Tag: legacy businesses

City Budget Roundup, Part 1: Soda, Short-Term Rentals, and Legacy Businesses

I’m leaving town just in time for election day this year (one more year, and it’ll be a trend), but before I do, I wanted to give a quick rundown of what’s happening with the city budget—specifically, what changes council members have proposed to Mayor Jenny Durkan’s budget plan, which holds the line on homelessness spending and includes a couple of controversial funding swaps that reduce potential funding for programs targeting low-income communities. None of these proposals have been passed yet, and the council has not started publicly discussing the cuts it would make to the mayor’s budget to fund any of their proposed new spends; this is just a guide to what council members are thinking about as they move through the budget process.,

This list is by no means comprehensive—the list of the council’s proposed budget changes runs to dozens of pages. It’s just a list of items that caught my eye, and which could cue up budget changes or future legislation in the weeks and months ahead. The budget process wraps up right before Thanksgiving, but the discussions council members are having now could lead to additional new laws—or constrain the mayor’s ability to spend money the council allocates, via provisos that place conditions on that spending—well into the coming year.

Sweetened Beverage Tax 

As I reported on Twitter (and Daniel Beekman reported in the Times), council member Mike O’Brien has expressed frustration at Mayor Jenny Durkan for using higher-than-expected revenues from the sugar-sweetened beverage tax, which is supposed to pay for healthy food initiatives in neighborhoods that are most impacted by both the tax and health problems such as diabetes and obesity, to balance out the budget as a whole. In a bit of budgetary sleight-of-hand, Durkan’s plan takes away general-fund revenues that were paying for those programs and replaces them with the “extra” soda tax revenues, which flatlines spending on healthy-food initiatives (like food banks, Fresh Bucks, and school-lunch-related programs) aimed at reducing consumption of unhealthy food… like soda.

“The intent was pretty clear when we passed the legislation last year about how the funding would be spent,” O’Brien said last week. “What we saw in this year’s budget was [a proposal] that may have technically met the letter of it, but certainly not the spirit.”

O’Brien’s proposal would create a separate fund for soda-tax proceeds and stipulate that the city should use the money from the tax in accordance with the recommendations of the advisory board that was appointed for that purpose, rather than reallocating them among the programs the tax is supposed to fund, as Durkan’s budget also does. (See chart above). The idea is to protect the soda tax from being used to help pay for general budget needs in future years, and to ensure that the city follows the recommendations of its own soda tax advisory group.

Airbnb Tax

When the city passed a local tax on short-term rentals like Airbnbs, the legislation explicitly said that $5 million of the proceeds were to be spent on community-led equitable development projects through the city’s Equitable Development Initiative. This year, state legislators passed a statewide tax that replaced Seattle’s local legislation, but council members say the requirement didn’t go away. Nonetheless, Durkan’s budget proposal stripped the EDI of more than $1 million a year, redirecting those funds to pay for city staff and consultants, prompting council members including O’Brien, Lisa Herbold, and council president Bruce Harrell to propose two measures restoring the funding back to the promised $5 million level and creating a separate equitable development fund that would include “explicit restrictions” requiring that the first $5 million generated by the tax go toward EDI projects, not consultants or overhead.

“I think the mayor did this intentionally,” O’Brien said last week. “I don’t think she doesn’t like the equitable development initiative—I think she’s just struggling to make the budget balance—but this is a priority. We’ve seen with the sweetened beverage and the short-term rental tax that …  when we say we are going to impose a new revenue stream and here’s how we’re going to dedicate it, and then less than a year later someone says we’re going to dedicate it a different way, I think that is highly problematic on a much larger scale than just these programs.”

The council appeared likely to reject a separate, tangentially related proposal by council member Rob Johnson to exempt all short-term rental units that existed prior to September 2017, when the council first adopted rules regulating short-term rentals, from the new rule restricting the number of units any property owner could operate to a maximum of two. Currently, this exemption only applies to short-term rental units downtown and some units in Capitol Hill and First Hill; by providing the same exemption to short-term rentals across the city, Johnson said, the council could provide some certainty that the city would actually bring in $10.5 million in annual revenues, which is what the state projected and what Durkan assumed in her 2019 budget.

O’Brien, who drafted the original short-term rental regulations, suggested Durkan had jumped the gun by assuming the state’s projections were right before the legislation had even taken effect. “Typically, we try to be conservative when we have new revenue sources,” he said. Sally Bagshaw, who represents downtown and Belltown, said she had heard from constituents who bought downtown condos as retirement homes who told her their buildings have turned into 24/7 party hotels with few permanent residents. “The idea of opening this up just for budget reasons is disturbing,” Bagshaw said.”

