Civilis Consultants — Michele Reeves – Rethinking Urban Places

3 STEPS TO SAVE SMALL BIZ (And no, I don’t mean hopping in a time machine back to 2019 with masks!)

by Michele Reeves on May 6, 2020

If local brick & mortar establishments are going to weather Coronavirus, they must work backward from consumer behavior and commercial real estate realities. Plans that suggest we jump into a time machine and return to retail and restaurant circa 2019, but with warning signs, plexiglass, PPE, and plastic sheeting, don’t understand a thing about how small, in-person transactional business actually works.

The ground floor commercial ecosystem consists primarily of retail, restaurant, and personal service businesses (salons, spas, etc). These brick & mortar concerns require customers to spend in-person time in a physical space. The best of these businesses are multi-sensory and encourage product interaction. (In fact, the more senses engaged, the more successful a brick & mortar business usually is.)

The characteristics that customers value from these in-person businesses has been evolving over the last few decades. Now, American consumers are choosing to invest their personal time in ways that are almost trending back to the 1900s. We have the Internet instead of the Sears catalog. We increasingly have commodities delivered. And, we choose to spend our personal time in spaces and with businesses that offer a combination of these four things:

Great physical experiences.
Personal customer service.
Unique curation. (products, services, etc.)
Expertise.

Another way of looking at it: fewer and fewer people want to be their own personal delivery vehicle, driving to a distributed network of stores and services all over the city, or even all over the Internet.

If we want to save as many of small, beloved businesses as possible, there are three key steps we need to take, which require combined action from the public sector, from property owners, and from businesses. You will notice that these steps reflect real estate realities and the customer preferences mentioned above.

Here are the steps and who has primary ownership over those steps:

PERCENTAGE RENT LEASES (Property Owners)
SUBSIDIZED LOCAL DELIVERY COOPERATIVE (Public Sector/Business Owners)
EXTERIOR COMMERCE (Public Sector/Business Owners)

PERCENTAGE RENT LEASES

Vacancies Will Abound Without % Rent Leases

Rent per square foot is tied to sales per square foot. Low sales districts have low rent. High sales districts have high rent. There are almost no brick & mortar businesses projecting that they will be doing anywhere near their 2019 sales levels anytime soon (unless there is a cure/treatment for Coronavirus). Most small, local businesses I talk to are hoping to be at 25% to 50% of 2019 sales levels after a month or two of opening. That means they are only going to be able to afford 25% to 50% of 2019 rent.

Here is the hard truth: landlords that require small businesses to pay 2019 rent between opening and the end of the year will most likely lose ALL of their tenants. And, each and every “juice the economy” plan being rolled out by governors will not work at 2019 rent levels either.

Luckily, there is a leasing tool that works really well for this situation. It is a type of lease called a percentage rent lease. In these agreements, tenants agree to pay a certain percentage of their sales in rent, sometimes with a floor or a ceiling. Instituting this type of sliding scale rent between opening and the end of 2020 is beneficial for landlords and tenants for several reasons:

It will keep space occupied in a very down market for landlords.
It is a period of time that will help us establish a new normal for sales per square foot through typical high seasons: summer, back-to-school, and Christmas.
It allows businesses to be entrepreneurial, building the new revenue streams and approaches they will need to survive.
It will include data from future breakouts, from micro hot spots to bigger outbreaks that coincide with flu season.

SUBSIDIZED LOCAL DELIVERY COOPERATIVE

We are training consumers right now to order online and take delivery of products that many have been resistant to in the past, such as groceries. If we are going to help local business compete with Internet vendors and with Amazon, the best thing that cities and towns can do in terms of local economic development is to fund the creation of local delivery cooperatives that can move products from local businesses to local residents.

(Notice, I am not talking about the delivery of on-demand prepared food. Honestly, outside of very dense places, it’s not good for the planet, nor is it sustainable long-term from a cost perspective, to have restaurants preparing ramen and having someone like Uber Eats drive it 30 minutes away. Having said that, this model could easily be used for pre-ordered prepared food, delivered at a scheduled time.)

Branded Electric Cargo Bike Delivery to Start!

A delivery cooperative could be started by focusing on first connecting local businesses with their local trade area. It could easily be a branded electric cargo bike-based approach. This service should be used to reinforce old school personal and direct relationships between vendors and customers. Going back to the list above:

Great physical experiences. If the bike is attractive, the branding distinct, delivery packaging eco-friendly, then every single person who gets something delivered locally is going to get a huge dopamine hit each time this bike pulls up and delivers something even FASTER than Amazon! Shoppers will feel sooooooooo good for using this service. And seriously, that a huge part of brick & mortar business… dopamine hits.

Personal customer service. We want to start using delivery to reinforce relationships. It’s not just about the internet. You want your customers to pick up the phone and order a new snazzy shirt and set of earrings so you look “newscaster on the top” during your Zoom calls.

Unique Curation. Your salon could easily deliver the hair care products you need to keep your curls rocking!

Expertise. I don’t want to look at every type of degreaser to scrape adhesive off of windows. I just want to talk to my local hardware store, ask what I should use, and have them deliver it! That would be awesome.

This is sustainable. This decreases driving. This creates connection and trust between local vendors and customers, which is what local retail is about. This gets local into the delivery model in a way that is appropriate to small brick & mortar businesses. And, it contributes to the future success of these businesses, post COVID. (Remember, Amazon is able to massively subsidize their product operations with the profits from their IT behemoth, Amazon Web Services.)

