COVID-19 Economic Response and Recovery
Use city land-use powers to support more equitable growth
Problem:
Municipal governments have a valuable tool in land-use regulations to support economic development and investment. In the post-COVID landscape, cities can both accelerate development already in the pipeline and ease the project review process to enable development to happen faster. Despite significant debate around the impact of zoning — and whether it is applied fairly — many agree that land-use powers could be better aligned with overarching economic development goals. Cities are currently witnessing a need for more flexibility in their regulatory structures to enable economic recovery.
Action:
Use land-use powers to further economic development by offering fee reductions, fast-tracked permitting/inspections, and amended zoning laws. Redeploy staff towards long term planning so that the city is well-positioned to capture new development when the economy starts to grow again.
There are a few types of land-use powers that cities can leverage:
- Land banks: Land banks provide a mechanism by which cities with high numbers of delinquent or underused properties might be put back into productive use. Land banks require consistent funding streams, solid database management, and mechanisms usually enabled by the state governments to support the clearance of title or other obstructions. States and counties generally need to get involved in establishing the laws that will allow for the collection of delinquent taxes.
- Zoning and Land-Use/Entitlements: Changing zoning laws will enable land-uses to be repurposed more easily in response to sectoral impacts caused by the pandemic (e.g., changing depreciated retail centers to new residential uses). This could include encouraging the development of multi-use buildings and areas in order to reduce the need to travel between traditional single-use districts (e.g., introducing more residential and leisure uses into central business districts). Building flexibility into permitted uses in certain areas would allow for more small business activity to take place.
- Fee Reductions and Permitting/Inspections: As cities are recovering from the economic shutdown due to COVID, municipalities are searching for ways to spur more rapid housing and development as a means of stimulating economic activity. There are numerous trade-offs to reducing fees and accelerating permits for different kinds of development and housing. One of the challenges is the loss of revenue from the reduction in fees levied by a municipality to enable more rapid investment in housing. While fee reductions, in particular, may enable a degree of savings and encourage development, it is not uncommon for the city to levy fees and taxes elsewhere as a means of filling a budget gap left by fee reductions.
Case Study
Houston, TX Land Bank
In 2018 the Houston Land Bank evolved out of the pre-existing Land Assemblage Redevelopment Authority originally established in 1999 with a singular purpose to convey vacant tax-foreclosed land into new affordable housing. The need for a more effective land bank became clear after the city lost 300,000 units of housing as a result of the hurricane, making the lack of affordable housing even more acute. The HLB was strengthened to provide more efficiency in the return of properties to productive use and protect neighborhoods from future disinvestment – and support the creation of affordable housing in underserved neighborhoods in which land values were accelerating.
In 2019, the HLB worked with the Center for Community Progress to revamp its legislative tools to update its legislative framework to increase its reach as well as worked to develop the organization’s human and administrative capacity. The strengthening of the land bank was possible due to the availability of local housing-specific funds (TIRZ) as recovery dollars that came into the city as a result of Harvey.
In order to facilitate the development of affordable housing, the HLB works closely with the City of Houston Housing and Community Development Department (HCDD), Houston Community Land Trust to connect potential homebuyers to the affordable homes being developed since it was established in 2018, also with Hurricane Harvey recovery dollars. The HLB is also investing in the local workforce, developing programs for new start-up builders to become HLB Approved Builders.
The HLB has sold over 712 properties with over $76M property value put back into the market. The team has over 75 properties in development and is working to purchase additional land to support its two programs. HLB is also reimagining how the land bank can best serve the community; for future developments, it is working on an “affordable housing+” strategy that would facilitate investments in neighborhoods where affordable housing is built. This includes building support elements to enhance communities (e.g., attracting grocery stores, innovation labs, etc.).
Since the 2008 foreclosure crisis, the number of land banks in the US more than doubled as a means for local governments to return tax delinquent and abandoned properties to market, as well as secure public policy goals of increased housing and amenities in core neighborhoods. The impacts on homeownership and the COVID shutdown have yet to be seen, but cities are already bracing for a potential wave of foreclosures.
Other examples:
- Zoning and Land-Use/Entitlements:
- Santa Monica recently passed several zoning changes to support business activity such as the elimination of the 1-year Rule for the abandonment of legal non-conforming use for retail and restaurant uses, and reduced restrictions on restaurant size and parking.
- Nashville recently eased its regulations on home occupations to make it easier for people (particularly musicians) to run small businesses out of their existing dwellings.
- Fee Reductions and Permitting/Inspections:
- The SMART housing program in Austin, TX provides a variety of incentives for private developers who create and preserve housing for low- and moderate households and for persons with disabilities. Projects that set aside units as affordable to homeowners and renters earning no more than 80 percent of the median family income (120 percent for owner-occupied units located in certain areas) are eligible for full or partial waivers of 29 separate fees. Fee reductions range from 25 percent for developments where 10 percent of units meet affordability requirements to 100 percent for developments where 40 percent of units meet affordability requirements.
How To Adapt this Approach:
- Rapidly examine slow-downs in permitting and approvals processes in city agencies and remove barriers and fees to project approvals, particularly for affordable housing.
- If digitization and online review meetings have already started, scale and further institutionalize changes to relieve staff burden
- May require staff training and permissions from the state
- If digitization and online review meetings have already started, scale and further institutionalize changes to relieve staff burden
- Leverage existing planning initiatives (comprehensive plans, neighborhood plans or zoning updates) and expedite those proposals for implementation
- Updates to comprehensive plans may already have proposed changes to the zoning code for future development
- Examine where variance applications are taking place and for what purpose
- Align city planning and the city’s economic recovery strategy
- Ensure that land is designated for the right purposes (e.g., industrial zoning when necessary, changing zoning to encourage development, etc.)
