The International Corridor: Portrait of a Threatened Small Business Community

The International Corridor: Portrait of a Threatened

Small Business Community

- How the Purple Line, Can Break or Build a Neighborhood -

A report written by Shola Ajayi, Lindolfo Carballo, and Zorayda Moreira-Smith,

commissioned by the Fair Development Coalition. November 22, 2011.

1 The International Corridor: Portrait of a Threatened Small Business Community

November 22, 2011

Acknowledgements: The Fair Development Coalition would like to recognize the following individuals who assisted with drafting the report or conducting the research: Delia Aguilar, Eleazar Bardales, Ricardo Mejia, Renato Mendoza, Mario Menendez, Alex Vidal, and Máté Vladár.

Thanks: The Fair Development Coalition would like to recognize the following small businesses that agreed to be interviewed for this study: Atlante Financial, Beauty Island, Botánica, Chapina Bakery, City Furniture, Cyber Web Latino, Dima Furniture Inc., Dollar City, El Pollo Sabroso, El Puente de Oro Restaurant, El Triunfo Restaurant, Estela's Hair, Fashion La Fama, Freedom Hair & Fu Casa, Hidde Soul Ropa Colombiana, Ivan Waldmen Law Office, La Chiquita Express (take out the second Chiquita), La Escudilla Restaurant, LNT Jewelry, Manna Restaurant, Multinegocio, La Muterita, Nueva Imagen, Olga's Party, Pablo Unisex Hair Salon, Patrick's Shoe Repair, Pupuseria Doña Azucena, Rainbow, RIA Envíos de Dinero, Samantha's Restaurant, Sara's Fabrics, Shahid Khan Enterprise, Sheila's Unisex Salon, Spin Cycle, Star Light Beauty Supply Inc., State Farm, Subzi Mandi, Super Value Flowers, Tabeer Resturant & Market, The K Shop, The Mirage Hall, Tienda Marife y Marife Sport, Tony's Villa Pizza, Universal Supermarket, University Liquors, and Zp Tax.


November 22, 2011

Contents Introduction .................................................. 1

Background Information .............................. 3

Methodology ................................................ 6

Finding 1 ...................................................... 7

Finding 2 .................................................... 10

Finding 3 .................................................... 13

Finding 4 .................................................... 15

Recommendations ...................................... 17

Conclusions ................................................ 25


November 22, 2011

Background Information Significant changes are coming to the dense cluster of communities commonly known as the International Corridor1. The anticipated construction of the Purple Line Transit System (hereinafter “Purple Line”) - a 16 mile street surface electric tram, to operate between Bethesda in Montgomery County, Maryland and New Carrollton in Prince George's County, Maryland 2 - and the surrounding planning processes reflected in the Takoma Langley Crossroads and Long Branch Sector Plans3 will recreate significant swathes of a sprawling neighborhood popularly known for its multiple challenges yet also representing significant strengths.

To garner a sense of these neighborhoods, consider their demographics. The Langley Park community in Prince George’s County, Maryland became known as an anchor in the “International Corridor” in the 1980s and 1990s during a major population shift driven by a large influx of Latin American and Caribbean immigrants. Today, immigrants comprise 66% of residents. The community’s $16,891 per capita income is just over half the County’s figure of $30,917 and state-wide, $34,236. The population of Langley Park is 14,687, 35.5% female and 64.5% male, with a median age of 28. The population is 75% Latino, 24% White, and 18% African American. The poverty rate is 19% compared to the County’s 7.4% and state’s 8.2%.[1]

Similarly, neighboring Long Branch is much more diverse than Montgomery County as a whole; 53% of Long Branch residents are foreign-born as compared to 30% county-wide. The community’s $24,180 per capita income is just over half the County’s figure of $46,122 and state-wide, $34,236. The population of Long Branch is 4,115, made up of

1 For purposes of this paper, the International Corridor is defined as the linked neighborhoods of Langley Park in Prince George’s County, Long Branch in Montgomery County, and portions of the City of Takoma Park and Montgomery County that are contemplated in the Takoma-Langley Crossroads Sector Plan. http://www.montgomeryplanning.org/community/takoma_langley_crossroads/ 2 http://www.montgomeryplanning.org/transportation/projects/purple_line.shtm 33 Montgomery County has not yet finalized the Long Branch Plan, but drafts have been shared and debated and statements in this document are based on that process. For a list of events at which information was collected as well as draft documents produced to date, please see http://www.montgomeryplanning.org/community/longbranch/ [1] http://www.census.gov

http://www.census.gov/


November 22, 2011

41% female and 59% male, with a median age of 32. The population is 49% Latino, 30% White, and 30% African American. [2]

The neighborhood of Long Branch has the highest immigrant population in the county with the highest immigrant population in Maryland. The neighborhood of Langley Park has the highest immigrant population in the county with the second highest immigrant population in Maryland.4 With local residents hailing from 45 countries, it has sprouted a thriving, largely minority-owned business community that serves its diverse residents.5 Individuals from all over the world arrived, invested, and made the area home. Global entrepreneurs have created a diverse, thriving, and resident-serving small business community including pupuserías, West African fabric tailors, East Asian grocery stores, Caribbean carry-outs, Indian restaurants, and a wide array of other retail venues. Some of the businesses that line the streets of the International Corridor include Sari Palace, Pupuseria Doña Azucena, and Tiffin Restaurant – all distinct and all regionally recognized for the quality and popularity of their products. The International Corridor is a bustling economic success, a place where a new entrepreneur can establish in cubby-hole spaces and cater successfully to niche markets. However, unlike intentional planning to generate and protect small businesses in other regions, the International Corridor’s vibrant, minority-owned business community has emerged in a policy vacuum.

But, change is coming. There is no doubt that the Purple Line and its accompanying revitalization efforts will bring benefits to the International Corridor, including increased access to public transportation, decreased traffic congestion, and an easier flow of commerce and people between the two participating counties. 6 However, focused efforts must be initiated to protect this vibrant community because history has taught that without concrete protections, development works to the detriment of poor, underserved, and minority communities. To ensure that development works to the benefit of, rather than displacing, local residents, civic and tenant associations, unions, hobby clubs, religious groups, advocacy organizations, and small business owners have organized together to form the Fair Development Coalition. This study is a product of the Fair Development Coalition and its members.

[2] http://www.census.gov 4 http://www.census.gov 5 ParkerRodriguez, Inc. (March 2002). Needs assessment for a multi-cultural center in Langley Park, Maryland. Maryland National Capital Park & Planning Commission, Prince George's County Planning Department. 6 http://www.purplelinemd.com/about-the-project/benefits

http://www.census.gov/


November 22, 2011

Alba Barillas, owner of La Escudilla Family Restaurant

I migrated from Guatemala, with my husband, to the United States 30 years ago. After living in Washington DC, we decided to move to Silver Spring. We came to this area for the tranquility, friendly people, and the multicultural community. We raised two sons, one studying biology at the University of Maryland, and the other an 8th grader. Two years ago my husband and I decided to follow our dreams and open a restaurant. Our goal was to share fresh, local, and homemade food with the community. And so, we opened La Escudilla Family Restaurant serving Guatemalan, Salvadoran, Mexican, and Honduran food.

As a new business to the area we are not sure what impact the Purple Line will have on our investment. We want to know what plans Maryland is making to help small businesses during the construction. Businesses suffer during such big projects, the side walk in front of our store could be blocked and roads could be closed. We also fear that fast food chains could open here, and we cannot survive if we lose customers. There should be an economic plan to make sure businesses are not negatively affected by the project.


November 22, 2011

Methodology Research for The International Corridor: Portrait of a Threatened Small Business Community (hereinafter Minority Businesses Threatened) was initiated September 1st 2011 and completed November 4th 2011. The objective of the study was to better understand the challenges and risks facing the area’s small business owners by collecting demographic information, measuring concerns regarding potential development-induced displacement, and identifying small business owners who are vulnerable to displacement.

In depth questionnaires were completed with a sample of small businesses 7 . Only responses gathered directly from the owners or managers of the small businesses were compiled for the analysis. Members of the Fair Development Coalition volunteered on interview teams and divided the survey area by commerce centers. Interviews were conducted in either Spanish or English for duration of 10 to 15 minutes. All identified small businesses in the area were given the opportunity to participate in the questionnaire. The completed study is comprised of questionnaires completed by 46 local small businesses. The results were tabulated into three sub regions identified below and combined for a measure for the full International Corridor. Predetermined Area: Langley Park - Long Branch - Takoma Langley Crossroads

7 Questionnaire available on request to CASA de Maryland.


November 22, 2011

Finding # 1 The International Corridor has a long standing and diverse small business community. Interviews conducted for Minority Businesses Threatened show that 50% of local small businesses have been in operation for more than a decade and 83% have been in operation for more than 5 years, dramatically reducing their risk of failure.8 Given the much higher than normal survival rate for the area’s small businesses, the International Corridor represents a comparatively strong entrepreneurial community. Years of Operation

8 According to The U.S. Small Business Administration, over 50% of small businesses fail in the first five years of operation http://www.sba.gov

17%

33% 26%

24%

International Corridor: Years of Operation of

Small Businesses 0-5 years

6-10 years

11-20 years

More than20 years

16%

23%

15%

46%

Takoma Langley Crossroads

23%

31% 31%

15%

Long Branch

15%

40% 30%

15%

Langley Park


November 22, 2011

While the diversity of the International Corridor’s small business community is visually obvious, nevertheless Minority Businesses Threatened results captured just how important the area has been for Maryland’s minority business owners. Eighty-five percent (85%) of interviewed owners identified themselves as “Minority Business Owners.” The small business owners shared that their diversity was reflected in their patrons, who they described as majority People of Color largely residing in the surrounding residential neighborhoods. Given that larger portions of profits earned by owners of local stores remain in the local economy, the International Corridor is a symbiosis of local clientele spending dollars at local businesses, who then feed those dollars back into the local majority minority and immigrant community.9

