oakland, CA $4,815,475 Old Town/Lansing, MI $10,130,290 Frankford/Philadelphia, PA $1,120,900 Broad Street/Providence, RI $9,539,182 Church Hill/Richmond, VA 4 8 $127,000 Total 398 1,490 $35,739,137 Frankford Avenue - Philadelphia, Pa. (Frankford Community Development Corporation) Frankford Community Development Corporation was involved in the acquisition and rehabilitation of eight properties in the district. Vacancy rates dropped from 40 percent to 17 percent. A Special Services District was established to fund a street cleaning and graffiti abatement program. Frankford Hospital continued to show its commitment to the neighborhood by contributing $150,000 annually to the neighborhood s Ambassador Force, which organized volunteers to greet visitors and deter unwanted activity. Fruitvale - Oakland, Calif. (Unity Council) Ground-floor occupancy rates rose to nearly 100 percent in 2002 from 85 percent in In January 2001, a property-based business improvement district was established that will generate $224,000 a year for the next five years and will underwrite the continued operations of the program in Fruitvale. After a lobbying campaign by Fruitvale Main Street, the City of Oakland removed 30 percent of the more than 80 pay phones in the district that were magnets for graffiti, loiterers, and drug traffickers. Todd Mack Framing Gallery, Old Town, Lansing. Greater Elmwood Neighborhood Services office building, Southside/Broad Street, Providence. 4

7 Expansion Site Results ( ) Number of Year of Net New/ Net New Public/Private Expansion Site Business Districts Program Initiation Expanded Businesses Jobs Investment Buffalo $93,695 Cleveland $3,698,009 Grand Rapids $55,400 Toledo $7,092,500 St. Paul/Minneapolis $5,815,668 Richmond, CA $127,000 Oakland $1,094,000 Total $17,976,272 Southside/Broad Street - Providence, R.I. (Greater Elmwood Neighborhood Services) Greater Elmwood Neighborhood Services received a $100,000 Empowerment Zone grant to establish a commercial loan fund from which local businesses could apply for up to $10,000 for storefront improvements and business equipment purchases. A new $1 million Compare Foods grocery store, opened in late 1998, draws 30 percent of its customers from other areas because it carries specialty Latino food products. The area was identified as a priority zone under the mayor s anti-graffiti task force. Upper Tacoma - Tacoma, Wash. (Martin Luther King Jr. Housing Development Association) First-floor occupancy increased from 87 percent in December 1996 to an estimated 92 percent by December Rite Aid built a new 17,500- square-foot pharmacy in the district, signaling one of the first major new investments in the neighborhood in decades and creating 24 new full/part-time jobs. The CDC partnered with a private developer to redevelop the New Look property, a 10,000-square-foot retail/commercial space below 49 units of senior housing. Church Hill - Richmond, Va. (Main Street 25) While the Main Street 25, Inc. commercial district organizing program did not achieve anticipated results, it spurred partnerships among businesses, funders, the city, and nonprofits interested in revitalizing this historic Church Hill neighborhood. Those partnerships made further planning possible. Highquality plans and renderings now exist for a $30 million mixed-use development plan. In the expansion sites, success is already apparent. In 2002, Uptown Area Main Street in Toledo, a program sponsored by Neighborhoods in Partnership, was awarded the CDC Project of the Year by the Ohio CDC Association. In 2002, the LISC Community Safety Initiative and the MetLife Foundation awarded St. Paul s Payne Avenue Main Street the MetLife Community Police Partnership Award for its business district safety program. Due to the success of the Cleveland program in 1999, the local LISC office joined Mayor Jane Campbell to announce the expansion of its program to include four additional neighborhoods. CDCs working in partnership with Boston Main Street programs, with the support of Boston LISC, are revitalizing five commercial corridors, including conversion of several eyesores into anchors. 5

