Photo of Seattle’s Othello Square neighborhood buildings and light rail train, taken from the Beet Box garden.

Commercial Affordability

Pilot Project

Identifying and developing models, tools and services that will increase community ownership and equitable development opportunities. Supporting business owners who risk being displaced from their neighborhoods within COO partnership communities.

Photo: Seattle’s Othello Square neighborhood from the Beet Box gardens.

Pilot goals

  • build on existing projects within Communities of Opportunity partner communities that promote commercial affordability;

  • identify new tools to increase access to capital; and,

  • find ways to address other batters to commercial affordability, such as technical assistance (TA) for business operations or capital improvements.

COMMERCIAL AFFORDABILITY PILOT IMPLEMENTATION

There are three main implementation elements to the Commercial Affordability Pilot that focus on the financial and environmental factors that contribute to the displacement of established businesses and barriers to stability and growth of newer businesses.

REAL ESTATE DEVELOPMENT PROGRAM

Grants of up to $300,000 per commercial real estate project provided to small business owners, landlords, and/or developers for projects that make rent more affordable for small businesses at risk of displacement. NDC will also provide one-on-one support including, structuring financing and identifying project needs and relevant third-part supports.

TECHNICAL ASSISTANCE (TA) TO SMALL BUSINESS OWNERS

TA to meet the unique needs of small businesses and with a goal of reducing barriers to real estate development, increasing chances of project success, and helping businesses access capital to fund commercial affordability projects. Including, real estate development technical assistance (i.e. project management, design, development support, construction monitoring), assistance with financial projections, and consultation with professional bookkeeping and legal services.

SMALL BUSINESS LOAN GUARANTEE PROGRAM

Development, capitalization and management of a small business Loan Guarantee Fund that will cover potential losses incurred by businesses in the pilot program. Managed by Craft3, the program will provide access to capital for small businesses that are not typically served by traditional lenders. Craft3 will also provide one-on-one, pre-loan technical assistance.

“The commercial affordability pilot program reflects COO’s ongoing commitment to innovation and advancing sustainable community-centered solutions that create a healthy and thriving King County for all.”
— ANDREA AKITA, FORMER DIRECTOR, COMMUNITIES OF OPPORTUNITY

COMMERCIAL AFFORDABILITY PILOT PROJECT VIDEOS

Commercial Affordability Pilot Project video (2022), Engish subtitles.

Commercial Affordability Pilot Project (Spanish subtitles)

Challenges for Small business owners

Small business owners in COO communities often lack equitable access to lending capital and are likely underserved by formal finance institutions. Coupled with increasing retail rents across King County communities, the impacts of COVID-19 on the retail and service environment, and racialized disparities in wealth, small business owners, especially those from communities of color, face increasing barriers to stability and growth.

According to recent research from the Stanford Institute for Economic Policy Research, early impacts of COVID-19 have caused a disproportionate decrease in business ownership among Black, Latinx and Asian-American business owners and others:

The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses. African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of losses. Immigrant business owners experienced substantial losses of 36 percent. Female-owned businesses were also disproportionately hit by 25 percent.

These impacts come on top of an already economically divided landscape, where income and wealth disparities continue to persist, with recent analysis from the Seattle Times showing that the median net worth of Black Seattle Households at only $23,000 and Latino households at $90,000 compared to a median net worth of white and Asian households at $456,000 and $446,000. Meanwhile Black, Native Hawaiian, Pacific Islander, American Indian and Alaska Native King County residents averaging lower annual wages across sectors, compared to white residents and sector averages:

Figure of wage disparities across race and ethnicity categories by work sector, Q1 2020. From here: https://www.healthierhere.org/economic-impacts-of-pandemic-in-king-county/

This data begins to illustrate the uneven and off-balance landscape that Black, Indigenous and other business owners and entrepreneurs of color work in, and how access to capital and social networks of capital are not equal.

PILOT LESSONS LEARNED (SO FAR)

  • Small businesses in South Seattle and South King County are demonstrating resilience to address challenges posed by COVID-19

  • Challenges of commercial affordability and displacement are evident across pilot project communities

  • There is interest in business development supports in addition to support to existing and legacy businesses

  • Commercial Affordability Pilot Technical Advisory Group (TAG) members see commercial affordability work as an essential element of broader community initiatives for greater equity and well-being

COMMERCIAL AFFORDABILITY RESEARCH & DATA

Craft3 developed a business financing white paper examines barriers to accessing business capital and the wealth equity gap, and shares learnings from Craft3’s R&D work looking at alternative credit evaluation tools for inclusive financing.

NDC developed a real estate financing white paper expands on the real estate training from the first Technical Advisory Group (TAG) meeting. The paper shares data related to commercial affordability and availability in King County, and discusses ways to impact real estate development costs and sources of funds, and their impact on commercial affordability.   