Perception of Business Improvement by Owner

9 Profits earned by owners of local stores, in comparison to profits earned by local chains, remain in the local economy supporting surrounding neighborhoods, businesses, and organizations. LOCAL WORKS! Examining the impact of local business on the West Michigan economy, www.civiceconomics.com. 2008.

65% 10%

25%

International Corridor: Small Business Owners Perception

of Business Improvement

Business hasImproved

Business hasno Change

Business hasDeclined

65% 10%

25%

Langley Park

38%

31%

31%


69%

8%

23%

Long Branch

http://www.civiceconomics.com/


November 22, 2011

Sicuong Phu, owner of Freedom Hair and Fu Casa-

I came to the United States 30 years ago as a refugee. Silver Spring was the first place I arrived, and I have been here ever since. As a refugee, I was sponsored by and received a lot of support from local residents. I have raised 5 children in this area, all grown up now working in medicine, government, and journalism. I opened my first store 20 years ago selling jewelry, fabrics, and luggage. In 2006, I opened the salon Freedom Hair.

Right now, I am confused about the future of my business, I don’t know about the government’s plans for the area. I hope the Purple Line will bring more customers to the area and be very convenient for local residents. But, how can the government help small business people, because I want to stay here.


November 22, 2011

7%

93%

International Corridor: Owned vs. Leased Properties

Owned

Leased

Finding # 2 The international Corridor’s small businesses are highly vulnerable to rent increases and lack of ownership of real estate. Local business owners shared their perception that the playing field of commercial real estate in the International Corridor will be unfavorably altered when developers and large corporations move to privately capitalize on public investments. To better understand the risk of displacement of local businesses, Minority Businesses Threatened explored the relationship of business owners to their commercial locations. Of the study participants, 93% are renting store locations. Of those commercial renters, 26% of local business owners hold leases set to expire within 2 years. Within 5 years an additional 26% of businesses will have leases near termination. Approximately, 89% of local stores have leases set to terminate within 10 years, at or near the projected time of construction of the Purple Line. As these established small businesses seek to renegotiate their rental agreements they’ll be doing so in the context of an increased private property value created entirely by public taxpayer investment.


November 22, 2011

Due to the high volume of commercial renters in the area, the Minority Businesses Threatened further captured data regarding rental cost of local entrepreneurs. Small business owners reported that most (66%) pay between $1,000 and $4,999 each month for rent. An additional 24% paid between $5,000 and $9,999 and 10% paid more than $10,000 in property rent. Property Lease Expiration

26%

34%

29%

11%

International Corridor: Property Lease Expiration

Within in 2yearsWithin 5yearsWithin 10yearsNotApplicable

18%

41%

29%

12%

Langley Park

46%

18%

18%

18%


18%

37% 36%

9%

Long Branch


November 22, 2011

Samir Talati, owner of Subzi Mandi-

At 21 I arrived in the United States with my mother and 2 younger brothers. We came to join our family that was already living here in Maryland. That was 27 years ago. In college, I studied civil engineering, but I always wanted to run my own business. In 1992, I left my job and opened this store. There is a large Indian community here in Maryland, and many people come from Virginia and West Virginia to visit the store. Back then, I was the only one selling Indian products. I have been here a long time, and hope to one day open a bigger store.

Over the last couple of years, I have seen a lot of businesses leave the area. This is because the landlords keep raising the rent. The government should make sure there are rent caps after the metro is built, or the landlords will definitely take advantage of us business owners. We have invested so much already in this area.


November 22, 2011

Finding #3 The International Corridor’s small businesses have strong ties to local residents. The Minority Businesses Threatened collected data addressing the linkages between local small businesses and local residents and discovered that these groups benefit from each other and share a history and a future. 10 Local store owners

recognize this dependency - 89% stated that they depend on local residents for the survival of their business.11 If local residents are displaced by rising housing costs, a concern frequently shared by survey participants, local businesses will lose their consumer base. Over the past 2 decades, local small-business owners have sought to meet the consumer needs of the local market. Many businesses described that they specifically opened on the Corridor because of the international consumer base of the local community. Of the local businesses, 41% are retail stores and their merchants describe that they offer particular goods demanded by local residents - imported garments, traditional foods, exotic spices, religious art, and more. This variety is also reflected in the small business restaurant community, 23% of surveyed participants. Mirroring local demographics and demand, Salvadoran, Guatemalan, and Mexican restaurants can be found alongside Italian, Indian, Vietnamese, and Peruvian dining options.

10 In addition to information collected from business owners, CASA de Maryland has collected data across time regarding why residents remain living on the International Corridor. The most frequently named reasons are access to public transportation, ability to speak Spanish, and ability to shop at small businesses that sell culturally appropriate products. 11 Other studies have additionally reported that small businesses often complement each other through cross-patronage and are more likely employ local people. Strengthening Local Economies and Civic Life: The Untapped Power of Small Business. http://web.mit.edu, 2010.

41%

23%

17%

2% 2% 9%

6%

International Corridor: Products or Services Provided

Retail

Restaurant

ProfessionalServicesRepair

http://web.mit.edu/


November 22, 2011

Patrick Afriyie, owner of Patrick's Shoe Repair-

I have been in the United States for more than 30 years. I am well established here in Langley Park. Everyone knows me as “Patrick the Shoe Man”. After working in another store for a long time, I left to open my store. I have been working very hard for the last 15 years on my business. I do shoe repair, but I also sell African products. People from all over come here to buy DVD’s, music, soaps, fabrics, hair products, cosmetics, tailoring, and anything else an African person could need.

I want this area to continue to grow. The Purple Line will be good for the community. But, if construction hurts my business or the rent is increased I will have to close my store. I couldn’t imagine having to open a new store in another location.


November 22, 2011

49% 51%

International Corridor: Businesses Informed by

Local Government of the Purple Line and Sector Plans

Informed

Uninformed

59% 15%

26%

International Corridor: Owners Perception of

Displacement

Possible

NotPossible

Finding #4 International Corridor small minority-owned businesses have not been informed about the Purple Line and other potential changes and are concerned about possible displacement.

With the Purple Line construction planned to start within the next 3 years, Minority Businesses Threatened discovered that more than half of local small business owners have not been informed by Montgomery or Prince George’s County about the Purple Line or Sector Plan Proposals.12 Less than 1% of interviewed businesses are receiving local government support for their businesses such as planning or financial assistance.

Additionally, local merchants are uncertain and concerned about how planned community revitalization and change will affect their future. Owners shared concerns of construction impacts; increased property rent, gentrification of local residents, and forced eviction. More than 59% of local business owners believe their businesses may be displaced due to the Purple Line. A further, 26% of businesses are unsure about what impact the Purple Line will have on their stores.

12 Businesses in Langley Park were significantly more likely than businesses in Long Branch to report being informed about the Purple Line and Sector plans at a rate of 58% for Langley Park businesses compared to 38% for Long Branch businesses.


November 22, 2011

Farhat Sherif, owner of Sports Outlet-

I came to the United States 38 years ago from Jerusalem. Like everyone else, I wanted a better life for my family and myself. I work here with my son; we opened in 1999 selling sporting goods. I hope to pass the store on to him after I retire. Most of our customers are Latinos from around here. We have even learned to speak Spanish by practicing with customers. We depend on the community here, when they are working and doing well, our store also does well.

I have been here for 13 years. I need to know in advance what changes are coming to the area. This would be helpful so I can plan for the future of my business. Hopefully, the station will bring more customers, and they can stop by my store.


November 22, 2011

Recommendations The Fair Development Coalition is dedicated to the long-term future of Langley Park, Long Branch, and the Takoma Langley Crossroads local small business community. Whether the Purple Line revitalizes or displaces local residents and small businesses depends on Montgomery and Prince George’s Counties and the State of Maryland balancing the strengthening market with local small business preservation and retention

provisions so that local small businesses are not displaced. The Counties have made efforts to assist local small businesses but they can do more to address the concerns of displacement because of revitalization.

The Fair Development Coalition recommends to Montgomery and Prince George’s Counties and the State of Maryland the following eight strategies to either preference or provide assistance to local small businesses.

Policies Preferencing Small Local Businesses:

Large retail establishments and chain stores will be attracted to the infrastructure improvements of the Purple Line. These stores can weaken local economy, erase community character, and destroy the civic and cultural life.13 Large retail stores are known in the industry as “category killers.” The name is significant. These “businesses do not intend to compete with local stores; they aim to be the only game in town.14

While large retail establishments, like Wal-Mart, Costco, and Target, have become a part of American landscape, this is not true in the International Corridor. What happens when a Wal-Mart moves in next door? Typically, the store offers deep discounts resulting in neighboring small businesses who cannot afford to offer the same price being forced to close. Once the small businesses are closed, Wal-Mart increases the price. Large retail establishments do not create more consumer spending. What they do is shift the spending away from the small businesses. Studies from Iowa, Massachusetts, Maine, Vermont, New York, California, and Virginia, found that large retail establishments derive the majority of their sales from existing businesses within the community concluding that the

13 Municipal Research and Services Center of Washington, Regulation of Large Retail Establishments (Big Box Retail) (2010), http://www.mrsc.org/subjects/planning/bigboxretail.aspx. 14 Stacy Mitchell, Researcher for the Institute for Local Self-Reliance, The Impact of Chain Stores on Community, Address Before the conference of the American Planning Association (April 1, 2000) transcript available at http://www.newrules.org/retail/article/impact-chain-stores-community

http://www.mrsc.org/subjects/planning/bigboxretail.aspx

http://www.newrules.org/retail/article/impact-chain-stores-community


November 22, 2011

end result is economic displacement, not growth or development. It’s a strategy that should not be encouraged and supported.15

Constructing to the demands of these large renters is cheaper for developers. Specific protections need to be implemented to ensure that local small businesses can survive.