8 URBAN BUSINESS DISTRICT REVITALIZATION STRATEGY LISC and NMSC tested whether the Main Street approach successful in smaller cities and towns could be applied to inner-city neighborhood business districts. The partners found that urban markets have unique assets and challenges, such as safety issues, a mix of diverse cultures and ethnicities, and neighborhood-based nonprofits with neighborhood revitalization in mind. To adapt the model for urban markets, they employed a strategy consisting of the following key components: for the demonstration program was how well CDCs could succeed with new constituencies on new turf and integrate commercial development with their other community development activities. LISC s experience from the demonstration and subsequent expansion suggests that their organizing, marketing, and real estate development activities in business districts are complementary and mutually reinforcing. LISC found that CDCs redevelopment of highly visible properties in a business district would STRATEGIC COMPONENT 2: Building Coalitions of Diverse Partners As discussed above, neighborhood business district organizing relies heavily on the participation of volunteers including merchants, property owners, public officials, residents, business organizations, financial institutions, churches, and others to create a vision for the district. Because inner-city communities are often racially, culturally, and ethnically diverse, with newcomers and oldtimers unaccustomed to working 1. Working with CDCs 2. Building coalitions of diverse partners 3. Addressing quality of life concerns 4. Investing in a mix of large redevelopment and smaller-scale business development 5. Enhancing local capacity for commercial corridor revitalization 6 STRATEGIC COMPONENT 1: Working with CDCs NMSC s efforts in small towns were nearly always implemented through organizations within the business community, such as the chamber of commerce or the merchants association. In an adapted urban approach, the partners intended to work most closely with CDCs neighborhoodbased nonprofit groups that understand their communities needs. Although LISC s definition of a CDC is flexible, most organizations it recruited to sponsor a program had already been involved in other lines of business, such as housing and commercial real estate development. In addition to being multipurpose organizations, most of those CDCs interacted with their local businesses, but few had been spawned by the business community. One question motivate surrounding businesses to expand, and that organized and consistent design and promotion among existing businesses would not only strengthen those businesses, but also spur restoration and new construction of commercial properties. Mixedused development, drawing on CDCs housing and commercial real estate development skills, also has broad application within the neighborhood business districts where LISC and its partner CDCs work, given the presence of numerous buildings with commercial/retail space on the ground floor and residential apartments upstairs. Another important benefit of CDC involvement in commercial revitalization is that ownership by an entity with neighborhood revitalization in mind is critical to preventing gentrification of target neighborhoods. Ultimately, LISC found that CDCs can revitalize business districts as effectively as they can residential areas. Frankford Avenue Ambassadors hard at work. together, building trust among them can be challenging. In addition, in many such neighborhoods, prior community improvement initiatives have failed to produce results, creating a climate of considerable skepticism. Moreover, in urban areas, merchants are often tenants with little control over the space they rent. To them, revitalization may present new business opportunities, but at the same time result in higher rents. Finally, the social characteristics of cities, such as transience and mobility, are also at play: the pride and commitment that motivate people who live and work in a community to change it are harder to harness when some of the key players, such as property owners, live elsewhere.

9 LISC provided a critical element to the success of the demonstration sites in helping to forge coalitions and build trust among people with disparate interests. In most sites, the local commercial district program manager drove this process by conducting extensive outreach within the business community to encourage the involvement of business owners, property owners, tenants, law enforcement and public officials, and other stakeholders in rebuilding their districts. Local stakeholders attended meetings and began to work together because they wanted access to resources such as a national network of experts and funding, as well as ongoing assistance from local LISC offices, to grow their businesses. LISC s existing presence and established relationships in these districts was invaluable, as LISC was able to identify and help address the needs of diverse populations it already knew. LISC reached out to individual constituencies by conducting training sessions in different languages, translating materials, and providing coordination across ethnic lines. STRATEGIC COMPONENT 3: Addressing Quality of Life Concerns In adapting the Main Street approach to urban areas, it became clear that safety and quality of life concerns are more profound in urban business districts than in small towns. Crime real or perceived can discourage customers and threaten the success of business district revitalization efforts. In Fruitvale, eliminating pay phones, which many residents saw as magnets for drug dealers, was a priority. Merchants and residents were encouraged to support an ordinance limiting the number of pay phones. It subsequently passed. Two of the six demonstration sites, Fruitvale and Frankford, created community policing programs using residents as on-the-street crime watchers. Other districts created graffiti removal programs, purchased street cleaning machines, increased the number and attractiveness of garbage receptacles, and implemented other beautification projects. The removal of so-called broken windows physical decay and the markers of abandonment, such as graffiti minimized fear and built community, generating both community pride and broader support for business district revitalization. STRATEGIC COMPONENT 4: Investing in a Mix of Large Redevelopment and Smaller-Scale Business Development In a few districts, attracting a big-ticket project such as the Visitors Bureau in Lansing provided a physical anchor and an economic engine for Old Town Lansing redevelopment. Other sites carved out commercial themes or niche markets arts, antiques, or ethnic shopping, for example to help catalyze business growth. Most sites simply tried to find the right blend of small-scale and large redevelopment projects coupled with ample business and property owner assistance. The ultimate goal: to retain and attract quality businesses to their business districts. LISC s financial and real estate development acumen brought a critical ingredient into the mix in the areas of property acquisition and real estate development. As each district s needs evolved, local LISC offices tailored services to satisfy them. In Fruitvale, LISC invested more With its strong creative community and ample architectural stock, Old Town s vision was to become the destination for arts and culture for Lansing and central Michigan. With the help of Michigan LISC, residents Refurbished Ferguson office established a community development corporation building, Lansing. the Old Town Commercial Association to house the program, set up committees, and identified the district s assets. Geographically, Old Town had outstanding buildings and access to the Grand River. Politically, it had a committed group of artists, residents, and business owners and strong support from the mayor and city officials. The first order of business was to change the neighborhood s reputation as an undesirable part of town. To do that, the 11-member advisory committee used festivals and aggressive marketing to establish the district as an arts and culture destination. The Old Town Commercial Association, working with local LISC, established relationships with bankers and developers, attracting more than $8 million in private investment, including a $5 million renovation of the Ferguson office building, now home to the Lansing Convention and Visitors Bureau, and a $2.7 million renovation of the Race Street Mill. Additionally, a LISC-sponsored revolving loan fund supports façade improvements, which complements the city s investments for streetscape improvements, including planters and a revitalized waterfront. than $5 million for large and smallscale development, ranging from the $100 million mixed-use Fruitvale Transit Village to smaller projects, such as a matching grant program for storefront improvements. 7

10 STRATEGIC COMPONENT 5: Enhancing Local Capacity for Commercial Corridor Revitalization In most cases, the local LISC office has worked to create a supportive climate for commercial district revitalization activities, bringing in public and private resources to help underwrite program costs, usually staffing costs. Local LISC programs also commonly provide early, high-risk capital that allows CDCs to take corridor project development ideas to the point where other financing Acapulco Records From Humble Beginnings in Fruitvale 8 partners are encouraged to get involved. Moreover, with established relationships with many city offices, local LISC programs have helped CDCs attract resources for façade improvements, small business financing, brownfield remediation, and infrastructure to help commercial corridor revitalization programs succeed. In addition, by working with multiple CDCs and neighborhoods within a city or region, LISC can help coordinate their efforts to achieve greater cost-effectiveness and scale. To complement this, LISC s national office provides capacity building grants for administrative staff, office equipment, technology upgrades, banners, signage, and other items to staff and market the program. CONCLUSION: BUILDING ON SUCCESS Based on the success of the urban neighborhood business district demonstration, LISC has introduced its strategy in 28 additional urban commercial districts around the country. Local LISC offices and the CDCs they work with have been the driving force behind this explosive growth. LISC s provision of funding and technical assistance to CDCs to improve neighborhood business districts is evolving as its efforts expand José and Maria Barajas small business, Acapulco Records, had humble beginnings. As hopeful entrepreneurs in the mid-1990s, the Barajases sold music cassettes from a vending cart on International Boulevard in Fruitvale. Eventually they moved their growing business into a rented storefront, also on International Boulevard, but never dreamt they could also own the building that housed their business. But with the help of Janet Johnson, a member of Fruitvale s Economic Restructuring Committee who was also an employee of Community Bank of the Bay, the Barajases became their own landlords. Janet helped José and Maria apply for a low-interest loan from the Small Business Administration, a giant step they likely would never have taken without her intervention. geographically. In some cases, LISC is the primary driver and funder of the commercial revitalization effort, often with support from the city. In others, LISC and the city work closely to implement and fund a local program, or as in Boston, LISC establishes relationships between CDCs and existing commercial revitalization programs. Cities where LISC has played a leadership role in establishing neighborhood business district revitalization programs include Buffalo, Cleveland, Indianapolis, Toledo, Grand Rapids, Kalamazoo, St. Paul/Minneapolis, Richmond, Oakland, and Philadelphia. Going Forward Going forward, LISC will continue to build on the approach developed during the demonstration program and institutionalize the lessons. The demonstration has enabled LISC to become a national resource of knowledge, networking, and intellectual leadership on urban business district revitalization, which will assist it in mainstreaming business corridor development skills throughout its network of 38 field offices. LISC has created the Center for Commercial Revitalization to lead this effort. Based on the demonstration lessons, its strategy will include addressing crime, cleanliness, and safety, explicitly building upon the complementary activities of corridor organizing and real estate development. Some issues it will approach in a more patient and developmental manner, given the differing challenges and dynamics in inner-city commercial districts. It will also help LISC staff to address one of the most fundamental issues in inner-city commercial revitalization today the emergence of new ethnic entrepreneurs. LISC is integrating into all its local programs not only the fundamental skills acquired through the demonstration, and the adaptations these efforts have generated, but also the synergies that exist with LISC s preexisting neighborhood revitalization portfolios. LISC s expansion effort to change the look, feel, and function of inner-city neighborhood business districts will be supported by its 25-year track record of building local partnerships. Design:

11 Founded in 1980, LISC is the nation s largest community development support organization. We support the efforts of nonprofit community development corporations (CDCs) that are working to rebuild their communities by providing them with grants, loans, and equity as well as technical assistance and training. With our financial assistance and technical support, these CDCs develop housing, attract new businesses, strengthen local economies, and perform essential neighborhood services, thus harnessing the individual energies of residents, entrepreneurs, volunteers, and government agencies to revitalize whole communities. Through our network of 38 local programs in U.S. cities and regions and a 37-state rural initiative, the combined efforts of LISC and the CDCs with which we work have brought $11 billion into community revitalization efforts over the past 25 years. This financing has led to the construction of over 128,000 affordable homes and close to 20 million square feet of retail, community, and educational space as well as the creation of more than 40,000 jobs.

12 A Road Map to Revitalizing Urban Neighborhood Business Districts: How LISC and Community Development Corporations Are Strengthening Neighborhood Markets in the Nation s Inner-Cities is available online at the LISC Online Resource Library: Printed copies can be ordered at: publications@liscnet.org.