EXTERIOR COMMERCE

I was reading through a governor’s draft list of guidelines for retail and restaurant openings in the age of COVID, and what was described was such a ghastly environment, I don’t think even the most talented retailer would be able to lure someone to impulse purchase something!

Seriously. Food is love. It’s communion. It’s family. It’s connection. There is nothing we hate more than an empty restaurant, or a half empty restaurant. Now imagine a half empty restaurant, filled with staff wearing masks, the smell of bleach wafting up to the HVAC ducts from constant disinfecting, you can’t hear your waiter through their mask, and there are hand sanitizer stations and information signage everywhere telling you all of the things they are doing to keep you safe. Meanwhile, none of the customers will be wearing masks, because they have to eat.

Adaptation (Courtesy of Extracto Coffee)

What this describes is an environment saying, “You really shouldn’t be here, it’s not safe.” This is not an environment conducive to driving repeat business. Nor does it make customers happy. Nor is it a place that makes me want to spend money. In short, this plan is a money losing nightmare. It’s not meeting customers where they want to be. It’s not giving them a great experience.

Or imagine a little 600 SF boutique with one other customer in the store. Even that will feel too close to maintain social distancing. Perhaps here, staff is wearing a mask, but the customer isn’t, and that customer is flitting around, trying to touch everything. Products are behind glass and under plastic. I can see, but I can’t touch. I have to ask staff to try something on. Hmmmm, again, not really the experience that makes people part with their hard earned cash.

Bottom line, you have to work backward from what customers want. Right now, most people across both parties are not super excited about reopening. They are not super excited about being indoors with a bunch of other people, especially since much of what is known right now seems to show that it is prolonged indoor exposure to other people that is the biggest spreader of COVID.

Not a Whole Lotta Room in Small Boutiques…

So we need to change our brick and mortar interactions to an exterior commerce model that reflects the safety of employees and customers.

Two to three days a week, streets should close down in commercial districts and make exterior commerce available to locals. This is not a street fair. It’s a set, regular time where restaurants, stores, salons and others bring their services outside. And, if we reclaim the streets, we have room to make it cool, fun, safe, and SOCIALLY DISTANCED in a way we cannot do with interior commerce.

Every one of these districts should also have a pick-up concierge service during street closures where you customers can order items ahead, and pick them up in one place on the street whether you are walking, biking, or driving.

For larger cities, to prevent crowding, you have to ensure these closures are held on a regular rolling basis everywhere in the city, so all neighborhoods have regular access to exterior in-person commerce opportunities.

Some specific thoughts for restaurant, retail, and service are shown below:

Restaurant. I very much worry we are putting waitstaff and customers at unnecessary risk with any sort of typical indoor dining model. I strongly recommend exterior counter service and/or pre-order and pick up. Then people can take their food and eat at any of the socially distanced tables. We are really not in a position to offer table service as far as I’m concerned.

Retail. I am inspired by downtown El Paso and it’s charming district right on the border. The product outside is for interacting with/display. It’s where you decide what to buy. Then you ask the vendor for what you want to purchase, and he fetches that from inside the store. Much of the commerce/shopping happens outside. Thinking about merchandising that will allow for self guided discovery (how Americans shop) with more vendor assistance than is typical for us will be key.

Service. This is the toughest one, and it will require some imagination, but it can happen. Heck, I’ve seen people getting tattooed in public at a Comic Con. And, vacationers get massages in outdoor cabanas in Hawaii. There is a way to make this happen!

District street closures can restrict entry if it gets too crowded, or reserve timed entry.

FINAL THOUGHTS

The last thing I want to say is that time is of the essence. As my father-in-law the retired investment banker put it: “I call it a crisis because timely action/resolution is important. A lot of human and business damage can occur if ‘help’ arrives late.”

We can’t afford to arrive late. The private and public sector must work together to make this happen if we want business to be able to roll with the punches that are coming over the next 18 to 24 months. It requires lenders to give a break to landlords so they can offer percentage rent leases. It requires the public sector to close some streets and use economic development money to start hyper local delivery services. And, it requires the brick & mortar business owners to do what they do best: reinvent! So let’s give them the space, time, and financial breathing room they need!

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Do You Want Every Small Business in America to Close?

by Michele Reeves on March 24, 2020

April 1st is coming people, and most of our small businesses have seen such a big drop in sales, they are not going to be able to pay rent in a few short days. More than that, they are not going to survive this economic pause without immediate infusions of cash and assistance.

Current GOP-forwarded initiatives are NOT going to work to help small business in the wake of the COVID crisis — they are both the wrong products (i.e. loans) and have the wrong timeline (not soon enough and not long enough).

*Tax Dollars Need to Support Small Business First, Not Cruise Ships and Fat Cat Airline CEOs*

This is not a “juice demand” stimulus situation. This is a “the world’s economies have all shut down so what do we do now?” situation. So what do we do? The answer is sort of simple. If the world’s economy is on pause, then we have to help small business press the pause button. We need a new set of tools to help small biz hibernate, take a hiatus, or do some minimal sort of operation (described more below), so they can re-emerge when demand starts to pick back up and/or they are legally allowed to open. And make no mistake, business is not going to recover back to 2019 levels for at least 12 – 18 months, if at all. So ALL of our tools should be oriented on helping people be closed for awhile.

How Do We Press Pause?

We have to go up the food chain to note holders and focus on debt forgiveness. And, we need to work on income replacement for lots of folks who might not qualify for unemployment.

Small brick and mortar businesses have 4 big categories of expenses: employees, build-out loans, inventory/food costs, and rent. If we want the small guys to take a hiatus instead of going out of business, we have to have a plan that can work for all four categories of expenses.

Employees

Whose brilliant idea was it to give loans to businesses with zero dollars in sales so they could pay employees? That’s the most complicated back door unemployment program I could imagine. And a needless hassle for business owners under stress. Instead, we need non-viable businesses to save money now, take a hiatus, and have government/foundations step up and offer unemployment benefits to two key types of employees:

Documented service workers that don’t qualify for unemployment.
Owners who aren’t employees, such as sole proprietors.

Build-Out Loans

*This is a “warm shell” space. It has walls, basic lighting and electrical, a floor, HVAC with ducting, and junction boxes for light fixtures.*

In many markets, space is delivered in what is called “cold shell” condition. That means walls framed, no sheetrock, no electrical distribution, no lighting, sometimes no floor, no bathroom, no HVAC (or no ducting), etc. So a retailer who takes a cold shell space is spending a lot of money all at once upon starting their business to build out their space (finishing a cold shell space is referred to in the biz as building out “tenant improvements”). Many startup businesses obtain a loan for tenant improvements. On average, smaller retail tenants usually have TI loans of less than $100,000. Of course, this depends on the market.

This process is even more amplified for uses that have particularly expensive equipment/systems to install, such as dentists, restaurants, or hair salons. As an example, take restaurants. They have to pay to bring their spaces to warm shell condition, and then on top of it, they have to install two ADA restrooms, a ton of plumbing, a ton of sewer connections, a grease trap, a hood vent, a fire-rated chase for a hood vent, upgraded HVAC, sometimes electrical panel upgrades, sometimes upgraded water supply, walk in cooler, etc etc. These types of tenants might have TI loans between $100,000 and $500,000, depending on the market and the size of the space. (It can be much more in very expensive markets.)

In order to hit pause, all tenant improvement note holders must refinance these loans so that there can be no payments by businesses for up to 12 months. Forgiveness or reduction of these loans should be considered for permanent COVID-induced closures or for businesses with depressed sales as compared to 2019. Lenders and bankers will cry, and how much they should receive in lieu of loan payments for 12 months, I would leave up to Elizabeth Warren to figure out. 🙂

Inventory Loans/Food

We should be connecting food banks and restaurants temporarily closing so they can unload anything that might spoil over the next 6 months. And, we should compensate restaurants for this cost of food.

For retailers, inventory loans are essentially short-term lines of credit that are used to purchase inventory, with the collateral being the product that is for sale. Any reasonable Main St assistance needs to include straight up forgiveness for inventory loan payments that cannot be made while businesses are put on pause. Once again, we would have to go to inventory lenders and ask them to refinance these loans. Debt forgiveness is a huge part of any package to help small business. Retailers could start paying upon resumption of business, or after 12 months, whichever comes first. And there should be a provision for a write down of this debt if sales are still significantly depressed after 12 months.

Rent

Every small brick and mortar biz (other than grocery, liquor, weed, hardware, and drugstores) is going to take a big sales hit. In some cases, by “hit,” I mean literally no sales. So, every small brick & mortar business should be able to close without paying rent, NNNs or CAMs (common area maintenance charges) for up to 12 months, or whenever COVID restrictions are lifted, whichever comes first. (Please see my post on why we need a commercial eviction moratorium RIGHT NOW! And, if you know any businesses having trouble asking for a rent reduction, here is a letter to get the ball rolling.)

If we do this there are many positive effects. Perhaps a business can do some online sales. They can offer community based support. They will keep utilities on and space occupied. (Unused commercial space decays into disrepair mighty quick.)

*This is “common area” in a commercial building. Tenants have to pay their pro-rated share of taxes, insurance, maintenance, utilities, and janitorial for this space. Those are “CAMs”*

Of course, non-payment of rent, NNN fees (taxes, insurance, and maintenance), and CAMS will negatively impact property owners. Many of the buildings that are good homes for small business are also owned by small property owners who have to make loan payments, and pay for property taxes, insurance, etc.

The only way to solve this is to move up the capitalist food chain, once again, to the folks who got massively bailed out in the last recession: note holders. This time lenders for commercial spaces should be required to step up. They can re-amortize commercial loans so property owners don’t have to make any payments if they are waiving rent. Unpaid interest during waived rent periods can be added to the re-amortization.

In this scenario, lenders will sacrifice some short term cash flow, but you know what? It’s about time they paid back the American people for the bailout they received during our last downturn. And property owners will pay a bit more for this over time, but you know what? That’s totally fair because property owners are typically in a much better financial position than small business owners.

Replacement Income

Service workers are being laid off in droves. All of them. Many of them are not going to qualify for unemployment programs for various reasons. We need to three key things:

Change the rules of unemployment programs so they cover as many service workers as possible (such as providing $$ for part-time employees) and then make sure these programs are adequately funded. They will require a bail out themselves when we see the numbers over the next few weeks.
Make sure sole proprietors or pass through entities for tax reasons (single-member LLCs) are eligible for some form of unemployment insurance/income replacement.
Foundations should set up a “service worker relief fund” that can serve as a sort of unemployment program for undocumented service workers.

Establish Delivery Service

What else would I like to see? I would like city governments get involved in creating opportunities for local vendors to sell their goods in a distributed way.

Perhaps it is in the form of a hyper local delivery service with e-bike cargo cyclists employed by the City. It could be offered for free as a service to vendors who want to work together to offer regular deliveries of everything from food, clothing, drinks, accessories, produce, activities, toys, etc. This would really help small biz create at least some revenue during this closure. (Retooling for delivery is not as easy as it sounds. For example, an ice cream maker wouldn’t make enough on a pint of ice cream to make traditional delivery feasible. Or a fine dining establishment doesn’t necessarily prepare food suitable for takeout. There is a lot of work to figuring out how to take what you do to make it delivery, pick up, or take out friendly.)

I like the idea of creating distributed local locations for pick up subscription boxes for local products with food, treats, group activities/games. Pick up times could be scheduled so there is no overlap and social distancing is observed.

Right now, Safeway and Amazon are getting a lot of the local grocery delivery market. Could we figure out a way to help smaller ethnic grocers cash into this demand by providing delivery to their local trade areas?

Just want to close by saying that I have been heartened by the incredible outpouring of passion, knowledge, technical expertise, and hard work that is being directed toward the challenge presented by COVID to small business. It is delightful to work along side the amazing people putting their heads together to help those who are most impacted by Coronavirus.

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Small Biz Commercial Eviction Moratorium NOW!

by Michele Reeves on March 23, 2020

If you want any of your favorite small retailers, restaurants, bars, and service businesses (for example, nail salons) to be in business after COVID loosens its grip on on America, the most important thing local jurisdictions can do right now is to issue a moratorium on commercial evictions.

*Extracto Coffee Reduced to Tiny Takeout Window with Social Distancing Line Markings*

WHY IS TIME OF THE ESSENCE?

Rent is due April 1. Depending upon the lease, many tenants may be evictable under their leases within 5 days of not paying full rent under the lease.

And why is that a problem? Because almost NONE of these restaurant, service, and retail businesses are going to be able to pay their full rent in April. No one who operates these beloved businesses (that are the very fabric of our community) is doing it to get rich. These establishments are owned and run by people whose businesses make it month-to-month—managing cash flow is always a challenge. In March, many have already seen their sales plunge, in some cases to $0. And remember, this has occurred in an unprecedented fashion, in the blink of an eye. Not a slow easing, or a gradual decrease in sales, as happened before the Great Recession. And, no one has any idea when sales will start back up again, and at what level.

Many of these businesses have already had to close, layoff all of their employees, and think about how to pay for inventory loans and tenant improvement loans in addition to rent. Not to mention, business owners have no personal income coming in during this time.

And now small business is supposed to make decisions about what to do with their holdings, determine whether the business can start back up again… when their business might start back up again, whether it can be remade into something else during the COVID crisis… literally do all of this in days with the threat of eviction hanging over their heads. This is not acceptable, especially when these business owners have their entire net worth tied up in loans, inventory/food, and lease obligations.

IS THIS REALLY NECESSARY?

In a word, Yes! Not all property owners are rich land barons. But as a whole, property owners are typically in a much better financial position than small business owners. And without a commercial eviction moratorium, small business will be 100% at the mercy of the worst behavior of property owners.

I am already seeing this less than helpful behavior on the part of owners in the emails I am forwarded by tenants seeing advice:

Property owners who are not proactively reaching out to their tenants.
Property owners who are not engaging with tenants when they are being begged for rent relief for at least April.
Property owners who are trying to tie tenants into long term agreements for reduced rent, the balance being added to future rent. This is tantamount to tenants taking on even more debt without any real idea of when they can reopen and what sales will be like at that time.
Property owners who are issuing lease addenda with small concessions that come with strict confidentiality requirements for tenants.
Property owners saying, “Sorry, you should have saved more money.”

HOW BAD IS THE LOSS FROM A LOCKOUT?

Most people have no idea that many kinds of spaces require expensive buildouts, the costs of which are entirely borne by tenants. If someone wants to start a restaurant, or a dentist or a beauty salon with a lot of plumbing, they are usually on the hook for hundreds of thousands of dollars in tenant improvement loans to construct their space.

The value of these buildouts are sometimes the only equity that these businesses have. If a landlord locks a tenant out, then that tenant cannot recoup their investment through the sale of their business. Instead, an owner would get a valuable space that would eventually be highly desirable and leasable, at no cost to the landlord to build out. We need to be sure that we are protecting the significant investment that restaurants, hair salons, and others have put into building out their space.

I want to be clear that many property owners understand they are in business with their tenants (not in a legal sense, but in a “rising tide lifts all boats” sense). And there are great stories of landlords working with their tenants. But we have to protect small business from those who are not collaborative because the stakes are just too high.

This is not business as usual. This is not even a typical recession. This is an unprecedented halt to commercial activity for an unknown period of time. We need new tools. We need new approaches. And we need to make sure the most vulnerable among us are not trampled. For us to work together going forward, small businesses needs the spectre of eviction removed from the equation as we determine the most equitable way to put worldwide commerce on hold.

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Cool Freaking Shoes, Publishing & Third Places

by Michele Reeves on May 18, 2019

At a large common table at a fave coffee shop early last year, I spied a man alternating between working intensely on his computer, and furiously sketching on a pair of canvas Vans. (Okay, spied is a bit dramatic, he was sitting right across from me!) Honestly, I was mesmerized by his drawings… their color, abstraction and dimension. His focus. His switching between computer work and sketching. I was desperately trying to figure out how to surreptitiously take a photo of the whole thing… but I’m not so good at that. (I always forget the sound is on when I try to take a secret picture… busted!)

Finally, I gave up being sneaky and just asked if he would mind if I took a shot of the shoes he was working on, and he graciously obliged… which is the picture you see below right (pens visible inside the shoe). After my intrusive request, we started chatting as if we had known each other for ages (much to the laptop warriors’ irritation around us), and I learned he was making the shoes for his sister, hiding animals in the colorful dimensioned shapes. (You can see the rhino on the front left shoe… an easy one to spot!)

I was IN LOVE with those shoes. Next thing you know, I called my Mom and my daughters and asked them to name a few types of animals for me. Needless to say, they thought me a bit crazy (but no more so than usual). Humoring my request won them a reward: the honor of being shod with magical works of custom art by the fabulous Luis Gutierrez!

He is a dynamic young artist and designer who moved here from Arizona, and I am delighted that we have become friends. We would never have met, nor would we have gotten to know each other, without the intervention of Sisters Coffee Company, one of my favorite third places in Portland. (Honestly, I wish I could send Luis into some downtowns where I work to implement a midnight guerrilla paint scheme on a beige building — now that would be fun!)

Anyone who is interested in purchasing one-of-a-kind gifts of original artwork sketched on shoes or bags, Luis can hook you up when he’s not busy painting, baking artistic creations (literally), or arranging to show his original pieces! You can track him down on Instagram at XoloArt1.

Ray Oldenburg coined the term “third places” in his book The Great Good Place, first published in 1989. In this important piece of writing, social environments were divided into “first places” (home), “second places” (work), and “third places” (churches, cafes, clubs, libraries, parks, etc). Mr Oldenburg felt third places were critical for building and maintaining a functional community and also considered them a basic building block of placemaking.

As I think about third places, I realize that mine usually revolve around visits to parks and things to do with food… and if I’m being totally frank, my preferences trend heavily toward places with food! For awhile, Ken’s Artisan Bakery in Portland was a frequent meeting third place for me. One day, I was scheduled to connect with a construction manager friend who had invited a landscape architect she knew — women discussing the built environment with pastries, I mean, come on, does it get any better than that?

We proceeded to chow down and chat up a storm, probably too loudly. The latter became readily apparent when a woman sitting near us introduced herself: Lisa Stidd was an architect who had recently begun doing some writing for a new online publication focused on urban issues, Urb DeZine!

She asked if any of us would be interested in writing for the publication, and that’s how I not only came to post the occasional piece, but it was my introduction to its publisher: Bill Adams. He has been a consistent and delightful collaborator and supporter, and I am grateful for what he does to provoke thoughtful discourse on all things urban.

Would I have encountered this opportunity without a third place? Nope.

Both of these spots have a few things in common: easy to walk to, busy, amazing natural light, and great core food products — either baked goods or coffee. For me though, they are at their best as citizens of the street. In other words, they blur the line between interior and exterior. When sitting inside at Ken’s on a nice summer day, with the giant window open (shown to the left), it is truly an interior/exterior experience. You are a part of the street, and it is a part of you. At Sisters, I have sat in the window on many a winter day and witnessed reunions, dog walkers, breakups, kids playing in the snow, people sprinting from torrential downpours, first dates, and even a television show being filmed with fake rain! (I know, they couldn’t find a real rainy day in Portland?)

So consider this a love letter of sorts, a deeply appreciative Thank You to all of the amazing third places in every city and every town that give us a spot to see and be seen in our community. Americans are not really very good at hanging out without a defined context, and if we didn’t have these fabulous third places, our already damaged sense of community fabric would be irreparably frayed.

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Building District Brand, One Experience at a Time!

by Michele Reeves on January 31, 2018

The Executive Director of the Historic Monterey Trail District, Nathan Ulsh, inspired me with a new tour he created for his South Sacramento corridor, so much so that I asked him if he wanted to guest post about it here! He does a great job bringing big picture resources to his district, and executing on the small things that foster connection and brand. Take it away Nathan…

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Posted by Nathan Ulsh
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How do you start to debunk the myth that your PBID’s commercial district is scary? This was the question I had when I observed that there were few white folks over the age of say, 40, meandering through our businesses on Franklin Blvd in South Sacramento.

Inspiration for tackling this problem came to me in the Spring of 2017: change minds one Spanish student at a time! I was perusing the Nextdoor app (social media platform similar to a virtual neighborhood watch) for Curtis Park, the neighborhood with a lot of disposable income directly adjacent to Franklin Blvd. They were recruiting students over 50 years of age for a level 102 Spanish class, and since it was drawing from Curtis Park and Hollywood Park, it meant this class was going to get good Anglo representation from consumers who might never otherwise go to South Sac.

Drawing on my experience conducting professional development tours for troubled youth to meet directly with business owners, I thought we could apply something similar for students in this Spanish class to foster more intimate conversations between Anglo customers and the amazing collection of multi-generational Latino-owned businesses that we have on Franklin Blvd. I reached out to the teacher, and offered a free business tour where her students could practice their Spanish, meet business owners, learn about Mexican culture, food, music and history, all while spending money in my district.

The teacher agreed and we were on. (Click on the image to the right to enlarge pix from our first tour!)

The best part of our Spanish meet and greet was the difference in attitudes before and after we set out. At the beginning of our outing, one of the attendees admitted that her friends had feared for her safety when she told them she was going on a business tour on Franklin Blvd. Thankfully she didn’t let it stop her!

We started with a brief history of our district, the vibrant culture represented here, and all of the projects we have in the works. Then we hit the road, on foot. Even though Franklin Blvd is an arterial, and consumers don’t think about walking, all of this was easily accessible as pedestrians.

Our first stop was Gala Formal Wear where my tour-goers learned about quinceñeras—the celebration, the attire, and the expense (these celebrations can easily top $10,000.) We asked everyone to come with an appetite, because the next port of call was a must-stop destination for the Mexican community: La Esperanza Bakery and Market. No one can resist their pan dulce (Mexican sweet bread), and our students chatted in Spanish about food and sweets, tasting a wide variety of specialties. The last stop of our two-hour tour was more food (it’s a good thing we were walking)! Los Inmortales provided a mouthwatering traditional Mexican dinner, and the owner conversed with our group in Spanish about his restaurant and the food that was served.

All in all, the business owners really enjoyed interacting with new customers, and the students ate it up (figuratively and literally).

At the end of our time on the street, the same woman whose friends had doubted her sanity for walking on Franklin Blvd said, “This was exciting! I am going to bring my girlfriends over to this area!” Everyone explained that they had not known about the history of the district, or the rich offerings of the businesses. It is, by far, the best collection of comments I have received about the district by outsiders. And now, they are going to tell every one of their friends.

And that’s how you change minds: one person at a time, having a great experience.

Needless to say, I am now offering quarterly Spanish-speaking business tours because it was so successful for everyone involved. (The folks cracking up above left are from our second tour.)

I love my job.

(Tour photos courtesy of Nathan Ulsh)

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Commercial Revitalization: Stop Displacing, Start Improving

by Michele Reeves on July 5, 2017

You can look at commercial district revitalization in two ways: The first way, which is the common way, and unfortunately not the best way, is to hatch a scheme to get rid of everything that is underperforming and replace it with something else. Bulldoze it, and start over with a blank slate. This approach to economic revitalization is the cornerstone of many well-intentioned plans — the wholesale replacement of entire existing commercial ecosystems. It is also an approach that values typical male attributes: valuing big, valuing new, valuing the deal. This is truly a shame since these districts often have wonderful businesses, owned by locals, that serve as non-traditional anchors pulling from wide trade areas.

The second way to approach these eclectic, local, one-of-a-kind commercial places is to figure out how to improve what is already there. Not only improve, but fully embrace and leverage what is there to ratchet up economic performance and brand. Remember, it’s always easiest to brand around unique and authentic assets, which these districts typically have in spades. Growing your improvement from within, locally and incrementally, instead of imposing it from without, is what I call a female approach to economic development.

The bottom line is that we need our economic development approaches to focus more on cultivation, or adding to what is already there, and less on replacement. There are many reasons why. The wholesale displacement approach to commercial revitalization depresses local wealth creation because it calls for out-of-town developers, big money, and national chains. (On a side note, I am not sure why communities encourage outside development so heavily, because out-of-town owners are consistently listed as a primary obstacle to renewal in cities and towns of all sizes.) On the other hand, fertilizing what exists is affordable, it encourages local ownership, helps foster local wealth creation, and creates opportunity for a wider assortment of entrepreneurs through incremental improvements. As you can imagine, I am a big fan of the “improve what you have” approach, even if it seems messier, and requires a new toolkit, and doesn’t always come with a deal plaque!

A great example of cultivating economic development is being implemented right now on a corridor called Auburn Blvd in the city of Citrus Heights, CA. One of their first “improve what you have” projects was wildly successful. Two local gentlemen wanted to take a long-standing, boring, beige, vacant restaurant (pictured above to the right) and open a new venue for chowing down! When this restaurant startup applied for their permits, the city used the land use process not to create roadblocks, but instead to find opportunities to collaborate so they could work together to make the business, the building, and the street better! Citrus Heights offered these two amazing Latino entrepreneurs some guerrilla design assistance, together with matching funds, to help them affordably amp up this restaurant’s ground floor identity.

Every city should be doing this!!

The restaurant, Crepe and Burger, has been a big success, they did a wonderful job transforming this space. (The “after” exterior photo is above left, and the “after” interior photo is below right.) Customers are even frequenting the outdoor seating area, which is a welcome injection of vibrancy on such a busy corridor. It’s entirely true that people sitting at tables with eye-catching umbrellas is the best sign a restaurant could ever have.

And yes, the community is talking about this building because it’s not the standard TanLand beige stucco building with stacked stone that dominates the retail environment in Northern California! But you know what? Standing out and getting attention for your business is a good thing!!