1. Implement Overlay Zoning to Insure Smaller Rental Space Availability

Special zoning overlay districts are a common strategy in both Counties and in the District of Columbia to create protections for sought after elements in commercial development. 16 We recommend utilizing the overlay zoning device to mandate preserving portions of retail space for local small businesses given the proven relationship of access to smaller rental spaces to success. 17 Given the current high utilization of retail space for local small businesses, we recommend that the for every 10,000 square feet of new retail built or rebuilt, 15% must be 500 square feet or less and an additional 35% be reserved for spaces of 1000 square feet or less.

2. Enact Legislation Restricting Large Retail Establishments:

Local government can play a critical role in creating opportunities and reducing inequality by leveling the playing field when development and revitalization moves into an area. Both Montgomery and Prince George’s Counties have adopted “big box” legislation that treats these retail stores as special exceptions.18 In Montgomery County,

15 “In Virginia, a survey of several Wal-Mart stores statewide found prices varied by as much as 25 percent. The researchers concluded that prices rose in markets where the retailer faced little competition. A similar conclusion was reached in a survey of Home Depot. Prices were as much as 10 percent higher in Atlanta compared to the more competitive market in Greensboro, North Carolina.” Mitchell, Stacy, The Impact of Chain Stores on Community, (April 1, 2000). See also,Elizabeth Humstone & Thomas Muller, Impact of Wal-Mart on Northwestern Vermont, prepared for the Preservation Trust of Vermont, the Vermont Natural Resources Council, and Williston Citizens for Responsible Growth, 1995; Chris Rouch, "Home Depot using predatory pricing tactics, critics say," Atlanta Journal & Constitution, March 18, 1995, p. 1B 16 See in Montgomery County, the Wheaton Overlay Zone which limits the amount of new development in the area in order to help preserve the small businesses in the area. http://www.montgomeryplanning.org/community/wheaton/documents/Oct.28WheatonWorksession2Final.pdf. Also, in Prince George’s County, the New Carrolton Transit District Overlay Zone. http://www.pgplanning.org/page440.aspx. See also, Summary of Overlay Districts, District of Columbia, Office of Zoning, (Nov. 5, 2010). http://dcoz.dc.gov/info/overlay.shtm (last visited Nov. 17, 2011)..D.C. has twenty-six Overlay Districts. D.C. specifically stated that the reason for some of these overlay districts were because: “to foster growth opportunities for and retention of small and minority businesses . . . encourage small-scale business development , , , preserve and enhance the unique low scale, predominately residential and historic character, and independent small retail businesses . . . .” 17 “Beth Weinstein, director of the public market Mercado La Paloma, identified a lack of small commercial space as the principal problem preventing first time entrepreneurs from opening a business. She found that one of the key reasons merchants are able to open a business at Mercado La Paloma is not their relatively low rents (currently approximately $2.50 per square foot), but rather, the availability of small spaces. Many merchants rent spaces that are 200 square feet from Mercado La Paloma, making the commercial space affordable. Norms of the industry, however dictate much larger spaces. At a retail shopping area recently constructed a few blocks from Mercado La Paloma, all spaces are 3,000-10,000 square feet, which Weinstein says is typical of most commercial space. Such square footage excludes low-income first time entrepreneurs.” Denham, Diana, Inclusionary Zoning to Encourage Small Businesses (May 27, 2010). 18 See zoning text amendment: 04-40 for Montgomery County and CB2-2002 for Prince George’s County. See also, Managing Maryland’s Growth: Models and Guidelines Big-Box Retail Development, Maryland Department of (footnote continued)

http://www.montgomeryplanning.org/community/wheaton/documents/Oct.28WheatonWorksession2Final.pdf

http://www.pgplanning.org/page440.aspx

http://dcoz.dc.gov/info/overlay.shtm


November 22, 2011

improvements are currently being debated for establishments larger than 75,000 square feet.19 We support the adoption of Montgomery County Bill 33-11.20 We believe that both Counties should require large retailers to enter into binding Community Benefits Agreements with local organizations to ensure the availability of that tool to protect local small businesses located in the International Corridor 21and open economic decision-making to the entire community rather than limiting it to outside investors and the owners of large property tracks.