Totem poles

Photograph by Rick Shu via Wikimedia Commons

As Crosscut has reported, local Native American leaders want the city to remove the totem poles erected in Victor Steinbrueck Park, because they have nothing to do with the Coast Salish people who have long populated the area in and around what is now Seattle. Other totem poles in Seattle, including the Tlinget pole in Pioneer Square, are similarly controversial. Council member Debora Juarez, a member of the Blackfeet Nation, is sponsoring an item that would direct the city’s Office of Arts and Culture to address the issue—not by simply removing the offending poles (which is controversial among some historic preservationists and Pike Place Market advocates) but by reviewing and making recommendations about all the Native American art on all city-owned land in Seattle. In response to Juarez’s proposal, budget chair Sally Bagshaw cautioned that she didn’t “want to get bogged down” in a massive study if the problem of offensive or inappropriate art could be addressed on a case by case basis “when they come to our attention. Otherwise,” Bagshaw continued, “I can imagine someone [stalling the process by] saying, ‘Well, we haven’t looked at our 6,000 acres of parks.'”

Legacy Businesses 

In announcing a proposed $170,000 add for the legacy business program—a plan to protect longstanding neighborhood businesses by providing cash assistance and incentives for landlords to keep renting to them—council member Lisa Herbold called it the policy for which she is willing to “fall on [her] sword” this year. Previous budgets have provided funding to study such a program, but Herbold’s proposal this year would actually get it off the ground, by providing startup and marketing costs for the program. “Much like landmarks are a bridge to our city’s culture and history because of their physical form, sometimes businesses as gathering places are also a bridge to our city’s history and culture,” Herbold said.

Support

Critics have said Herbold’s proposal, like similar programs in other cities, could prevent the development of badly needed housing by saving struggling businesses out of a misguided sense of nostalgia.

In response to a question from council member Teresa Mosqueda about whether the program might allow businesses to relocate or reopen in new developments, Herbold said yes, citing the Capitol Hill writers’ center Hugo House as an example. However, it’s worth noting that the Hugo House is a nonprofit, not a for-profit business, and it was “saved” not by government intervention but by the  private owners of the old house in which Hugo House was originally located, who promised to provide the organization with a new space when they redeveloped their property.

 

A Proposed City Program Could Save Seattle’s Legacy Businesses—but Should It?

This article originally ran in the February issue of Seattle magazine

If you haven’t been to Husky Deli in West Seattle’s Alaska Junction in a while, don’t worry: It hasn’t changed much since the last time you were there. There’s still the same ice cream counter featuring flavors like Husky Flake, Almond Joy and spumoni; the old-school deli with classic made-to-order sandwiches; the shelves stocked with staples and an oddball selection of British treats—Hobnobs, Marmite and Kinder Bueno bars.

It’s the kind of place that may still exist in your neighborhood—an old-fashioned grocery store and gathering place, owned and operated by the same family since 1932, when the place sold chocolate-dipped ice cream bars to local schoolkids. Jack Miller, the deli’s apple-cheeked, barrel-chested paterfamilias, started working here as soon as he was “old enough to help make ice cream”—around age 6 or 7, he thinks. He took it over from his father (who took it over from his father) in 1975.

“When people come back to town after being gone, they come in here, because they want to see what’s still here,” Miller says. On 9/11, he recalls, “We were full—people came in because they wanted to run into some place where they knew they were going to see people they know, and Husky’s is that kind of place.”

City Council member Lisa Herbold, who represents West Seattle and has lived in the neighborhood for decades, wants to make sure businesses like Husky can survive the rising rents and booming development that have doomed neighborhood institutions across the city—the Harvard Exit Theatre, Ballard’s Sunset Bowl, West Seattle’s Alki Tavern. Last November, Herbold secured $100,000 in the 2017 city budget (approved in an 8–1 council vote) to study the cost and scope of creating a “legacy business program,” to help “preserve businesses that contribute to the City’s unique culture and character and are at imminent risk of closure.” That includes businesses like Husky, which ranked fourth on a questionnaire Herbold posted on her council website asking, “What business do you fear will go away?” In that questionnaire, Scarecrow Video in the University District came in at No. 1.

“We need a bridge to our past,” Herbold says. “Development happens, growth happens, but the people who made this city what it is are still here.”

The San Francisco program on which Herbold’s proposal is loosely based includes both a registry of legacy businesses and a dedicated fund (passed by 57 percent of San Francisco voters in 2015) to pay for direct assistance to historic businesses, along with financial incentives for landlords to keep renting to those businesses. Herbold says she doesn’t plan to propose a property tax in Seattle. Instead, she hopes to provide incentives and assistance to businesses through existing city funds. Assistance could include help from the city’s Office of Economic Development with marketing, relocation or complying with complex regulations.

David Campos, the San Francisco Board of Supervisors member who spearheaded the legacy business effort there, says that in San Francisco, the main threat to historic businesses is rising rents: “A lot of these legacy businesses were not getting long-term leases, because the owners of these properties saw that they could make many times more money if they kicked them out and rented to somebody else.” The grants to property owners, which are capped at $22,500 a year, help make up the difference between market rent and what the businesses are able to pay; the grants to the businesses, capped at $50,000 a year, help businesses pay for ongoing operating costs, whether or not they stay in their original location. The program just started issuing its first grants.

One of the challenges of the legacy business project is defining just what bumps a business into the “legacy” category. San Francisco has grappled with this, without coming up with a definitive answer. Campos, who represents San Francisco’s rapidly gentrifying Mission District, says the case-by-case process is “intangible and very neighborhood-specific,” with businesses chosen based on testimony from the community and a hearing before the city’s Historic Preservation Commission.

Seattle’s definition may be similarly subjective, though Herbold says, “It has to be something other than nostalgia. I don’t see this as being a way to a save every quirky little hole-in-the-wall business in town.” The point is to heed community input. “It is really important that we don’t have a legacy business template, but rather, that each community has the ability to identify what’s important for them.”

Jaimee Garbacik, a local author whose multimedia historical mapping project, Ghosts of Seattle Past, collects “the venues, restaurants, shops and institutions we’ve lost to development,” according to its websites, is a vocal advocate for Herbold’s proposal. The way to make sure “legacy business” isn’t just a synonym for “quirky dive bar” is to work with and survey neighborhood residents from all backgrounds and find out what matters to them, she says. “I would hope that a space with cultural significance to a specific community, including gathering places, historically significant spaces that don’t qualify for landmark status and businesses that offer specialized services should be distinguishable from somewhere that merely has niche flavor,” Garbacik says. And just because defining what counts as a “legacy business” is difficult, the city shouldn’t be dissuaded from undertaking the project.

Of course, not everyone is in favor of preservation for preservation’s sake. Advocates for housing development tend to be skeptical of proposals that would require preserving the buildings where legacy businesses are located, arguing that this will discourage new housing and serve as another avenue for neighborhood activists to stymie projects they don’t like.

One such skeptic is Roger Valdez, a lobbyist for local apartment developers. Sitting at a table at Joe Bar, a quirky little hole-in-the-wall coffee shop on North Capitol Hill, he notes: “Whatever Lisa says, I know there are going to be people who use [her project] to stop development. It feels like another opportunity for people who want to monkey-wrench the [development] process.” And change, he says, is inevitable. Some businesses that fit into a neighborhood 20 years ago no longer do. “Small businesses are just hard to run, and sometimes the neighborhood changes and doesn’t support that business anymore. I don’t see how you’re going to put your finger on the scale and say, ‘Nobody goes to Café Whatever anymore, but there’s a group of people who want to save it, so let’s save it.’”

Ethan Phelps-Goodman, founder of the development-tracking website Seattle in Progress, spoke recently at an event curated by Garbacik about lost or threatened Seattle institutions. He agrees that small, community-based businesses add character to a neighborhood, but worries that the definition of that “character” will be determined by a narrow slice of neighborhood residents. “You can say that it will be a community-driven process, but we’ve seen repeatedly how without extreme care, open community processes are captured by the most engaged, connected and already privileged members of a community”—that is, the single-family homeowners who often show up to oppose new development already. Phelps-Goodman argues that the best way to keep small businesses viable is to create new mixed-use development that includes spaces for both old and new small businesses. “By far the most important thing we can do is address the shortages of affordable small commercial spaces that are the root of the problem,” he says.

It’s closing in on noon back at Husky Deli, and nearly every seat is taken in the small dining area. Miller, the owner, knows he and his business are in an enviable position. As owner of the building, he’s the master of his fate. His building will only be torn down for redevelopment if he decides to take that step. “We’ve got no plans to do that.” While redevelopment could mean a financial windfall, there are other important things—like making the kind of human connections his place of business fosters. It’s true even for newcomers to the city. “They start off eating at Chipotle and all the places that they know, but pretty soon they realize that it’s pretty cool to go to a place that’s been there a long time.” Herbold sees her proposal as a bridge to that kind of past—to a time when guys like Miller passed their businesses down from generation to generation, and everyone bought their ice cream by the cone.

