Economic Diversity

​ECONOMIC DIVERSITY AND SUPPORTING OUR LOCAL BUSINESSES

As I am fond of telling folks, my father Jack ran his pharmacy inside of a large retail space and sold a wide variety of consumer goods. His business was right on the Plaza and before his retirement, he moved to the Mitchell Center. His store was a real meeting place, bustling with residents, visiting and shopping. My work life is different from Dad’s. I have helped manage a small, retail, largely-online, store that sells supplies to guitar makers. The business started in Healdsburg and we moved to Windsor a few years back. I have been at Luthiers Mercantile for 25 years and I am proud of the reputation I have within the stringed instrument industry.

I mention this to make one thing clear. I am a friend of small business. 

Goals:

An economic diversity program in Healdsburg should: 

• Encourage entrepreneurial opportunities in such a way that we see an increase in businesses that serve the needs of Healdsburg residents. 
• Reduce greenhouse emissions by reducing automobile travel outside the city for shopping and services.
• Increases our economic resiliency during economic downturns.
• Increase sales tax revenue by drawing in our most promising and reliable market: local residents. 

Background:

Developing retail diversity and bringing balance to our economy downtown (and elsewhere) was a central theme of my campaign for Healdsburg City Council. It is an idea that I believe to be extremely popular among residents in Healdsburg. I am in favor of a pro-entrepreneur approach that expands the types of businesses operating in town. It has nothing to do with reducing support for established businesses. ‘Economic Diversity’ was stated as a goal of our most recent Council in their Strategic Plan document, though so far, we have not seen much action on it. 

When I talk about developing “local-serving” businesses. I do not pretend that there is a hard line between tourist businesses and local-serving ones. Many tourists shop with the locals just as some residents enjoy wine tasting and our many fine restaurants. Defining ‘local-serving’ in a useful way will be a bit of a challenge, but if we understand this at the onset and define the “gray area”, we can still successfully address the problem. 

My motivation stems from conversations with many among our working-class residents who are experiencing a culture divide when they discover so many businesses downtown are catering to the tastes of the wealthy, and with corresponding price tags. They feel like our downtown is no longer their own. As a result, they tend to avoid the Plaza area and have grown accustomed to making the often-undesirable trip to Santa Rosa or elsewhere to shop. This is, of course, a wasteful and time-consuming alternative that contributes nothing to our city’s sales tax revenue.

Let’s work on ways to welcome them back downtown. 

We should acknowledge the many benefits and strengths of our tourist industry (I readily do) and support existing businesses that contribute presently to our community, while simultaneously working for diversity and pressing for balance.

Tourists value Healdsburg for its authenticity, and for the sense of a closely-knit and supportive community that small towns offer to their residents. In this way we offer respite and escape from the congestion, tension and alienation people often experience living in larger cities. Let’s make sure our downtown continues to express this authenticity as a place where community members from all strata of the socio-economic continuum, are welcome, and in so doing preserve what makes Healdsburg such a magical place to visit.

 Fact Finding

A natural first step is to gather information.

• What do residents want? Let’s survey residents to learn what businesses are missing and what they would like to patronize. Office supplies? Sporting goods? Kid’s clothes? The results of this survey would be valuable to anyone looking to open a business, or expand a business, in Healdsburg.
• The big myth! Does anyone really know if it is essential for a business to participate in the wine/tourism industries to survive downtown? Mostly, people just assume this to be the case. We often see local serving businesses thrive because their customer base are nearby, while tourist centered businesses do not always demonstrate the kind of longevity indicative of success. With the Chamber’s help, we should initiate an economic study that puts this question to rest. Should we find that local-serving businesses have an untapped potential for success, then I would hope the Chamber would do more to support their advent and draw attention to them. And once again, the results of this study, regardless of the outcome, would be invaluable to entrepreneurs.

How We’ll Do It

Here are some ideas to help encourage more local-serving businesses and help draw in the buying power of our residents. They all require scrutiny, development and public input. My point in presenting them here is to show that we have a full hand of options to explore. 

• It has been years since we have seen a vigorous ‘Shop Local’ advertising program to support our local business. Let’s change that by requiring this in our next contract with the Chamber of Commerce.
• Developing affordable housing downtown brings the market for consumer goods close at-hand and will help shift us away from our current emphasis on luxury items. 
• Assist entrepreneurs with information (from the above studies) about what businesses Healdsburg residents want to patronize. 
• Let’s develop greater rental security for businesses, utilizing and strengthening the guidelines presented to those renting housing in the city’s Rental Advisory document.
• As we plan for greater density downtown, let's be sure to include more 'affordable by design' retail spaces at the street level to help draw down rents
• We should establish a program for recognizing and rewarding businesses that best serve and benefit the community.  This program would go hand-in-hand with our Shop Local program, alerting shoppers of those business who have been recognized. It also helps to 'sell' the idea that economic diversity is a value held by, and encouraged by, the city 
• Let’s look at a vacancy tax. This discourages property owners from sitting on places while they wait for a tenant willing to pay an exorbitant rent. This helps lower rents in the long run and revenue from the tax can be used to benefit start-ups from local-serving entrepreneurs. Finding a vacancy tax plan that we can apply to empty homes is another priority that should be included alongside the commercial vacancy tax.
• Let’s look at setting limits on new real estate offices downtown. We have already adjusted zoning to limit tasting rooms and hotels downtown. We did this in part because our General Plan stipulates that there should not be an over-concentration of particular business types. Real Estate offices might be the next in line.

Outside Resources

Many communities have instituted economic diversity policies for a variety of different reasons. Sometimes to increase the number of minority run business, to reduce the number of chain stores, and so on. We should look through these for ideas that can be adapted to suit Healdsburg and its economic diversity goals.

The following ideas come from the Institute for Local Self-Reliance website (www.ILSR.org). Many of these ideas are specific to communities facing an over-saturation of chain businesses, but could be adapted to our situation where many think we are reaching an over-saturation of luxury goods. Some of the ideas may not be appropriate for Healdsburg, but I decided not to truncate the list. Links and annotations are on their site. 

• Get Zoning Right for Small Businesses — Rather than favoring strip malls and large-format development, zoning should support multi-story, pedestrian-oriented districts that include a mix of small and large commercial spaces, and that preserve historic buildings. This type of varied building stock offers the best habitat for local businesses, and research has found that neighborhoods with a range of building types and ages have more startups per square foot. 
• Set Aside Space for Local Businesses in New Development — Cities can require development projects to reserve a portion of their first-floor space for small storefronts and for locally owned businesses, either as a condition of permitting or through agreements in particular projects, as Austin, Portland, Ore., and other cities have done. Because of financing incentives and national relationships, new development is often oriented to the needs of large chains; set aside can help close the gap.
• Adopt a Business Diversity Ordinance — A Business Diversity Ordinance can ensure that independent, neighborhood-serving businesses don’t get crowded out by chains. Municipalities around the country, from Fredericksburg, Texas, to Jersey City, have used this tool effectively. San Francisco’s 12-year-old policy is one of the most comprehensive. It requires a “formula” business to apply for a special use permit and meet criteria in order to locate in any of the city’s neighborhood commercial districts.
• Facilitate Adaptive Reuse of Vacant Buildings — Cities can establish an Adaptive Reuse Program to help local entrepreneurs turn vacant historic buildings into new businesses. In Phoenix, for instance, the program offers permit-fee waivers and a faster timeline for eligible projects. In Anchorage, Alaska, a land trust works with local entrepreneurs to repurpose derelict commercial properties.
• Reorient Economic Development Incentives — Economic development incentive programs disproportionately favor big companies,and what’s more, they often don’t work Instead of giving public dollars to big businesses, cities should redirect these resources to foster local businesses, as some cities, like Grand Rapids, Mich., are doing. Another model can be found in Portland, where the city has several initiatives to accelerate the growth of minority-owned businesses.
• Open a Small Business Office – Cities should create a position within city government to guide business owners through local permitting requirements, and to serve as a liaison between small businesses and policymakers. Models include a Small Business Navigator office such as those in Montgomery County, Md., and Minneapolis, or a Small Business Commission, such as the one in San Francisco.
• Give Preference to Local Businesses in Purchasing — Cities should establish a preference for locally owned businesses in city purchasing, and include clear definitions, goal-setting, and reporting to ensure that their purchasing doubles as economic development, as Cleveland has done. Cities can also establish a preference for local businesses when leasing city-owned commercial space, as Seattle is doing with its King Street Station.
• Expand Access to Capital — Community banks supply a majority of small business loans. As their numbers have plummeted in the last decade, so too has lending to small businesses. To strengthen and expand these institutions, Oakland, Santa Fe, and other cities are exploring setting up a public partnership bank, modeled on the Bank of North Dakota.  Another helpful approach is to establish a one-stop, single-application portal for local entrepreneurs seeking loans, as Philadelphia has done with its Capital Consortium.