- Collaborate more robustly with land banks (if already established) and streamline processes to develop or convey land to prevent speculation in underserved areas
- Evaluate options given local circumstances
- If a land bank is not yet established, work with the state or county to understand which regulations would need to be put in place for tax collection
- Create or update the database of city-owned land
- Understand losses from unpaid taxes on vacant or abandoned properties
- Determine the best place to house a land bank
- If a land bank is not yet established, work with the state or county to understand which regulations would need to be put in place for tax collection
- Depends on the capacity of your city (e.g., could you do this within the city, does your mayor want to be directly engaged and oversee, etc.)
- Some cities may prefer to set it up as a standalone agency with more autonomy
Benefits:
- Uses one of the strongest municipal powers to draw investments in a way that is aligned with economic development goals
- Relatively low cost for a city (e.g., fee reductions may have some costs)
- Leverages existing planning, or current planning processes that can be implemented quickly
- Accelerates digitization of review processes and permitting already underway due to COVID
- Recoups taxes or puts properties back on tax rolls for revenue creation
Risks:
- May require disruption of existing planning processes
- Can perpetuate economic disinvestment in low-income areas, if not thoughtfully considered
- Can be time-consuming and require considerable buy-in from stakeholders and community
- May require supporting legislation from the state or county
Impact: Medium
Implementation time: Slow (if no city council approval required), M (if required)
Cost: Low. Some FTE are required to administer the program, but the actions are centered around powers and property the government already owns.
Learn more about the Toolkit
Action:
Target support to small businesses in commercial corridors in disinvested neighborhoods. Provide grants to address building needs, connect businesses to technical assistance and workforce development programs, and help businesses leverage other supports to help them grow.
Why:
In this way, you will make neighborhoods more livable, help retain essential services, and support household wealth building.
Case Study
Inclusive Economic Opportunity Districts – Indianapolis, IN
In collaboration with the City of Indianapolis and the Indy Chamber, LISC created “Inclusive Economic Opportunity Districts” in the City’s North Mass and East Washington Street corridors in late 2014. This is a local example of LISC’s national economic inclusion framework, which facilitates data gathering, mapping of existing ecosystems and the creation and implementation of a shared, community-led agenda for inclusive economic growth.
North Mass and East Washington St. are legacy commercial and industrial corridors, surrounded by LMI neighborhoods. The industrial corridors consist of small manufacturers, landscaping companies, building materials suppliers, and other business-to-business service firms.
A primary goal of the program is to revitalize these corridors, support their businesses, create good and accessible jobs, and build identities which will attract new businesses.
The program’s partners work with local community development corporations (CDCs) which help small business owners take advantage of resources, such as Office of Community Services Community Economic Development grants, and connect with local residents looking for work. The CDCs also help businesses looking to move or expand into these corridors to access capital, apply for façade improvement grants, and connect to workforce development services. LISC also works with the CDCs to identify opportunities to deploy its lending capital.
The City has prioritized the corridors for its Community Development Block Grant (CDBG) program. This enabled the CDCs to attract City grants to convert industrial buildings into hubs for arts, artisan manufacturing and small businesses. The City has also prioritized the corridors for Environmental Protection Agency Brownfield Assessment grants, which has enabled the CDCs and businesses to reduce the cost of environmental due diligence.
Based on the success of the North Mass and East Washington Street work, in 2018 the Far Eastside was added as an Inclusive Economic Opportunity District.
In 2019:
- 232 jobs were created from businesses starting, expanding or moving to
- Inclusive Economic Opportunity Districts
- 162 businesses assisted
- 38 businesses moved to Inclusive Economic Opportunity Districts
- 5 brownfields were readied for development
- 21 businesses received façade improvement funding
- 581,302 sq. ft. of commercial space was improved
How to Adapt This Approach:
- Identify priority commercial corridors in LMI neighborhoods
- Identify local CDCs and nonprofits that have connections to the local communities
- Facilitate data gathering, ecosystem mapping, cross-collaboration, and agenda-setting among these groups
- Develop a shared action plan with clear roles and responsibilities for community collaborators
- Work with them to engage local residents, business owners, and community leaders to understand their specific needs and aspirations for the neighborhood
- Help partners implement district marketing campaigns highlighting the district’s unique attributes to attract visitors and shoppers to retail businesses
- Support and invest in partner efforts and provide access to City resources and programs such as CDBG funds, façade improvement funds, and/or workforce development programs
- Advocate for Federal dollars to advance local efforts like Brownfield assessment and remediation
Learn more about the Tactical Guide
COVID-19 Economic Response and Recovery
Retool Incentives to Support Small Businesses
Action:
Retool existing incentive programs to (1) include small businesses and (2) support the hiring of local residents, particularly those with barriers to employment.
Why:
Small businesses are being disproportionately impacted by this crisis and often do not qualify for incentive programs, due to minimum requirements on investment and jobs created. By opening incentive programs to smaller firms, cities can support local businesses through the recession and advance other policy goals (e.g. workforce, equity, living wage, etc.).
Case Study
Business Expansion Incentive Program – Austin, TX
The City of Austin has experienced two decades of rapid growth and expansion, which has led to challenges around equity and inclusion. In 2018, the City adopted new guiding principles, which put “equitable prosperity, opportunity, and affordability” at the center of the City’s economic development policy. The City retooled its incentive programs to align with this policy, prioritizing small and local businesses, hiring residents with barriers to employment, and paying a living wage.
Austin’s Business Expansion Incentive Program offers three types of assistance:
- Local Austin Business: Offers up to 3% wage reimbursement per job/per year maxing out at $1,800, and up to 50% property tax reimbursement. The incentive is available to all registered Austin businesses, which pay Austin’s living wage.
- Targeted Hiring: Provides $3,000 per target job/per year and up to 50% property tax reimbursement for the creation of 1 job in targeted populations or for residents who have barriers to employment, and pay Austin’s living wage.
- Relocating: Offers a 3% wage reimbursement per job/per year maxing out at $1,800, and up to 50% property tax reimbursement for businesses new to the city and creating 75+ jobs over 10 year paying Austin’s living wage.
