CRT 2017 #44 · Communication to the City Council · Aug 7 2017

Prepared by Larisa Ortiz Associates (LOA) June 2017 Retail Strategy for the City of Cambridge Action Plan Prepared by Larisa Ortiz Associates (LOA)

Prepared by Larisa Ortiz Associates (LOA) June 2017 OUTLINE OBJECTIVES MARKET ANALYSIS MAIN FINDINGS Updated GUIDING PRINCIPLES OVERVIEW 1. DRIVE EXPERIENCE 2. THRIVE ONLINE 3. HELP SMALL BUSINESSES REMAIN COMPETITIVE 4. IMPROVE ACCESS 5. SUPPORT AND BUILD CAPACITY OF LOCAL BUSINESS ASSOCIATIONS 6. FILL GAPS 7. ADDRESS REGULATORY BARRIERS 1

Prepared by Larisa Ortiz Associates (LOA) June 2017 OBJECTIVES Develop best practice policies and programs that will support and enhance the ground level active use and retail environment in Cambridge. PUBLIC POLICIES/INVESTMENTS: Short and long term MARKETABILITY/VISIBILITY: Actions and best practices that the City might consider to enhance marketability and visibility to retailers TENANT MIX: Recommendations for appropriate retail mix for each commercial district ADMINISTRATIVE CAPACITY: Determine roles and responsibilities for advancing retail initiatives 2

Prepared by Larisa Ortiz Associates (LOA) June 2017 MAIN FINDINGS OVERALL STATE OF RETAIL Changes in consumer habits are creating new pressures on Cambridge The growth of e-commerce and online tools are leading consumers to merge online and offline into a single shopping experience. 1 Consumer dining habits are changing: people are eating out more. 2 Consumers are spending less on products and more on experiences and service-based retail. 3 3

Prepared by Larisa Ortiz Associates (LOA) June 2017 MAIN FINDINGS CITYWIDE ANALYSIS Accessibility is unequal and less-multi-modal districts may require customized transportation strategies. aging. Despite making up the greatest proportion of the residential population (43%), millennials are decreasing in numbers. Cambridge is an employment destination and its workforce is an important segment of the local customer base. Cambridge is a regional eating and drinking destination and well served by existing retail offerings. Leakage analysis suggests opportunities lie in creating environments that support existing retailers (including restaurants). 4

Prepared by Larisa Ortiz Associates (LOA) June 2017 MAIN FINDINGS CITYWIDE ANALYSIS Retail rents in Cambridge are reportedly a challenge for many small business owners despite being comparable to nearby competitive districts. , particularly hybrid retail stores and experience-based retail. The City has a large number of neighborhood and business associations that provide key services to businesses and commercial districts, but these have a vast disparity of budget and operating capacity. 5

Prepared by Larisa Ortiz Associates (LOA) June 2017 1. DRIVE EXPERIENCE 2. THRIVE ONLINE 3. HELP SMALL BUSINESSES REMAIN COMPETITIVE 4. IMPROVE ACCESS 5. SUPPORT AND BUILD CAPACITY OF LOCAL BUSINESS ASSOCIATIONS 6. FILL GAPS 7. ADDRESS REGULATORY BARRIERS GUIDING PRINCIPLES 6

Prepared by Larisa Ortiz Associates (LOA) June 2017 Drive experience

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Build experience of the diverse districts through necessary public realm improvements and local activities ACTION Assess districts and promote necessary public realm improvements BEST PRACTICE NYC Small Business Services Neighborhood 360 CDNA (Commercial District Needs Assessment) 1 8

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Support experience- based retailers + food establishments ACTION Continue city-wide marketing efforts to promote and celebrate the diverse array of restaurants and businesses in Cambridge (e.g. Taste of Cambridge) BEST PRACTICES Philadelphia Retail Marketing Alliance Combined effort of Center City District, the City of Philadelphia Commerce Department, the Office of the City Representative, Greater Philly Tourism, Philadelphia Convention and Visitors Bureau and Philadelphia Industrial Development Corporation to coordinate marketing efforts, communicate new market realities and attract new retailers 1 9

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Encourage district-wide events + activities ACTION Encourage stewardship and revenue generation through the activation of public spaces Consider providing competitive funding for events & programming held by local business organizations 1 BEST PRACTICE San Francisco Plaza Program Local non- through license agreements, garners revenue from events 10

Prepared by Larisa Ortiz Associates (LOA) June 2017 Thrive Online

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Develop a city-wide effort to establish online marketing presence ACTION Expand technical assistance and training to business associations and businesses on how to have a presence on review platforms Consider expanding Enhancement Program to ensure non-CDBG eligible neighborhoods are covered BEST PRACTICE Downtown Boulder, CO Updated and publicly available online database of relevant business journal articles on selling online and marketing 2 12