3. Implement Restrictions on Chain Stores

Chain stores create a similar dynamic; first offering goods and services at a discount price resulting in the closure or displacement of local small businesses then increasing the price of goods once they have taken over the market. In light of their unfair market advantage, several jurisdictions have sought to regulate them. A good example can be found in the San Francisco’s Planning Code.22 All proposed business developments in neighborhood commercial districts that include national chain

Planning, (October, 2001).(defines big-box stores with footprints from 20,000 square feet to 200,000 square feet and discusses the impact of big box to the community: increased traffic, oil run-off from the surface parking lot, increased traffic, increased noise pollution, reduction of small-scale, locally-owned retailers, and increase unemployment rates., ) 19 http://www.montgomerycountymd.gov/content/council/pdf/bill/2011/Packets/

20 http://communitybenefits.blogspot.com/ This website mentions all the CBAs that are currently in effect and also has a list of literature. See also, Community Benefits Agreements, Partnership for Working Families. http://communitybenefits.org/article.php?list=type&type=155 (last visited Nov. 17, 2011). 21 For this recommendation and others, it is critical that public engagement information and outreach be conducted at least bilingually in Spanish and English and that information be made available to renters as well as property owners. As an example, MDOT mailings updating residents regarding the Purple Line are mailed in English to neighborhoods where the majority of residents are Latino and a significant portion of those residents self-identify as limited-English proficient. 22See,Formula Business Restrictions-San Francisco, New Rules Project, http://www.newrules.org/retail/rules/formula-business-restrictions/formula-business-restrictions-san-francisco-ca (last visited Nov. 17, 2011). San Francisco has restricted formula retail stores and restaurants since 2004. Formula stores are considered and must be approved by the Planning Commission on a case-by-case basis. Formula stores are prohibited entirely in a few neighborhoods. The preamble of the ordinance: "San Francisco needs to protect its vibrant small business sector and create a supportive environment for new small business innovations . . . . The increase of formula retail businesses in the City's neighborhood commercial areas, if not monitored and regulated, will hamper the City's goal of a diverse retail base with distinct neighborhood retailing personalities comprised of a mix of businesses. Specifically, the unregulated and unmonitored establishment of additional formula retail uses may unduly limit or eliminate business establishment opportunities for smaller or medium-sized businesses, many of which tend to be non-traditional or unique, and unduly (footnote continued)

http://www.montgomerycountymd.gov/content/council/pdf/bill/2011/Packets/

http://communitybenefits.org/article.php?list=type&type=155

http://www.newrules.org/retail/rules/formula-business-restrictions/formula-business-restrictions-san-francisco-ca

http://www.newrules.org/retail/rules/formula-business-restrictions/formula-business-restrictions-san-francisco-ca


November 22, 2011

retail (called “formula retail” in the ordinance) are subject to neighborhood notification requirements and heightened review by the planning commission. Review criteria include whether similar goods or services are already available within the business district and the compatibility of the proposed business with the character of the neighborhood. Formula retail is defined as one of at least a dozen outlets in the U.S. that share common features such as standardized array of merchandise, trademark, architecture, or décor. It excludes grocery stores. Also, Colorado has adopted separate ordinances dealing with chain retailers and chain restaurants in its downtown area.23 Chains are required to apply for a special use permit. They must not have street frontage of more than 50 feet and must be compatible with surrounding uses. Its chain restaurant ordinance allows no more than 10 chain restaurants in its downtown shopping district and will not allow a chain restaurant to locate on a corner. Locally, in Chesapeake City, Maryland, the Town adopted Zoning Ordinance No. 07-08-13 limiting chain stores.24 The ordinance states the Town found that the preservation of the existing character and small town charm would be adversely altered if the large chain stores were permitted. Furthermore, the Town acknowledges that regulating these cookie-cutter chain businesses is necessary to strengthen the local economy. Jurisdictions can ban chain retailers and restaurants, limit the number in an area, or make them subject to case-by-case review and approval. Jurisdictions can also combine these approaches.25 Montgomery and Prince George’s Counties should combine the approaches by limiting the number of chain retail stores and restaurants permitted in the International