The Commercial Affordability Pilot was informed by research and community engagement:

BUSINESS DEVELOPMENT WHITE PAPER

The purpose of this white paper was to:

  • Examine the common barriers to accessing business capital for entrepreneurs, especially as it relates to commercial affordability projects;

  • Make the case for why the traditional methods and tools for evaluating credit are not equitable as those methods rely heavily on personal wealth and income; 

  • Provide the historical context for racial wealth gap and how that impacts entrepreneurs of color and low-wealth entrepreneurs in their ability to access credit;

  • Share learnings from Craft3’s Research & Development work, looking at alternative credit evaluation tools for inclusive financing; and

  • Present our proposed solutions to reducing credit barriers due to systemic racism, to be implemented during the COO Commercial Affordability Pilot.

REAL ESTATE DEVELOPMENT WHITE PAPER

The purpose of this document is to:

  • Outline the challenges related to commercial affordability and availability;

  • Introduce the Commercial Affordability Pilot Program;

  • Explain the two primary methods for impacting real estate development costs: reducing uses of funds, and supplementing sources of funding; and

  • Demonstrate how utilizing the methods presented can affect commercial affordability



STAKEHOLDER INTERVIEW SUMMARY

BDS Planning and Urban Design (BDS) conducted 24 one-on-one key stakeholder phone interviews with small businesses, property owners, community organizations, and lenders. Guided through a consistent set of questions, the team gathered insights regarding commercial affordability efforts within and across COO geographies, and about ways to support COO in its efforts to develop pilot programs.

Information from these interviews supported the consultant team in recommending possible membership of a Technical Advisory Group meant to aid in the development of the Commercial Affordability Pilot Program.


COMMERCIAL AFFORDABILITY PILOT PROJECT FINAL REPORT

This report describes the results of the Commercial Affordability Pilot through its work with four (4) commercial projects - Jackson’s Catfish Corner, the SeaTac International Mall, Spice Bridge Food Hall, and the Salvadorean Bakery.

The report includes recommendations for future funding and programming, key insights, project metrics, and case studies of a selection of the projects that participated in the pilot.

“One of the main [motivations] to do this project [was] really for our community...to
have a place where [they] can come hear
their language being spoken, see people
that look like them, dress like them, and
have the space be a community hub.”
— FAISAL MOHAMED, SEATAC INTERNATIONAL MALL

COMMERCIAL AFFORDABILITY PROJECTS IN THE NEWS






Interested in learning more about how to support greater affordability, equity, and access for small and micro business in the King County region?

Reach out to King County pilot project lead, Dan Bernard






Project Team

NDC

NDC is a national 501(c) 3 non-profit organization founded in 1969 to increase the flow of capital for investment in low-income communities. NDC has created two Community Development Finance Institution (CDFI)’s to direct capital to support the development and preservation of affordable housing, the creation of jobs through training and small business lending, and the advancement of livable communities through investment in social infrastructure.

NDC provides real estate financing, technical assistance and serves as project lead.


BDS Planning & Urban Design

BDS Planning & Urban Design (BDS Planning) envisions communities that are more vibrant, just, and sustainable, and operates across the Pacific Northwest with deep experience in King County. BDS Planning offers comprehensive community development services, with an emphasis on projects that require consensus and unlikely coalitions, communicating complex information, and shaping policy.

BDS Planning leads the Commercial Affordability Pilot community engagement plan.


Craft 3

Craft3 is a certified nonprofit CDFI, established in 1994. Our mission is to strengthen economic, ecological, and family resilience in rural and urban communities that are challenged by market, economic, and demographic conditions that limit their ability to access capital across Oregon and Washington by providing loans and business assistance to entrepreneurs, nonprofits, tribes and individuals who do not have access to traditional financing. Since inception, Craft3 has invested over $534 million in local businesses and communities.

Craft3 is the small business lender and advisor for the project.

Moving Beyond

Moving Beyond was started in 2018 by Aparna Rae and Jane Reisman. We began as a response to the challenge in the ecosystem of operationalizing DEI in and throughout the core work of organizations. A collective of practitioners spanning a range of expertise — including strategic planning, evaluation and measurement, training, facilitation, coaching, and building dynamic learning systems. Moving Beyond incorporates these diverse talents and strengths to push each other and our clients in achieving their goals.

Moving Beyond is the program evaluator of the Commercial Affordability Pilot.



TECHNICAL ADVISORY GROUP (TAG)

The Technical Advisory Group (TAG) was formed to work with the consultant team to help develop the pilot project selection process (developing scoring criteria and success measures for chosen projects and providing feedback), represent their respective communities, provide input and ideas to inform pilot goals, and share back information to their community on decisions made and actions taken. TAG members include representatives of organizations and small businesses across King County including:

·       Catfish Corner ·       City of Seattle Equitable Development Initiative ·       City of Burien ·       Community Roots Housing

·       Earl's Cuts & Styles ·       Empresarios Unidos ·       Friends of Little Saigon ·       Global to Local

·       Greater Seattle Business Association ·       HomeSight ·       Julio Consulting ·       Kent Chamber of Commerce

·       King County Department of Local Services ·       Pot Pie Factory

·       Urban Black/Rainier Valley Community Development Fund ·       SeaTac Community Coalition ·       Seattle University

·       Thyme Well Spent Catering ·       Ventures ·       Verity Credit Union



ADDITIONAL RESOURCES FOR SMALL BUSINESSES AND ENTREPRENEURS

Directories of resources:

Organizations / Technical Assistance Providers: