Toolkit Home | Economic Support | Tenant Rent/Lease Support
Providing rent/lease support for tenant legacy businesses.
Many legacy businesses operate in leased spaces and are especially vulnerable to rising rents, lease instability, and sudden displacement. Targeted economic support for legacy business tenants can be an essential component of your legacy business program, helping these businesses remain in place, plan for the future, and continue contributing to the cultural, social, and economic continuity of their neighborhoods. Assisting with rent or lease support helps legacy businesses in your program by stabilizing their most significant and unpredictable expense, allowing them to remain in place despite rising rents and development pressures that threaten long-term continuity. This section provides examples of rent and lease support that might be incorporated into your legacy business program.
Rent Gap Subsidies
A rent gap subsidy provides direct financial assistance to a legacy small business owner to help them cover rising rental costs. As neighborhood rents rise above the business owner’s previous cost, the subsidy covers the “gap” between the old and new rents, allowing them to remain in place amid neighborhood change or gentrification. These subsidies are generally intended as a stopgap, allowing the business owner time to adapt their business or find another financial solution. In the 40 legacy business interviews I have been part of for the People & Places project in Arlington, VA, rental cost issues have been the most frequently mentioned challenge.
At the local level, rent gap subsidies can be funded through local municipal funds (e.g., general funds), economic development funds, commercial stabilization, or small business funds, or through funds raised through Tax Increment Financing (TIF). Federal or state grants, such as Community Development Block Grantsfrom the US Department of Housing and Urban Development (HUD), are also potential funding sources. Additionally, local private entities, such as Community Development Financial Institutions (CDFIs), may be willing to partner with legacy business owners to provide subsidies in their communities.
San Francisco Legacy Business Program
The San Francisco Legacy Business Program, through its Legacy Business Historic Preservation Fund, provides grants to qualified legacy business applicants totaling $500 per full-time employee, which can be used to subsidize rent costs.
Case in point.
Lease Negotiations
In an effort to reduce the displacement of legacy businesses due to rapid rent increases, a few legacy business programs now offer some form of leaseholder assistance. While these services do not offer direct financial support, this service can have a dramatic impact on the legacy business’s bottom line. These services often include landlord mediation, lease negotiation, and pro bono lease reviews. In some cases, like in San Francisco’s Legacy Business Program, lease restrictions are placed on buildings that house legacy businesses. As you start your program, identify which municipal agencies in your area already offer lease services that you can leverage. You may also want to consider providing training or further learning assets for your legacy business owners to help them negotiate their own leases. You can use examples like Los Angeles’ Legacy Business Program to help you create your own services.
Case in Point: the Los Angeles Legacy Business Program offers lease assistance and legal support through the toolkit available to the business owners in their program. The program leverages the small-business support currently offered by other organizations in the city.
Los Angeles Legacy Business Program
The Los Angeles Legacy Business Program offers lease assistance and legal support through the toolkit available to the business owners in their program. The program leverages the small-business support currently offered by other organizations in the city.
Case in point.
Creating Pathways to Property Ownership
One way to ensure that legacy business owners do not struggle with rent issues is to provide a pathway to owning their building. While this type of economic support is not currently part of existing legacy business programs, it does exist in cities with such programs. These types of programs are found throughout the US and can be used by your program to support legacy business owners. However, it is important to note that in alpha cities like New York, San Francisco, and Boston, or other cities with extremely high real estate costs, these programs will most likely not be financially feasible.
Other examples of partnerships that could strengthen the pathway-to-ownership initiatives in your legacy business program include:
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Working with Community Land Trusts (CLTs) to acquire commercial properties in their community that could provide shared ownership opportunities for legacy business owners. (See All-In Cities’ Commercial Community Land Trusts toolkit for more information)
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Partnering with community real estate co-op organizations or working with organizations like the Local Initiatives Support Corporation (LISC) to provide programs for legacy business ownership. (See the Community Ownership through Real Estate section for more information)
The Business Community Ownership Fund
The Business Community Ownership Fund in Seattle was designed to give business owners, especially those in BIPOC, ethnic, immigrant, and underserved communities, greater control of their business expenses through joint ownership of commercial properties. The program purchases commercial properties in partnership with small business owners, sharing ownership and guaranteeing long-term affordability through capped occupancy costs.
Case in point.
Rent Abatement
Rent Abatement programs are local initiatives designed to reduce or freeze commercial rents so that small businesses can remain in place. They are not used in current legacy business programs and are still not widely used nationwide. Still, they are gaining popularity as cities strive to maintain economic stability in their neighborhoods. Rent Abatement programs could serve as a powerful tool to curb rising rents and help long-standing businesses that rent their spaces while remaining competitive.
Rent abatement programs provide financial (and tax) incentives to commercial property owners in exchange for maintaining affordable rents. The programs come in various forms and are offered by both government and private entities. Some provide direct assistance to landlords while others, like in New York City, offer tax abatement that must be directly passed through to the renter.
Pittsburgh Downtown Partnership
The Pittsburgh Downtown Partnership is a nonprofit BID focused on the “economic vitality and quality of life of downtown Pittsburgh.” They offer a rent subsidy of up to $2,000 per month to commercial property owners for up to 12 months to incentivize multi-year leases with existing businesses.