skew the mix of businesses towards national retailers in lieu of local or regional retailers, thereby decreasing the diversity of merchandise available to residents and visitors and the diversity of purveyors of merchandise." 23See, Formula Business-Restrictions-Coronado, CA, New Rules Project, http://www.newrules.org/retail/rules/formula-business-restrictions (last visited Nov. 7, 2011). Coronado adopted the Formula retail ordinance in December 2000 to maintain a unique and diverse retail base. Specifically, “the unregulated and unmonitored establishment of additional formula retail uses will unduly limit or eliminate business establishment opportunities for smaller or medium sized businesses, many of which tend to be non-traditional or unique, and unduly skew the mix of businesses towards national retailers in lieu of local or regional retailers, thereby decreasing the likelihood of a diversity of retail activity.” 24 Defines a formula business as a service establishment with 50 or more other establishments regardless of location 25 Coronado, California caps the number of chain restaurants and treats chain retail stores as a conditional use. Bristol, Rhode Island bats chain businesses larger than 2,500 square feet from downtown. Port Townsend, Washington restricts chain businesses to a single highway and limits them to no more than 3,000 square feet. Arcata, California allows no more than nine chain restaurants in the city at one time. McCall, Idaho limits the number of chain businesses to no more than ten percent to the total number of like businesses. Fredericksburg, Texas requires the chain businesses to apply for a conditional use permit. Approval will only be given to businesses that will not destroy the uniqueness of the district. See, http://www.newrules.org/retail/rules/formula-business-restrictions

http://www.newrules.org/retail/rules/formula-business-restrictions




November 22, 2011

Corridor and treat them as a conditional use. The Counties should create and implement a development restriction that would require neighborhood notification and heightened review by the Planning Board and County Council for developments attracting national chains. Additionally, the planning board and the County Council should have a public hearing to allow residents to express their opinion as to whether they want or do not want the national chain in the area. Providing Direct Assistance to Existing Small Businesses

4. Fund a Rent Subsidy Program

Rising rent in a short period of time can be disastrous for the survival of local small businesses. Rental subsidies allow the property owners to adjust the rent to fair market rates while tenants are given a subsidy to cover the difference between the market rate and the rate that they are able to pay based on their earnings.

In Lexington, Kentucky, this principal has been applied to out of state companies to lure them to the area. The new arrival could receive a one-time rent subsidy of up to $10,000.26 In Lorena, Texas, the rent subsidy program awards an amount no greater than 50% of each month’s rent, not to exceed $1,800 for one year. 27 Because of the unique distinct character of the International Corridor, rental subsidy programs should be implemented specifically for existing local small business owners to survive should rents rise rapidly after the Purple Line opens.

5. Commitment to providing and increasing financing and technical assistance

Financial and technical assistance are essential to the success of any kind of business, especially small businesses. Technical assistance can include training assistance, marketing development, and technology upgrades. The goal of this assistance is to help small businesses operate more effectively and efficiently.

Montgomery and Prince George’s Counties offer a multitude of programs but lack the type of targeting that will be necessary to create a specific impact in the International

26 Warren Nash & Gina Greathouse, BBDP Offers Rent Subsidy to Out-of-State Businesses Relocating to Lexinton, University of Kentucky, Sep. 2, 2010, http://www.uky.edu/econdev/bbdp-offers-rent-subsidy-out-state-businesses-relocating-lexington (last visited Nov. 18,2011).The BBDP is the Bluegrass Business Development Partnership is an economic development initiative between city government, chamber of commerce, and the office of commercialization and economic development. 27 Lorena Economic Development Corporation, Business Rent Subsidy Grant, http://www.ci.lorena.tx.us/index.aspx?NID=160 (last visited Nov. 18, 2011).

http://www.uky.edu/econdev/bbdp-offers-rent-subsidy-out-state-businesses-relocating-lexington

http://www.uky.edu/econdev/bbdp-offers-rent-subsidy-out-state-businesses-relocating-lexington

http://www.ci.lorena.tx.us/index.aspx?NID=160


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Corridor. 28 We recommend the counties survey existing specific needs and tailor a package of assistance in the identified areas. Furthermore, both the Montgomery County Department of Economic Development and Prince George’s County Economic Development Corporation’s websites are only in English and all of the links are in English making it difficult for foreign-born small business owners.29 Like with other recommendations here, multilingual access is critical for success.

6. Fund Corridor-Specific Marketing and Promotions including a “Buy local, buy small” Ad Campaign Focusing on Minority-Owned and Local Businesses:

The buy local movement builds a vibrant local economy by encouraging consumers to shop at local stores. Small business in cities with buy local campaigns have a better probability of survival during an economic downturn than other businesses located in locales that do not have an interest in the small business community.30

A buy local campaign is not new to this area. Silver Spring launched a buy local campaign in partnership with the Latino Economic Development Corporation. The campaign has an extensive directory of small businesses, a website, a Facebook page, and hosts events to encourage community members to stay local for their needs. The ongoing projects clearly show that the community’s interest in staying local is key to the success of local small businesses and to ensure the cultural character and diversity is promoted and protected. We recommend the Counties fund International Corridor promotions and advertising to drive consumers to the unique blend of products available in the neighborhood.