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) ACTION Expand technical assistance to businesses on how to develop websites or join existing platforms for e-commerce via business associations Consider Small Business Enhancement Program to ensure non-CDBG eligible neighborhoods are covered BEST PRACTICE Downtown Asheville + Asheville- Buncombe Technical Community College Free online learning modules in online selling, social media and marketing 2 Recommendation: Develop city-wide effort to establish online sales presence 13

Prepared by Larisa Ortiz Associates (LOA) June 2017 Help small businesses remain competitive

Prepared by Larisa Ortiz Associates (LOA) June 2017 Recommendation: Address commercial affordability for small businesses ACTION Provide tax exemptions to property owners; offer fee waivers for new small and local businesses BEST PRACTICE Jump Start Philly Exempts qualifying businesses from paying the Business Income and Receipts Tax during the first two years of operations. Additionally, fees are waived for eligible new businesses for a variety of licenses and registrations Commercial Affordability Tax Abatement (Seattle, WA) Provides property tax exemptions for property owners who provide a defined combination of benefits to local small businesses 15

Prepared by Larisa Ortiz Associates (LOA) June 2017 WHAT ARE THE CONSEQUENCES OF RENT REGULATION? RENT REGULATION ADDRESS? leading to deferred maintenance/ depreciation of building Perpetuates business models that are unsustainable/ poorly planned Potentially raises the cost of commercial property but not residential (mixed use building) Property owners can still claim losses which may be more valuable to them Property owners may still prefer to rent out spaces to creditworthy tenants rather than small businesses, new concepts and startups Banks valuation enhanced by creditworthy tenants, or national chains Banks offer better loan terms and to property buyers when a chain business is on the lease Note: According to the 1994 Massachusetts Rent Control Prohibition Act: "No city or town may enact, maintain or enforce rent control of any kind." "This policy is based on the belief that the public is best served by free market rental rates" 16

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Enhance business storefronts ACTION Expand Storefront Improvement Program through additional funding to allow for greater use BEST PRACTICE AVENUE NYC Uses a mix of tax levy dollars, CDBG and bank foundation $$ to provide community-based organizations with grant funding to support neighborhood storefront improvement programs 3 Lamplighter is a recipient of Cambridge Storefront Improvement Grant 17

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Provide legal support to businesses during leasehold negotiations ACTION Partner with local lawyers alliance groups to provide legal, compliance and governance support to business associations pro-bono BEST PRACTICE NYC Department of Small Business Services Partners with Lawyers Alliance for New York to provide legal, compliance and governance support to BIDs for free Provides assistance on matters relating to lease or other types of contracts 3 18

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Offer support for small business labor ACTION Educate business owners about shift-sharing platforms and tools to coordinate business activity (e.g. business hours, programming, employees roles and availability) EXAMPLES SLING When I Work Scheduling tools that make it possible for businesses to keep everyone connected and informed on the schedules, activities and employees roles/tasks of any participating business. It uses the web, text messaging and mobile apps to give participants access to schedule 24/7/365 from anywhere. 3 19

Prepared by Larisa Ortiz Associates (LOA) June 2017 Improve access

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Mitigate impacts of construction projects on small businesses ACTION Continue supporting wayfinding and promotion strategy for businesses in affected areas Assist businesses in procuring additional signage District-wide promotion and marketing during construction periods BEST PRACTICE Myrtle Avenue Construction Mitigation Sign Program (New York, NY) City of Sacramento, CA Requires contractors to provide signs noting businesses are open and accessible. 4 21

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Offer transit support for small business labor ACTION Work with local employers and MBTA to introduce late-night transit service for employees Provide small business support for employees to walk, bike and take transit to work BEST PRACTICE Rhode Island Public Transit Authority VIA Metropolitan Transit in San Antonio, TX 3 Rhode Island Late Night Service Bus 22

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Further investigate transportation needs of commercial districts ACTION Work with Environmental and Transportation Planning Division to conduct an in-depth study of transportation needs from local businesses, local workers, and special needs groups in less multi-modal districts BEST PRACTICE Huntington Village Parking Study, Long Island, NY The study showed the Village as a successful park-once district with high parking utilization rates. It suggested valet strategies and the creation of loading zone strategies to manage and balance high demand. In addition, the study proposed improving accessibility through investments in multi-modal transportation options. 4 23

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Investigate whether on-street parking policies should vary by time of day and allowed use. 4 24 ACTION Study impact of changing side-street parking to accommodate both commercial and residential use during the daytime. BEST PRACTICE Huron Village

Prepared by Larisa Ortiz Associates (LOA) June 2017 Support and build capacity of local business associations

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Strengthen the role of local business associations in managing and promoting their commercial districts ACTION Support efforts of local business association(s) surrounding CBD formation and consider funding a CBD feasibility study for interested commercial districts 5 WHAT IS A COMMUNITY BENEFIT DISTRICT? CBDs are a geographically defined area in a city in which an assessment funding tool is dedicated to improvements in that area including sidewalk cleaning, landscaping, branding and marketing, creative placemaking, security, small business assistance, historic preservation, park improvement etc. WHAT ARE THE BENEFITS OF A DISTRICT MANAGEMENT ORG? A 10-year Philadelphia study found a demonstrable correlation between the presence of a district management organization with sustainable funding and retail sales growth over time. 26

