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Getting started with economic support for your legacy business program.
If you are interested in understanding how to support the legacy businesses in your program economically, it is crucial to consider the bigger picture. When designing a legacy business program, it can be easy to focus solely on legacy business owners who are the visible faces of cultural heritage and community identity. Yet the economic reality for legacy businesses is more complex. Legacy businesses operate within a physical space—a space they may or may not own. Many legacy business owners rent their buildings from landlords or property companies. Others may own their buildings outright. Each ownership model presents unique challenges.
Legacy business owners who rent their properties are more vulnerable to sudden rent hikes driven by speculative development or gentrification. These rapidly rising rents can outpace the business's sometimes modest income. Furthermore, rapidly changing neighborhoods can shift demographics or consumer preferences, making formerly stable business models unstable and increasing the risk to the business.
For building owners, property taxes and redevelopment pressures can increase the risk of raising rents or selling legacy business properties. Changes in municipal zoning or usage can help to expand or create new commercial corridors, but it can also disrupt building ownership. Additionally, many of the buildings that house legacy businesses are older or in underserved neighborhoods, driving up maintenance, code-compliance, and restoration costs that are passed on to business owners.
The two-part economic support model.
Given that both renters and building owners are part of the economic ecosystem for legacy businesses, a two-part economic support model provides the most comprehensive approach for a legacy business program. Including financial assistance for renters, such as rent stabilization, small-business grants, or low-interest loans, helps their businesses with immediate challenges. Providing incentives for property owners, such as property-tax abatements, preservation grants, or rehabilitation tax credits, can make it easier for them to sustain rental prices and maintain their properties rather than sell or redevelop them, directly benefiting the legacy businesses that occupy them. If the legacy business owner also owns their building, they could have multiple paths for economic support. Supporting both sides helps stabilize rents and ownership costs while strengthening long-term relationships between tenants and property owners. You should also consider linking the two sides of economic support to each other so that incentives provided to renters do not lead to increases in rent, and incentives to building owners are tied to rent or lease stabilization. The result is an approach for your legacy business program that preserves not only the legacy businesses themselves but also their physical spaces and their place in defining the community. Given the need for this two-part model, this website provides examples of economic support for both tenants and building owners.
This two-part economic support model is ideal, but in reality, it is not widely practiced. Most economic support models in existing legacy business programs focus solely on benefiting business owners through grants or other incentives. Only one program, the San Francisco Legacy Business Program, provides precedent for the two-part economic support model. This legacy business program is the first and best-established in the country, and implementing it took considerable time and effort, starting as a pilot program in 2013, becoming an official municipal program in 2016, and then fully integrating as a working program with process and funding by 2019. The two-part economic support model requires unifying multiple municipal organizations to implement policy, planning, and economic development changes as part of your legacy business program. From my interviews with existing legacy business programs in San Antonio and Los Angeles, this is the foremost hurdle preventing their increased economic support. Keep that effort in mind when you begin planning your program.
San Francisco’s Legacy Business Program demonstrates the two-part economic support model by using its Legacy Business Historic Preservation Fund. This fund was formally created through voter approval, making grants available to both legacy businesses and the landlords who lease to them. The fund became part of the broader legacy business program in 2015, addressing rent stabilization and anti-displacement through a two-part economic support model.
The wording of the Historic Preservation Fund policy underscores its importance in preserving legacy businesses, given the city’s economic climate at the time: “property owners have little incentive to retain longstanding tenants (and) a long-operating business that does not own its commercial space or have a long-term lease is particularly vulnerable.” The fund authorizes annual grants to legacy businesses based on the number of full-time employees, and annual grants to business owners who create 10-year leases (or more) with legacy businesses. This two-part approach helps to preserve the building while stabilizing the relationship between building owners and the legacy business owners who lease with them.
Being pragmatic when incorporating economic support.
It is unlikely that any legacy business program would kick off with an economic support program as sophisticated as San Francisco’s. Implementing economic support in your legacy business program will likely be an ongoing and evolving process. Keep the scale of your program and the limits of your budget in mind when you are just starting; you do not want to overpromise economic support for your legacy business owners. According to the San Francisco Office of Small Business’s Report on Legacy Business Grants, Fiscal Year 2024-2025, this may have happened even with the San Francisco Legacy Business Program. The large pool of legacy business owners in that program diminished the available funding for individuals, limiting the average grant allocation to around $16,000. Given the extreme economic and development pressures in the city, this amount was insufficient to help some owners, with the San Francisco Chronicle reporting that several legacy businesses went out of business shortly after receiving the grant.
You may need to start with the most practical economic support method and build from there. If you are in doubt about where to start, meet with your legacy business owners and focus on what they most immediately need to stay in business. Since each legacy business program will likely be different, customized to the community’s needs, a wide range of economic support methods will be outlined so you can integrate those that best meet your situational needs.