City Considers Protections for “Legacy Businesses”

This post originally appeared on Next City.

Wedgwood Salad
Image via Serious Eats.

The Wedgwood Broiler, in a neighborhood of single-family bungalows in far North Seattle, is a blue-collar bar and restaurant that has been around for more than 50 years, and has the look of a place last renovated sometime in the 1980s. There’s the green wall-to-wall carpet, the mauve-and-mint patterned wallpaper in the ladies’ room, and the lighting set to “permanent twilight.” Smoking has been banned in Seattle bars for years now, but the place still looks like it reeks of smoke. The menu — grilled steaks, hamburgers and salads with Cheez-Its for croutons — is purely vintage, except for the 2016 prices.

The Broiler is the kind of old-school place that people mention when they talk fondly about “old Seattle” — basic, rough-hewn, unpretentious. It’s also a member of an increasingly endangered species: Businesses that thrived in a pre-tech-boom Seattle are being replaced by sleek doggie-friendly brewpubs and high-end doughnut shops. Old institutions, many of them in low-slung buildings along once-sleepy commercial strips, are disappearing amid new development.

Seattle City Council Member Lisa Herbold wants to make sure businesses like the Broiler — and Husky Deli in West Seattle, Scarecrow Video near the University of Washington and the Ballard Smoke Shop dive bar in northwest Seattle — don’t go the way of the Sunset Bowl, Piecora’s Pizza and other beloved local institutions that have closed in the last decade. To that end, she’s proposed a “legacy business” program that would identify such neighborhood institutions and provide them with financial or regulatory support to help them survive as Seattle continues to boom.

“It’s important that we preserve a cultural bridge to our past,” Herbold says.

Her idea, which is still in its infancy — the city council just allocated $100,000 to study what a legacy business program might look like — is loosely based on a similar program in San Francisco, which has also lost older businesses to new development. Voters passed a proposition for it by a margin of 57 to 43 percent in 2015. Businesses that are 30 years or older, “have contributed to their neighborhood’s history,” and agree to maintain their identity can apply for placement on the city’s Legacy Business Registry.

Once the mayor or a member of the Board of Supervisors nominates a business, and the Small Business Commission approves the nomination, the business becomes eligible for grants of up to $50,000 to help with rent, renovations or other costs. (Building owners could also get grants to help subsidize below-market rents.) So far, about 300 businesses have qualified, and the program — which got off to a slow start, apparently in part because the initial legislation didn’t fund a staffer to administer the grants — is on track to fund grants of about $3 million a year.

At this point, Herbold’s Seattle legacy business program doesn’t include a dedicated funding source. Instead, it would be administered through the city’s Office of Economic Development, which would provide help with marketing, regulatory compliance and relocation costs for businesses forced to move to a new location by development.

“I want to be more creative around the types of support that eventually might be available, rather than to presuppose taxpayer funds,” Herbold says. In her view, there are “forces that are creating impacts, and communities that are feeling the impacts, and I just want to create a space for a small handful of eligible businesses to have the city as a partner in facilitating conversations between them.”

Skeptics of Herbold’s proposal suggest that development is inevitable, and that protecting old businesses may come at the cost of encouraging new ones. And they point out that, in Seattle at least, “preservation” efforts are often smokescreens for anti-development activism. For example, one business that made the “threatened” list in Herbold’s survey was the West Seattle PCC Market — an outpost of a local grocery chain that opened in the late 1980s, and which happens to be the site of a hotly disputed new mixed-use development.

“This is all about redevelopment,” says Roger Valdez, a local lobbyist for small developers and the founder of Smart Growth Seattle. “If you’re talking about a business closing because the owner doesn’t know how to run a business, is the city really going to intervene in that situation? I think it’s not fair to be picking winners and losers in the realm of small businesses.” Herbold says just as firmly: “This is not about development. But I want development to consider the things that are important to our communities.”

One of the challenges Herbold and other advocates of legacy business protections face is defining what counts as a “legacy” business. David Campos, the San Francisco supervisor who spearheaded the legacy business project in that city, says the criteria they use are “intangible and very neighborhood-specific,” and Herbold says Seattle’s definition may be similarly subjective.

“It is really important that we don’t have a legacy business template, but rather, that each community has the ability to identify what’s important for them,” she says. “Development happens, growth happens, but the people who made this city what it is are still here.”

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