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Provide additional technical and financial support to business associations 5 LISC Chicago Business District Leadership Program Six-month program for corridor management professionals Training topics include commercial revitalization strategies and leadership skills International Downtown Association Emerging Leadership Program One-week experiential training program for commercial district management professionals BEST PRACTICE BEST PRACTICE ACTION Strengthen local business associations by partnering with experts in the fields of organization management and leadership skills and providing additional funds for their operation. Explore partnership with City of Boston and other regional entities. 27

Prepared by Larisa Ortiz Associates (LOA) June 2017 Fill Gaps

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Encourage short term/ pop-up uses ACTION Launch proposed Cambridge New Food Truck Program to activate public spaces, expand entrepreneurial opportunities and provide diverse food options BEST PRACTICE Farragut Square, Washington DC, became an outdoor food court since a number of food trucks began selling food at lunch hour for the thousands of workers in the district 6 29

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Encourage short term/ pop-up uses ACTION Partner with arts organizations to activate and curate empty storefronts with arts installations BEST PRACTICE No Longer Empty (New York, NY) No Longer Empty presents art in environments that are free and accessible to all. Exhibitions and events put up in vacant spaces focus on encouraging local participation and attracting new visitors to each neighborhood 6 30

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) Recommendation: Encourage small businesses to open up establishments in vacant storefronts ACTION Set up a business relocation grant program to assist with business retention BEST PRACTICE City of Laurel Main Street Business Relocation Grant Program (Maryland) Applicants receive reimbursement grants up to $10,000 and if business meets goals of the City they may also receive property tax credits up to 100% City of Rochester Targeted Business Assistance Program (New York) Targeted small businesses located within or moving into City of Rochester received financial assistance including low interest loans and interest rate subsidy grants and 50/50 matching equity grants for projects including furniture, fixture, and equipment, construction and renovation Downtown Raleigh Alliance Retail Up-Fit Grant (North Carolina) Applicants receive a 50/50 matching grant on property improvements up to $50,000 for tenant build-out (for all retail businesses looking to locate within the Municipal Services District/ BID) 6 31

Prepared by Larisa Ortiz Associates (LOA) June 2017 Address regulatory barriers

Prepared by Larisa Ortiz Associates (LOA) June 2017 WHAT CAN AND CANNOT BE DONE THROUGH ZONING? CAN Limit store frontage Restrict certain uses Require transparency CANNOT Control rent Differentiate between ownership models POTENTIAL UNINTENTED CONSQUENCES: Undermines small business growth Creates scarcity of existing spaces resulting in higher rents BIG STORES, SMALL STOREFRONTS Rents increase upon lease expiration

Prepared by Larisa Ortiz Associates (LOA) June 2017 Prepared by Larisa Ortiz Associates (LOA) 7 Classes triggered higher parking requirements (Educational Institution) Change of Use triggered a variance or special permit No classification; required variance Classified as fast food; required a variance ACTION Adopt recommendations from the 2015 Commercial Land Use Classification study Recommendation: Adapt commercial land use classification to allow for flexible retail formats HOW IS THE CURRENT TABLE HURTING SMALL BUSINESSES? PRACTICE SPACE HONEYCOMB CREAMERY LAMPLIGHTER BREWING CO. 34

Prepared by Larisa Ortiz Associates (LOA) June 2017 Roles & Responsibilities Administrative Capacity 35 City of Cambridge Business Association Business City-wide District-level/Outside the Store Inside the Store Regulatory/Zoning Clean/safe Public realm improvement Technical Assistance Education Promotion/Marketing Placemaking Technical Assistance Outreach/Advocacy Operations Merchandise Customer Service Marketing

Prepared by Larisa Ortiz Associates (LOA) June 2017 SUMMARY GUIDING PRINCIPLES OVERVIEW 36 Public realm improvements Experience- based retailers District-wide events 1. Drive Experience 2. Thrive Online Online marketing technical assistance Online sales technical assistance 3. Help small businesses remain competitive Commercial affordability Storefront improvements Legal support Labor support 4. Improve access Wayfinding + promotion strategies in construction areas Labor transport needs Closer study of transportation issues 6. Fill Gaps Short-term/ pop-up uses Business relocation grant program 7. Address regulatory barriers Adopt recommendations from the 2015 Commercial Land Use Classification Study Revise fast food order definition and classification for small batch manufacturing 5. Support + build capacity of business associations Support CBD efforts Additional TA and support

Prepared by Larisa Ortiz Associates (LOA) June 2017 DISCUSSION Retail Strategy for the City of Cambridge Action Plan Prepared by Larisa Ortiz Associates (LOA)