So let’s talk about the “improve what you have” toolkit for ground floor retail execution. It certainly involves thinking beyond just facade improvement programs, which can be expensive, and are typically most effective with well-funded property owners. Instead, cities should be creating programs with a wider variety of options, that contain smaller steps toward improvement, and that can be implemented by a more robust mix of stakeholders, from the well-funded to the cash-strapped. Examples might include:

dated acoustical tile false ceiling removal program
window transparency program
window lighting education and improvement program
building color consulting (also known as Ban Beige!)
merchandising training
parking lot outdoor seating
district performance training tracking
extreme makeover team development
in-store improvement classes

Investing in the improvement of the ground floor experience is vitally important to the economic success of your local commercial districts right now, and also moving forward into the future as retail continues to evolve. (Heads up: retail has always been about reinvention, that’s the nature of the beast.) In the years to come, brick & mortar businesses are all going to have to offer a wonderful atmosphere, a curated experience, and excellent service in order to attract in-store customers, whether it be a lawyer, doctor, accountant, bank, clothing store, grocery store, or restaurant. If a business doesn’t offer a distinct experience, they will be trafficking strictly in a commodity. And more and more, commodities will be consumed online. We will diagnose our medical problems online instead of going to the doctor, we will get that LLC contract online instead of going to see our lawyer, and we will shop for groceries and clothes online instead of going to stores.

To convince customers to invest their time in real-world businesses, districts will have to tell a great story at the street level, and businesses will need to craft unique and interesting experiences to entice people to visit. So let’s get to work and help our existing stores, restaurants, and districts do just that so they can survive and thrive in the years ahead.

Thank you to Casey Kempenaar and Devon Rodriguez for the “After” photos of Crepe and Burger above.

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Oh the Stories They Could Tell…Astoria Armory Edition

by Michele Reeves on April 3, 2017

This nondescript building in downtown Astoria, OR was hiding a surprise: a breathtaking expanse of clear span space with a rare domed lamella roof system. As unlikely as it appears on the exterior, this warehouse-like building was actually an Armory, constructed to provide entertainment for military personnel during World War II headquartered in this lovely Pacific Northwest spot — the gateway to the mighty Columbia River.

My grandfather was one of those people. He served in the Pacific Theater as a naval doctor and shipped out of Astoria. As a young child, my mother traveled up there with the family. Everyone thought her older sister was her mother! For me, the chance to tour this building and learn more about its past was like reaching back through time to picture life there in my grandfather’s era.

When I wandered through in 2013, the building had seen better days. It was on life support, being kept alive as a storage space for Astoria’s wonderful maritime museum. (When it comes to historic preservation, often, an occupied building is a saved building, no matter the type of occupancy.) As a consequence, the basement was a compelling jumble of nautical items from every era stored for future exhibits — boats, engines, harpoons. It was as if I entered the lair of a seafaring hoarder, with tightly packed treasure at every turn (see photos at the end of the post).

But the star of this space, even with the broken windows, dusty bleachers, and a bad stage remodel, was the soaring ceiling and the diamond shaped pattern of the roof. You could easily close your eyes and picture a crowded USO performance, hear the music, envision the mood.

One of the pure joys of my work is not only having the honor of seeing amazing structures and touring incredible places, but also witnessing communities take these assets and resurrect them to live another day. And that’s exactly what happened in Astoria.

The building was purchased by Craft 3, one of the most innovative Community Development Financial Institutions (CDFI) in the country. They bought the structure and leased it to an informal group of Astorians who had dubbed themselves “Friends of the Astoria Armory” (FOAA). The lease rate? $1. Basically, the deal was this: prove it can be a going concern, and Craft 3 would sell it to the FOAA.

According to this innovative lender, after buying it, Astorians put in about 1,000 volunteer hours and, and within a few weeks were hosting their first event: a roller derby bout! And over the next year and change, they clocked in over 175 events in the venue. In this short period of time, they proved the concept, formed a non-profit, and bought the Armory, with Craft 3 underwriting the loan.

This city of 10,000 is one of the best can-do small towns anywhere in the world. They restored and installed a rail trolley car on their riverfront tracks, they recently located and floated an historic ferry to Astoria that used to service the area, and now, they have restored their Armory, to name just a few of the incredible projects this community has made happen with duct tape, chutzpah, and a little bit of magic.

Please do check out the Astoria Armory site, marvel at the historic photos from the building’s heyday, and take heart, like I do, in the power of community and humanity to endlessly renew itself!

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On Nov 8th Morn…I Experienced Everything Great about America

by Michele Reeves on December 20, 2016

My election day began with a meeting of a group I was recently asked to join, the NE STEM/STEAM coalition in Portland, Oregon. The group’s mission (I paraphrase) is to help students from communities of color gain access to careers and education in science, technology, and the arts.

It is an incredible collection of people and organizations, spearheaded by the indomitable New Market Tax Credit guru and all around community development expert Carl Talton. The members of this coalition include non-profits like Airway Science for Kids, Inc. (To put it in their words, they work with “Portland’s hard-to-reach youth” to build an actual airplane and sell it. Talk about inspirational.) And there is the retired school superintendent, Pixel Arts Education, a local college, the Rebuilding Center, educators… the list goes on and on. Amazing people doing amazing work to bring economic opportunity to all Americans.

business1

My next meeting of the day was to get together with a small, local property owner as a part of a public sector program that, in part, brings assistance to long-time resident owners so they can learn to leverage their properties as investments and stay in their neighborhoods as they change, instead of being displaced by gentrification. In this case, I had the absolute honor of meeting with an immigrant couple who moved to the US as adults, learned English, and over the years acquired buildings as they started businesses.

She is from Asia, quiet and whip smart. He is from South America, gregarious and very detail oriented. They were strong, open, caring people who have worked hard their whole lives, who take care of their parents and their extended families, and have contributed much to our economy.

Every person I worked with on election day personified, in tangible and heroic ways, the ideals this country was founded upon, and it was a privilege to have been able to spend time with them and be reminded of all that America can be.

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My What a Quaint Bridge Tender House You Have Chicago

by Michele Reeves on July 31, 2016

Who knew that competition was so fierce and cutthroat in the world of architectural boat tours in Chicago? According to our guide, who was a docent volunteer on the official Chicago Architectural Foundation tour, CAF has turned their river meanderings into one of the top visitor draws in the city, which, of course, has spawned a lot of copycats. Damn tour counterfeiters.

Although I was feeling smug about having chosen the right tour, in truth, if I am totally honest with myself (which I try to avoid), it would have never occurred to me to take the tour unless my friend (and planner) Sara King had recommended it!

And, I can unreservedly recommend it to anyone visiting , even if you have no interest in architecture. It’s just really darn fun to be toodling around on a boat, on a river, in such an amazingly urban place. Chicago is truly one of our grandest and most interesting cities visually.

Tidbits that jumped out at me: there is a building that was designed to look like a champagne bottle…The structure used as City Hall in some Bat Man movies is a gigantic and vacant historic Post Office (they abandoned it and built a really ugly new PO next door, refusing to connect it up to the Riverwalk, way to go Feds)…The Chicago Riverwalk was inspired by a Daley visit to San Antonio…They use locks to get from the River to Lake Michigan because the lake is higher than the river…Montgomery Ward was responsible for all of the miles of the public access to the lake in Chicago. I was very impressed by the latter — Ward spent years fighting the city’s plans to develop this land, using his own money. And to this day, he is the reason over 28 miles of coast line is open and accessible to regular folks. Huzzah to Montgomery Ward.

I was particularly taken with the lovely scale of the river — not too big, and not too small — and the appropriately charming bridges that cross the river. They are bascule designs, perfectly balanced upon a fulcrum to open and close with only a small motor to move them. The bridges, and the wide variety of bridge tender houses (no two are alike apparently), serve as a wonderful counterpoint to the modernity and height that arise around the river.

And there is no better vantage point to see these charming little houses than from the river! Here are some examples that I was able to catch, sun permitting!

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Oh the Stories They Could Tell… The “Is That a Beluga Whale?” Edition

by Michele Reeves on April 22, 2016

There is a unique joy in walking through a building and experiencing what it was, understanding what it is now, and contemplating what it can be in the future.

Some structures clearly have a grand old past, evoked by remnants of fixtures, stained glass, and finish work. Some have a more sordid identity, making it difficult to imagine a new future. Ruminating on building stories — both glorious and sordid — is going to be a new series here on the blog. And, the kick-off will be this tale from a structure often referred to as the Sugar Shack.

The story of the Sugar Shack is a tale of the more sordid variety. And the tour of this building was, perhaps, one of the most unusual I have ever had the pleasure of taking.

Imagine a mid-century strip mall, built in 1951, now entirely sided with corrugated metal, its storefronts lost to time.

If you took this metal-walled building and filled it with sea animal replicas, a largely empty porn video store, a wannabe natural history museum, a working strip club, and odd people living in the nooks and crannies of the rabbit warren of rooms that had been carved out over time, voila, you would have the Sugar Shack.

(Yep, you read that list correctly.)

On the day I took a tour of these fine facilities, we thankfully set out to look at the building prior to the adult entertainment business actually opening to the public. It began in the seafood restaurant. We filed into its darkened recesses, one after another. As my eyes adjusted, I gasped when images came into focus and I could make sense of them.

“Is that a beluga whale over there?”

StripClubInteriorSmaller

The room was filled with all manner of creatures from the deep blue sea — on tables, on the floor, and still hanging from the ceiling. It was eerie in the gloom, and we had to be careful not to trip over said sea life as we traipsed around the room.

We then stepped through to the strip club, poised to begin operation for the day, replete with disco ball, low lighting, and tired interior.

The walkthrough also included areas that showed how the internet killed brick & mortar pornography, including an abandoned adult video store and little used lap dance studios.

By far the strangest, and most surprising part of the tour was the retail space devoted entirely to a very complete collection of taxidermy. I kid you not.

Taxidermy1Smaller

Once again, we found ourselves in the dark, no natural light intruded upon this area of the building. It had a musty aroma — a combination of the dead animals and wood chips that were strewn about the floor. The impressive collection of animals was intermittently illuminated by the swinging flashlights and cell phone beams of us tour goers, creating a surreal atmosphere.

This structure has certainly seen some hard days, it has housed some highly illegal activities, and the operators have been investigated by what seemed like every law enforcement agency in existence. But that’s not its entire story. That’s not what this building is, nor is it what this building has to be.

You see, the community took this building back when it was purchased recently by a group of area non-profits, and they are working now to consider what it can be, and determining how it can tell new stories — stories of hope, stories of jobs, stories of activity — stories that are good for the neighborhood.

I, for one, am very excited about the next chapter of the building formerly known as the Sugar Shack.

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