While still open to larger and relocating employers, typical of most incentive programs, the City’s Local Austin Business and Targeted Hiring programs have eligibility criteria designed to allow smaller, local businesses to qualify for these incentives. Program elements include:
- All incentive projects are evaluated by staff using a cost benefit analysis to determine fiscal impact. Importantly, to ensure smaller local firms can qualify, the City does not require the project to have a net revenue positive impact for the City, but it must be revenue neutral.
- Austin uses a return on investment calculus, which includes a broad definition of community benefits such as development and hiring underrepresented groups; demonstrating diversity, inclusion, and equity practices and policies; neighborhood connection; local partnerships; sustainable business practices; and civic engagement.
- The City provides bonus qualifiers for small businesses, cooperatively owned businesses, businesses, which engage local music and arts community, and businesses that provide on-site day care.
- All three incentives require that qualifying jobs must pay the Austin living wage of $15 per hour.
- All grants are performance based and quality controls include a third-party audit system.
- While most incentive projects must be approved by the City Council, the Economic Development Department is able to negotiate and award incentive deals up to $61,000 per project for a total up to $5 million per year.
Small businesses and MWBEs have benefited from the City’s new individualized focus on smaller incentive deals.
For example, a local minority-owned restaurant, L’Oca d’Oro, agreed to retain 20 individuals over 5 years from the program’s targeted population, and make 10 new hires. In return, the restaurant receives $2,000 annually on a declining basis for each retained employee and $220 per year for each new hire.
Another minority-owned firm, AllPro Hospitality Staffing, committed to creating 10 new jobs under the targeted hiring incentive.
How to Adapt This Approach:
- Review past outcome data to assess the effectiveness of current incentives in advancing inclusive goals
- Engage a diverse set of local business groups, merchant associations, chambers of commerce, and other community stakeholders to determine potential changes to current incentive offerings or identify the need for a new incentive program
- Develop proposed modifications to existing incentive programs, which align with the City’s broader equitable economic development strategy/recovery plan. These modifications could include:
– Opening existing programs to local small businesses
– Targeting incentives to businesses located in LMI neighborhoods
– Incentivizing the hiring of residents with barriers to employment
– Supporting businesses investing in upskilling of existing employees - Revise eligibility requirements to align with these modifications (e.g., reducing new job creation/ retention minimums, reducing investment requirements, reducing the complexity/legislative requirements for incentive approval, setting a neutral fiscal impact standard, including a broader set of community benefits in return on investment analysis, etc.)
- Conduct analysis to model the potential uptake of the modified incentives and assess potential fiscal impact
- Share proposal with stakeholders and incorporate feedback
- Articulate policy case for the proposal to policy makers and secure approval
- Partner with merchant associations, local/ethnic chambers, and other community groups which are trusted partners in the communities, to drive outreach and promote the modified incentives.
- Track and publish KPIs on a regular basis. Include impact, demographic and neighborhood data on each incentive project. (See KPIs section)
Learn more about the Tactical Guide
Action:
Support local incubators or makerspaces, which offer affordable rents, flexible terms, shared equipment and services, room-to-scale operations, networking events, and communities of peer entrepreneurs.
Why:
Such projects can be catalytic, helping entrepreneurs create businesses and existing businesses to grow, thereby building local wealth. By establishing and preserving affordable spaces for light manufacturing, business incubation, maker/artist studios, and cultural activities, cities can foster quality middle-skill job opportunities for LMI residents.
Case Study
East End Maker Hub – Houston, TX
Urban Partnerships CDC (UP CDC), a nonprofit real estate development company, partnered with TXRX labs, a nonprofit high tech maker space, to develop the East End Maker Hub in a historically marginalized part of Houston with a majority Latinx population.
It offers 300,000 square feet of multi-tenant, multiuse manufacturing and fabrication space, which supports makers, manufacturers, corporate tenants, and other small businesses. It features multiple spaces of varying sizes to target manufacturers and makers looking for affordable long-term rents, collaborative space, and access to equipment.
The hub was funded by HUD Section 108 and CDBG grants, which the project procured from the City. UP CDC also procured an EDA grant. The project received a New Markets Tax Credit allocation through the People Fund, Urban Research Park and McCormack Baron Salazar and also received support from LISC, a CDFI.
TXRX labs, Houston’s largest manufacturing business incubator and accelerator, is the anchor tenant of the East End Maker Hub. TXRX provides access to over $2 million worth of machinery and equipment, classes, and technical support, job training programs.
It focuses outreach on minority-owned manufacturers, makers, and other small businesses located within a three-mile radius of the building. It also sees its role as supporting wealth building in the local community.
As part of TXRX’s Youth Education program, its staff speak at local community events and give presentations at local churches and schools. They also build relationships with local teachers to help them understand the role of manufacturing as a pathway to middle-income jobs. Further, they encourage the students to visit the hub and participate in afterschool programs. Each year, the hub provides job training for 75 adults and hands-on learning for over 500 teenagers.
The hub is projected to have an annual economic impact of $153 million and create 400+ direct and 200+ indirect jobs.
How to Adapt This Approach:
- Identify and support local CDCs and CDFIs with a mission to support local manufacturing/ makers/entrepreneurship
- Engage local communities, entrepreneurs and neighborhood groups, to involve them in the project
- Help them to secure HUD Section 108 funding, New Markets Tax Credits, and other government funding to purchase/renovate a disused/underutilized building in a disinvested neighborhood
- Support land-use changes to facilitate the project
- In pre-development planning and space considerations, strike the right balance between creating a workplace and community asset that contributes to placemaking
- Plan to open doors to the public and forge ties with the local community, catalyzing public understanding of the importance of industrial spaces
- Support community-based organizations providing programs and services to local businesses
- Connect City/regional workforce training and placement programs and prioritize local hiring
Learn more about the Tactical Guide
COVID-19 Economic Response and Recovery
Support Mainstreet/Downtown Businesses by Increasing Local Tourism
Problem:
The COVID-19 pandemic has dramatically altered tourism and travel across the world. Because of these new circumstances, cities can now capture some of that spend locally.
Action:
Cities/ tourism bureaus should launch a PR and targeted advertising campaign to encourage patronage of local businesses. Disinvested neighborhoods and hard-hit industries should be prioritized.
Case Study
New York, NY: NYC & Company Local Tourism Campaign
After the 2008 financial crisis, New York City’s hospitality industry was facing a crisis. Tourism had declined to record low levels and models accurately predicted that business travel and international visitors would be slow to return. This presented a unique challenge for a city that serves as an international tourist and business hub.
To address this, NYC & Company – the City’s destination marketing organization (DMO) – launched a campaign to encourage local tourism. One element was a media campaign to encourage local tourism. The DMO targeted people living in the five boroughs and surrounding neighborhoods to encourage them to visit local attractions and do “staycations” in local hotels. Their communications team also launched promotions of local restaurants and attractions, and showcased examples of New Yorkers enjoying their staycations. Because of a limited budget, the team focused on earned media. It developed contacts at local TV stations and established recurring Friday programming highlighting new places to explore. The marketing team also enlisted prominent residents to promote local establishments and developed content that it could provide to media organizations and through social media channels. The program was successful; there was an increase in room demand and occupancy rate in spring 2009, which was driven by local residents. The business travel market stayed depressed for at least 12-16 months and it took even longer for international travel to return.
Hotel stays were just one element of the organization’s strategy. It also encouraged residents to try local neighborhood restaurants and to explore the many attractions that NYC has to offer.
NYC & Company is currently applying its learnings from the 2008 crisis to develop a roadmap for reopening the city, called All In NYC. The initiative builds on the exploration and staycations promoted in 2008 and prioritizes “Hyperlocal Exploration”, including a Five-Borough Public Art Program. It is also creating “Welcome Back” content which shows how businesses are reopening safely, in an effort to restore consumer confidence.
How To Adapt this Approach:
- Identify local communities that have disposable income (e.g., suburbs, surrounding regions, and states)
- Try to bring on board a local digital marketing agency, which might be willing to work for free/at a discounted rate in exchange for local brand recognition
- Brainstorm marketing campaigns to encourage local “stay-cations” and short getaways. Focus on your audience’s needs and wants and structure the campaign around 5 questions: “what, who, why, where, and when”
- Develop a content plan, which will appeal to your target audience’s needs and wants
- Include a focus on less obvious attractions and neighborhoods. These can include walking tours of famous places (e.g., history, civil rights), visits to ethnic restaurants, and shops that offer local artisan goods
- Develop creative ways to tell local stories
- Launch the campaign with dedicated funding
- Focus all marketing spend on mobile, social media
- “Earn” (do not buy) time on regional publications and media. Try to bring on board a local PR agency, or former journalist with experience pitching stories to the media (and not just writing press releases). Again, negotiate a discount in exchange for local brand recognition and/or access to local business development opportunities
- Attend virtual (or in-person) community gatherings to offer suggestions for safe ways to “explore your city”
- Include a “featured neighborhood” of the week/month, with suggested restaurants, attractions, etc.
- Create a list of top restaurants by cuisine for each neighborhood in the city
- Work with local business leaders to offer incentives to residents who live within a certain distance
- Track reach, engagement and influence, and revise tactics as necessary.
Benefits:
- Facilitates additional spending at local businesses during a time when people are not traveling as much
Risks:
- Spending will just be redistributed within the city, rather than be additional
- Many city-backed marketing campaigns are poorly targeted, executed or measured
Impact: Medium
Implementation time: Slow
Cost: Low. This primarily is leveraging existing media and advertising resources to promote local neighborhoods.
Learn more about the Tactical Guide
COVID-19 Economic Response and Recovery
Provide Technical Assistance to Small Businesses
Action:
Create strategies and partnerships that will make your destination more sustainable and inclusive. And tell that story to visitors
Why:
Since COVID-19, travelers, particularly younger travelers, have a heightened awareness of environmental sustainability and social and racial equity. As a result, they are more likely to look for evidence that destinations are taking steps to address these issues.
Background:
Numerous reports and studies have found that the pandemic has reinforced, even accelerated, people’s views on sustainability, with more consumers focused on helping to create a better, healthier world.
For example, 60% of travelers say that their future booking decisions would be influenced by sustainable initiatives at the property, even if it meant spending a modest premium.
Travelers’ behavior, loyalty, and values are also being redefined by the economic downturn, restrictions in day-to-day living caused by COVID-19, and flashpoint events highlighting systemic racism within our communities.
It is widely expected that the pandemic will accelerate the trend of travelers seeking “travel with a purpose,” with 67% of recently polled travelers saying they want their bookings to make a positive difference for communities affected by the pandemic.
Travelers are also now placing greater importance on pre-trip planning.
Destinations can respond to these trends by developing a shared understanding of what it means to be a sustainable destination.
For example, Sedona, AZ engaged the Global Sustainable Tourism Council to conduct a sustainability assessment of its tourism economy.
The goal was to enable the destination to design and target policies, programs, and campaigns which demonstrate sustainable destination management, maximize economic benefits to the host community, and minimize negative impacts on the environment.
Programs could include:
- Sector-wide sustainable guidelines.
- Technical assistance to small businesses to help them adopt more sustainable practices (e.g., relating to energy and water use, single use plastics and recycling, food procurement, laundry operations, and reporting).
- Destination management tools to “nudge” visitors around the city, to manage crowds, and/or to help tourists engage local communities.
- Investments in green infrastructure.
- Communicating the destination’s commitments to travelers.
Case Study
City of Boston
In 2020, the City of Boston drew down $2.5M of CARES Act Federal relief funding to launch a marketing campaign to market the city to Black and Brown residents and visitors.
The campaign’s goals were to “build Boston’s brand as a travel destination, increase awareness and active promotion, and drive visits to Boston from diverse local and regional visitors.“ It was part of the city’s strategy to build back a stronger and more equitable economy.
In particular, the campaign sought to “examine the ways in which Boston communicates about the offerings of the city, and highlight attractions and events that speak to the experiences of people of color.”
The Greater Boston Convention & Visitors Bureau selected two award-winning agencies with deep roots in the city. One was Boston’s oldest, minorityowned and operated marketing communications agency. The other was a Boston-based, minority owned, award-winning creative branding, design,
and advertising agency.
They soon discovered that the city had allowed others to create a narrative of Boston as an all white, masculine, sports- and alcohol- dominated city. Visitors and some residents had low awareness of the city’s vibrant Black neighborhoods, and the contributions of Black and Brown residents to the city.
The campaign featured different Boston neighborhoods with neighborhood maps and guides and short-form videos, as well as social media influencers from some of the city’s oldest Black neighborhoods. It also celebrated Black and Brownowned businesses in local and national media, in order to drive local spend.
Like many campaigns during the pandemic, its primary audience was local residents. However, as travel becomes safer, the city plans to continue its efforts to encourage a wider audience to change their perceptions and, ultimately, actions.
Learn more about the Toolkit
COVID-19 Economic Response and Recovery
Provide Access to Funds and Resources for Tourism Businesses to Adapt
Action:
Provide access to finance and technical assistance to help small, tourism and hospitality businesses pivot, adapt, and capitalize on new demands and opportunities in a postpandemic world.
Why:
Keeping local, small businesses is critical for the recovery of your tourism economy. By helping them develop new online communications and sales channels, create new lines of business, or repurpose and adapt their space, you are helping to create longterm revenue solutions.
Background:
In 2020, U.S. travel spend declined by nearly $500 million and, while the industry improved between April and September, progress stalled in the final quarter of the year due to the continued absence of business travel and another surge in COVID-19 cases.
The travel economies of every city and state were affected. Seventy percent of U.S. metropolitan regions have at least 10% of their workforce in leisure and hospitality, and during 2020, cities in more than 18 states experienced 40+% downturn in travel spending. The impact was felt most by small businesses (with fewer than 500 employees), which make up 99.5% of the tourism sector and 60.6% of employment within the sector. Many of them face a time of extreme liquidity strain and most of them entered the pandemic with very limited cash flow.
Women and minorities have also been hard hit, with women- and minority-owned businesses comprising 63.5% of U.S. accommodation and food services businesses and 46.5% of arts and entertainment businesses.
Given that COVID-19 will probably be around for a long time, many tourism businesses will need to adapt and/or reinvent themselves for “the new normal.”
Case Study
Bellville Downtown District Marketplace
Belleville is a town located between Toronto and Ottawa in Canada. During Canada’s strict lockdown in 2020, the Downtown Belleville Improvement Area (a business improvement district) decided to embark on a project to create an online marketplace called the Downtown District Marketplace.
In just four weeks, the BID launched a website which allowed nearly two-dozen businesses to receive orders for curbside pickup. Today, the website hosts over a thousand products from local businesses, including restaurants, artisan markets, art associations, and galleries. It has attracted more than 50,000 visitors and over 1,000 orders. In fact, the marketplace has been such a success that the BID is no longer supporting it with grant funding.
The BID is currently developing the site to add shipping. Currently, customers can pick up curbside, or merchants manage deliveries themselves.
How the marketplace works
The BID created the marketplace on the Shopify platform. The platform charges the BID $299/month, plus $10/month for a multi vendor marketplace app, which means the BID does not become the merchant.
The BID was fortunate to have two young staff members with the technical skills needed to design a website. They created pages for each local business, which only they could access and edit.
Shopify collects the money from the sales, and the BID pays its merchants every 2 weeks. Each local business is responsible for paying credit card and transaction fees. The BID doesn’t take any commission. The local businesses greatest concern about the marketplace was payment terms. Early on in the project, the BID spent many hours sorting out payments to the local businesses, but it has since managed to automate this process.
Launching the marketplace
The BID launched the marketplace with a teaser campaign, which included VIP access to the first 250 people that signed up for its newsletter. In this way, it was able to gather feedback on issues that early users faced and make adjustments before opening to the general public.
Its subsequent marketing tactics have included social media (paid and organic), digital advertisements, local radio, and press releases sent to local and national media outlets. Local partners have also provided content and written features for the Marketplace.
The BID did not receive support from the city to launch the Marketplace. It did, however, receive funding from a regional marketing board to run a contest on the website — users who spent $50 could win Marketplace gift cards to use on their
next purchase.
How To Adopt This Approach:
The project’s success was based on strong relationships with local businesses
1. Assemble and train a group of 5–10 local business owners, who will become
your ambassadors to get other merchants on board
2. Regularly engage business owners and provide sufficient training about the sales platform, recognizing that different business owners have different levels of digital literacy. This will mean creating step-by-step guides, complete with screenshots on how to add products and make payments
3. Help merchants to become confident selling online. Just as a shop needs an attractive window display, a website needs beautiful photos. Merchants will also have to do their own marketing to drive traffic from their website to the Marketplace, for example, by posting and buying advertisements on social media.
Do:
- Do spend time building the trust and confidence of your member businesses.
- Do regularly engage with your business owners and provide support based on their differing levels of digital literacy.
- Do set aside considerable time at the beginning to sort out payments from Shopify to vendors.
Don’t:
- Don’t assume any knowledge. Create stepby- step guides, and share information on how businesses can take good photographs, buy ads, and market their businesses on social media.
Learn more about the Tactical Guide
COVID-19 Economic Response and Recovery
Reallocate municipal tax revenues to replace general fund cuts, such as tax increment financing, property tax, sales tax, and real estate transfer tax
A. Tax increment financing (TIF) revenues
Action:
Cities should review and develop plans to utilize TIF district revenues within their city. TIF revenues that have not yet been spent or accounted for should be used to augment, or even replace, general fund revenues for economic development programming.
Why:
Cities in every US state use TIF revenue. Cities allocate funds generated from TIF districts into specific budgets, which are not co-mingled with general fund revenue. This lack of co-mingling is usually a legislative requirement.
However, this should not stop cities from creatively analyzing the activities which are able to be funded under TIF to see if there are opportunities to substitute general fund programs with complimentary TIF-funded programming
Background:
TIF revenues are often used to finance infrastructure, as well as development/ redevelopment projects, that would not be feasible “but for” the TIF financing.
The program works as follows:
- The city borrows money through a bond issuance, or another debt instrument, to improve a distressed property.
- As the property improvements are completed and the property’s assessed value increases, incremental tax revenue is generated.
- The city repays the bonds from the incremental revenue.
TIF legislation is constantly changing and can sometimes be politically charged. Understanding your local rules and “philosophies” regarding TIF is a critically important first step
At the same time, cities should think about ways to broaden the use of TIF. For example:
- Marketing efforts, which are specific to a TIF district, can be leveraged to promote the wider community. At the very least, continued marketing efforts of TIF districts may provide some relief to general fund marketing allocations.
- Community improvement projects (CIPs) and district maintenance.
- Cities typically “charge” these expenditures to the general fund or other funding streams, but reallocating TIF revenues to these purposes may help offset other departmental expenditures. This, in turn, could free up general fund revenues for economic development programming.
- Paying for staff/personnel costs.
- Fund property acquisitions.
- Creating immediate economic development opportunities (such as ad hoc events).
- Enhancing security/district services.
The Council of Community Development Finance Authorities (CDFA) has produced a comprehensive Tax Increment Finance Center. For more information on the CDFA Tax Increment Finance Center, click here.
Case Study #1
Chicago, IL – The Hatchery
The city of Chicago built a 67,000 ft2 food and beverage business incubator in an economically depressed west side neighborhood with very high unemployment. The incubator includes 56 commercial-grade kitchens, co-working and shared space, meeting space, and a community center.
Neighborhood residents are offered priority access to all of the spaces, discounted and hourly rates (which do not require a lease agreement), and free classes for both job seekers and entrepreneurs.
The project cost $32.4m and the city contributed a 2.6 acre parcel of land (which it sold for $1) and $7m of TIF funds. It was a creative approach to allocating TIF funds and not the “typical” deal which focuses on “gap and but for” financing for a predominantly private project.
The facility is co-owned by two long-standing Chicago nonprofits – microlender Accion Chicago and business incubator Industrial Council of Northwest Chicago.
IFF, a CDFI, served as the lead developer and was charged with pulling together financing and land parcels.
The financing breakdown was as follows:
- Debt financing from Chicago Community Loan Fund, IFF, MB Financial, and PNC Bank;
- $10.25 million of NMTCs from PNC Bank, Community Reinvestment Fund, and the City of Chicago;
- Grants from Kellogg Co., ConAgra Foods, Walton Family Foundation, and others;
- $7 million in TIF from the city of Chicago; and
- The $1 sale of 12 vacant city-owned lots (which were combined with 9 other parcels of developer-owned land).
Impact:
The Hatchery is projected to create 900 jobs and $25 million in pre-tax wages in five years.
B. Real estate property taxes
Action:
Cities should explore allocating a specific percentage (or millage) of real estate property taxes for economic development programming. Any allocations should be targeted for specific, quantifiable, and impactful projects and programs.
Why:
Real estate property taxes are one of the most stable and significant sources of revenue for many cities, and so can support expanded economic development programming.
Background:
Many city and state governments are heavily reliant on property taxes. While many cities offer property tax abatements and rebates for specific projects, few allocate or reallocate a percentage of the tax revenue for economic development projects and operations.
Such allocations can be used to:
- Acquire property, including raw land and rights-of-way, for high-priority economic development projects. These could be industrial parks and mixed-use developments that will generate a return on investment.
- Fund commercial rehabilitation, expropriation of private property (eminent domain), redevelopment, or storefront improvement programs. Such investments, which physically improve underperforming real estate, will typically help seed additional capital investment.
- Fund local incentives, contributions to economic or workforce development partners, or outsourced programming.
Case Study #2
Gwinnett County, GA
In 2020, the Gwinnett County Board of County Commissioners led a campaign to increase property taxes by 30 cents per $1,000 of assessed property value.
The new tax will “provide funds for financial assistance to the Development Authority of Gwinnett County for economic development purposes.”
It is expected to generate $1m funding for additional programming, which will increase the economic development department’s budget from $5.2m to $6.2m.
Specifically, the revenue will fund the creation of the Gwinnett Entrepreneur Center which provides physical space, education, and networking connections for startups, the expansion of the Infinite Energy Center, and the development of the Water Tower @Gwinnett for water-related research and training.
C. Sales tax
Action:
Cities should consider whether to introduce a local sales tax or to allocate existing sales tax revenue for economic development. If sales tax is prohibited by state law, cities should identify like-minded communities to lobby for change
Why:
Although sales taxes may not be stable during challenging economic times, they can still relieve some of the pressure on the general fund to pay for economic development programming.
Moreover, many sales taxes are paid in part by people residing outside the city.
States such as Wyoming, Nebraska, Oklahoma, Texas, and Missouri allow cities to levy local sales taxes for economic development purposes. Go here to learn more about Texas’ experience.
Background:
While it may be challenging to introduce a new tax at this time, many cities and states allocate a proportion of local sales tax revenue for community economic development efforts. The funds are used to fund:
- Specific economic development programs
- Local buy campaigns
- Incentives for reinvestment,
- Enhanced services and staffing,
- Capital investments Sales tax may also be rebated to support new or expanded entertainment, hospitality, recreation, retail, etc. offerings.
Case Study #3
MAPS – Oklahoma City
The residents of Oklahoma City approved a new, time-limited tax to fund capital investment programs, which were known as Metropolitan Area Programs (MAPS).
The first MAPs was an additional one-cent sales tax, which raised $350 million, and was used to revitalize downtown, improve Oklahoma City’s image, and create new and upgraded cultural, sports, recreation, entertainment, and convention facilities.
The city subsequently proposed a second MAPS program, MAPS for Kids, which was again funded by an additional penny of sales tax. The new tax raised $514m which was combined with a $180m Oklahoma City Public Schools’ bond issue to renovate 70 school buildings and fund classroom technology and transportation projects. 70% of the funds were disbursed to the Oklahoma City Public School District, and 30% to the surrounding suburban school districts.
In 2008, the city’s residents approved a third MAPS program to fund improvements in the downtown arena and build a practice facility for a new NBA franchise.
They approved another MAPS programs to fund a Better Streets, Safer City program, and, in December 2019, a new “MAPS4” program. Since its creation, MAPS have provided $1.81b of funding, and the current programs are expected to provide $978m between 2020 and 2028.
D. Real estate transfer taxes
Action:
Cities that levy real estate transfer taxes should consider allocating a portion to specific economic development programming.
Why:
While real estate transfer taxes can be somewhat volatile, they also offer a sustainable source of funding. They are also specific in nature, so the impact on the general public is limited. As such, they tend to be expended for very specific purposes for the communities which paid them. To reduce volatility, cities can transfer some of the revenue from these taxes to a revolving economic development fund which continues beyond a single fiscal year.
Background:
Real estate transfer taxes are imposed on the transfer of title of real property. In most cases, they are based on the value of the property transferred.
Legislation in 37 US states permits such taxes and cities often have the ability to levy the tax and use it for purposes, such as:
- Allocate money to an economic development incentive fund for targeted businesses and industries.
- Provide funding for neighborhood commercial enhancement programs which help stem blight, and leverage private sector investments through a match program, or tax credits.
- Fund travel, contracts for services, continuing education and training, trade show promotion and events, marketing, special events, and opportunistic one-time activities.
Learn more about the Toolkit
COVID-19 Economic Response and Recovery
Place-Based Strategies: Promote Neighborhoods and Increasing Access to Commercial Space
Background
Immigrants and refugees start an outsize share of “Main Street” businesses — grocery stores, restaurants, and other establishments that help drive neighborhood-level economic development. Cities can play a role in supporting immigrant commercial corridors — and immigrant-owned food businesses in particular — through the implementation of place-based strategies, including providing access to commercial kitchen space for early-stage food entrepreneurs.
Strategies:
A. Promote commercial corridors where immigrant businesses are located. Immigrant- and refugee-owned businesses are often concentrated in specific commercial corridors and neighborhoods (e.g., Koreatown, Mexicantown, Little Italy, etc.). Cities can encourage residents to frequent these areas through creative marketing and promotion efforts. For example, each summer, the City of Philadelphia issues “passports” to Philly residents through a program called Passport PHL that encourages people to explore the city’s minority- and immigrant-owned businesses.
B. Support neighborhood-based community development organizations that serve immigrant small business owners. Community Development Corporations (CDCs) and other community development organizations provide business development services and opportunities for businesses to come together to improve and co-market their business districts. Cities can partner with these organizations to help develop commercial corridors and business districts where immigrant and refugee-owned businesses are concentrated. For example, Philadelphia’s HACE, a community development organization that primarily serves Philadelphia’s Latino community, runs a Main Street Program that provides technical support to business owners and encourages collaboration and networking among business owners in the community.
C. Launch a business incubator with commercial kitchen space. Access to commercial kitchen space is often a hurdle for aspiring food entrepreneurs and can be a barrier to growth. Food business incubators that provide access to affordable commercial kitchen space, as well as business training, technical assistance, and other resources can help immigrants, refugees and other underserved entrepreneurs grow their businesses. See case study: SPICE Kitchen Incubator.
Case Study
S.P.I.C.E. (Supporting the Pursuit of Innovative Culinary Entrepreneurs) Kitchen Incubator, Salt Lake City, UT
Highlights:
- SPICE Kitchen Incubator is a project of the International Rescue Committee (IRC), a refugee resettlement organization, in partnership with Salt Lake County. IRC has offices around the U.S.
- Salt Lake County promotes SPICE Kitchen as an economic development priority for the region, helping to attract private and public funding to start and grow the effort.
- The program, which has served more than 130 low- to moderate-income entrepreneurs since its founding and is currently serving 50 enrollees during COVID-19 (10 of which are new since April), as individuals seek to adapt to changing economic conditions through self-employment.
Overview:
Launched in 2013 — and modeled on the work of La Cocina in San Francisco, CA — SPICE Kitchen Incubator provides training, technical assistance, and affordable commercial kitchen space to refugees and other underserved residents who are interested in starting food businesses in Salt Lake County. SPICE Kitchen’s partnership with Salt Lake County dates back to its inception, when county officials helped attract seed funding from American Express to establish the project, and stems from a county-wide focus on integrating and supporting new Americans. Today, the incubator’s annual operating budget is $400,000, 15% of which comes from local public dollars. An additional 20% is funded by income generation, while the majority of funding comes from private foundations, corporations, and Community Reinvestment Act dollars from financial institutions.
Project Components:
SPICE Kitchen Incubator provides access to affordable commercial kitchen space; industry-specific technical assistance in areas like marketing, operations and access to capital; workshops from staff and partner organizations on key food business topics; and support with market access and positioning. The SPICE incubation model includes these four phases:
- Application and enrollment (<1 month): Participants who are recruited from the local community and via local refugee resettlement networks attend an orientation session and go through an intake assessment to determine product viability, entrepreneurial drive and other necessary characteristics.
- Pre-incubation (6-8 months): Participants receive training and technical assistance to develop their business plans, including product development, marketing, finances and operations. This can include financial coaching and credit repair, if necessary, in anticipation of the soft launch of the enterprise.
- Incubation (8 months-4 years): Those who succeed during pre-incubation are invited to set up shop in the commercial kitchen, where they continue to receive technical assistance, opportunities to access capital and resources to grow their business, and market access support.
- Graduation (ongoing): After meeting certain incubation benchmarks, participants graduate from the program and most move their business out of the commercial kitchen, though as alumni they can continue to rent space and access technical assistance and support.
During COVID-19, SPICE Kitchen has shifted entirely to digital training, building in remote digital skills training via phone first to ensure access to their training platform. The primary focus has been on guiding entrepreneurs through the types of relief support available, eligibility for different forms of relief, and one-on-one help completing the application process.
Since its founding, SPICE Kitchen has served over 130 low- to moderate-income participants, helped launch eight food trucks and three brick-and-mortar restaurants, and helped entrepreneurs collectively earn over $3,230,000.
Adapt this Approach:
- Partner with an organization that works to empower immigrants and refugees economically, such as through refugee resettlement.
- Fund the effort through a combination of public and private investment, tapping into resources from community foundations, private corporations, and Community Reinvestment Act funds that already prioritize low- and moderate-income residents.
- Position the project as a unique regional asset and identifiable brand, allowing program graduates to benefit from their association with the incubator.
Learn more about the Tactical Guide
COVID-19 Economic Response and Recovery
Navigation: Guide Newcomers through the Start-up Process
Navigating the process of starting a small business can be challenging for anyone, but especially so with added language and cultural barriers. Cities should reexamine licensing and regulatory processes through the lens of immigrant and refugee entrepreneurs, and in so doing simplify the process for all entrepreneurs.
Strategies:
A. Create a one-stop-shop for resources. Bring resources for immigrant and refugee entrepreneurs together in one place — digitally or physically — to help community-based organizations and entrepreneurs easily locate the services they need.
- San Jose, CA: In San Jose, CA, the City’s Office of Economic Development set up a multilingual hotline to provide answers and support to local businesses.
- Philadelphia, PA: The Philadelphia Department of Commerce and the city’s Office of Immigrant Affairs host an annual Immigrant Business Week to highlight and offer a range of multilingual resources, training, workshops, and other events for immigrant small business owners.
B. Develop multilingual business guides for key sectors. Develop multilingual, step-by-step guides to starting small businesses, focusing on businesses and sectors where immigrant and refugee entrepreneurs are most represented. Prior to translating guides, ensure that they are written in plain language and are clear and easy to follow, even in English. For example, the City of Chicago created a multilingual Restaurant Start-Up Guide, and the Tulsa Mayor’s Office of Economic Development created a guide on “How to Do Business in Tulsa” which has been translated into Spanish.
C. Train informal community leaders as navigators to assist small business owners. Beyond individuals in formal or elected leadership, certain community members may naturally take on leadership roles — especially in times of crisis — helping others navigate relief and recovery programs. Identify individuals with deep ties in target communities and partner with them to conduct effective outreach. Consider providing training to help them become stronger bridges to immigrant and refugee entrepreneurs. See case study: Portland Natural Helpers.
D. Incorporate access and navigation into city government through policy change. Dozens of cities have created Offices for New Americans, typically housed within City Hall, to work directly with city agencies like small business services to become more accessible to immigrants and refugees. Many cities also have language access policies for agencies that interact directly with city residents. For example, as required by New York City’s language access policy, the NYC Department of Small Business Services maintains a language access plan to ensure accessibility for all New York City residents, regardless of English proficiency
Case Study
Natural Helpers, Portland, ME
Highlights:
- The program, run by the Portland Office of Economic Opportunity, trains trusted community leaders to help newcomers navigate city services, including small business support. In its first round, Portland received 48 applications and selected and trained 15 Natural Helpers, from 11 different countries.
- During COVID, Natural Helpers pinpointed that navigating small business recovery relief was too convoluted, resulting in the creation of multilingual journey maps for immigrant small business owners
- The Natural Helpers program identifies and trains informal community leaders who are immigrants or refugees themselves — who understand how to navigate the community from personal experience — to serve as a bridge between newcomers and city services and resources.
Program Components:
- Application/selection committee: Natural Helpers should be multilingual and have strong communication skills in English and in target languages, have trust and be aware of needs in their communities, and have experience helping community members access resources. Portland’s Office of Office of Economic Opportunity was intentional about recruiting broad cultural and linguistic representation.
- Training: There are countless resources available to New Portlanders, and this program seeks to educate Natural Helpers about what these specific resources are, where to find them, and how to access them so they can guide their fellow community members in doing the same.
- Stipend: Natural Helpers were compensated for time spent in training and for a selective number of community service hours.
- Goal: To bridge the information divide. Natural Helpers help their community navigate a wide array of city resources and in the process help the city understand where the current gaps are in its service provisions.
- Formal recognition: Natural helpers are giving formal recognition to the type of community service and altruistic work that often goes unnoticed in public life. All participants in the program are formally recognized and certified as Natural Helpers for the City of Portland by the City Manager.
- During COVID-19 Natural Helpers have visited immigrant and refugee small businesses directly, sharing information about the city’s COVID-19 loan program, encouraging businesses to apply, and working with them to complete the application. They have also connected business owners directly with city staff to resolve permitting and inspection issues.
- The total cost of this project in Portland is $8,500.
Adapt this Approach:
- Elevate trusted multilingual local leaders who have strong local ties and an interest in serving their communities.
- Provide training on city policies, services, and programs and stipends to fund community navigation work.
- Work with navigators to strengthen the feedback loop between the city and business owners, making changes to programming where necessary to better serve entrepreneurs.
Learn more about the Tactical Guide