7. Commitment to the creation of business cooperatives

Renting space should not be the only option for local small business owners. There are several advantages to being an owner versus a tenant. The advantages are: the monthly mortgage plus association fee may be less than the monthly rent, greater protection from rent increase and early termination or non-renewal of lease, ownership builds equity allowing for future loans, space is customizable, and eligibility for tax breaks.31 But,

28 Gerry Knapp & Marie Howland, “Minimizing Small Business Displacement in a Revitalization Zone-The Case of Silver Spring,University of Maryland at College Park, Urban Studies and Planning Program,(2005). http://www.arch.umd.edu/images/student-work/documents/Small_Business_in_Silver_Spring1.pdf (last visited Nov. 18, 2011). 29 Montgomery County Maryland, Small Business Toolbox – Montgomery County of Economic Development, http://www.montgomerycountymd.gov/dedtmpl.asp?url=/content/ded/sbs/toolbox.asp (last visited Nov. 18, 2011); Prince George’s County Economic Development Corporation, http://www.pgcedc.com/ (last visited Nov. 18, 2011) 30 John Tozzi, To Beat Recession, Indies Launch Buy-Local Push, Bloomberg Businessweek, (February 27, 2009). See also, Becky McCray, Shop Local Campaigns for Small Towns, (2009). 31 Gerry Knapp & Marie Howland, “Minimizing Small Business Displacement in a Revitalization Zone-The Case of Silver Spring, University of Maryland at College Park, Urban Studies and Planning Program,(2005). http://www.arch.umd.edu/images/student-work/documents/Small_Business_in_Silver_Spring1.pdf (last visited Nov. 18, 2011).

http://www.arch.umd.edu/images/student-work/documents/Small_Business_in_Silver_Spring1.pdf

http://www.montgomerycountymd.gov/dedtmpl.asp?url=/content/ded/sbs/toolbox.asp

http://www.pgcedc.com/

http://www.arch.umd.edu/images/student-work/documents/Small_Business_in_Silver_Spring1.pdf


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local small business owners often encounter financial challenges that impede ownership. Generally, local small business owners do not have the finances and credit to acquire an affordable mortgage. Furthermore, the initial cash needed to purchase an office and retail space is more expensive than leasing.

Montgomery and Prince George’s Counties should encourage ownership, either through commercial condominiums or business cooperatives.32 At a minimum, Montgomery and Prince George’s Counties should provide down payment assistance programs and offer loans to finance closing costs and legal fees to assist existing small business owners with purchasing their retail spaces.

8. Special Programming During Construction

Construction is a necessary part of development. The construction of the Purple Line will cause a major disruption for local small businesses and, if not managed properly, can be the primary cause for the closure and displacement of small businesses. Consumer access is a major concern, but loud noise, construction dust, signage blocking, and loss of parking can be detrimental to sales resulting in a significant financial loss.

The state can help in two ways. First, it is critical that the Maryland Department of Transportation enter into an agreement with the Fair Development Coalition both to insure that construction jobs on the line create training and employment opportunities for the local residents that form the consumer base of local small businesses but also to insure that construction has the most minimal impact possible on the accessibility and visibility of local small businesses.

Second, we recommend Maryland implement a “Tax free” program for International Corridor businesses so that consumer traffic is incentivized despite the difficulties created by construction. “Tax-free” is not a new idea. In 2007, Maryland approved a bill that would relieve consumers from paying state sales tax on certain items. 33 “Shop Maryland,” a week long campaign to promote retail sales forgiving the sales tax encourages the community to shop. Additionally, in February for one weekend, the

32 Good examples can be seen in Portland-the Portland Saturday Market, in Philadelphia-El Mercado and Reading Terminal, and in Minneapolis-el Mercado Central. The market in Portland is a mutual benefit cooperative, which means that all members share in the cost and the governance, but keep all profits from the items they sell. 33 Peter Franchot, Comproller of Maryland, Sellers’Privilege, http://www.comp.state.md.us/ShopMD_2011/sellers.asp (last visited Nov. 18, 2011).


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community can purchase Energy Star appliances without being taxed.34 The underlying reason for tax free periods is to offer great deals and boost revenue for local retailers. Maryland continues to implement “tax-free” periods because they work. We believe they can work for the International Corridor.

Conclusion The International Corridor is a simultaneously celebrated and maligned neighborhood. It is impossible to deny the shabby appearance of many of the streetscapes. Yet despite these challenges, people have arrived to live here, work here, and create a community. Despite dilapidated and ill-cared large commercial spaces, poor pedestrian access and traffic management, and even a failing economy, local small businesses have thrived. Entrepreneurs and their consumers have shown dedication to the International Corridor. As the neighborhood finally shows promise of infrastructure investment, they should be able to remain.

34 Caron Brace, Comproller of Maryland, Franchot RemindsConsumers to Shop Maryland Energy This Weekend, 2011, http://www.comp.state.md.us/publications/nr/current/pr06.asp (last visited Nov. 18, 2011).

http://www.comp.state.md.us/publications/nr/current/pr06.asp

Documents

The International Corridor: Portrait of a Threatened Small Business Community