Q&A: Creating Community-Serving Commercial Spaces

Q&A: Creating Community-Serving Commercial Spaces

Co-authored by:
Director of Community Real Estate Karoleen Feng
Senior Project Manager Feliciano Vera

MEDA launched its Community Real Estate program just four years ago, as a proactive, aggressive response to the unprecedented gentrification and subsequent displacement occurring in San Francisco’s Mission District, long a welcoming neighborhood for Latino immigrants and small businesses. We pivoted from being a 45-year-old direct-services agency to becoming an affordable-housing developer, now with a staff of 13 that has preserved or produced a pipeline of 1,159 homes and 100,000 square feet of affordable commercial space in a contracted period.

To maintain a strong and supportive neighborhood for Latino residents, businesses and institutions, MEDA has approached our community-development work through the lens that Mission-based businesses and organizations want to have long-term, stable spaces to call home so that they can continue to provide affordable products and services. MEDA terms this cultural placekeeping, cognizant that these commercial tenants are an inherent part of the fabric of the Mission’s unique identity and culture.

Having built momentum in incrementally keeping commercial tenants in place, MEDA is scaling its work to bring back former Mission tenants and adding more spaces for commercial tenants to expand. In doing so, we have come to recognize that commercial tenants fall along a continuum of readiness to occupy/stay in a space, ranging from month-to-month leases through ownership.

Who do we want there, who is the right tenant or type of tenant to have there, what does the community need,, and what are the values and needs for this space?

When MEDA develops commercial spaces to combat gentrification and displacement, we use the approach that such spaces must be viable in being able to serve the community in the long term. To make that strategy successful, MEDA needs to treat our potential commercial tenants the same as residents in our affordable housing. It is imperative that these small ventures build financial assets via careful business planning, and these entrepreneurs must be engaged to see themselves as part of the future of the community.

We ask our small businesses to intentionally commit to a minimum of the following four social criteria:

  1. Develop to ensure social impact;
  2. Commit to local hiring;
  3. Offer affordable products/services; and
  4. Be locally owned (e.g., , be a local event space, or include local artists)  

For our early education centers, MEDA looks to connect them with our Mission Promise Neighborhood education initiative work, whereby students and their families are connected to a support network to generate academic success from cradle to college to career. For our cultural organizations showcasing a Mission identity, we expect them to be committed to keeping place through their vision and programming.  

What is the work to be done – recruitment, MOUs, business terms, LOIs, specific design needs/parameters (type and size of space), financing commitments and evaluating financial capacity, ownership vs. leasing?

As previously stated, MEDA recognizes that commercial tenants fall along a continuum of readiness to occupy/stay in a space, ranging from month-to-month leases through ownership. If we are committed to the long-range sustainability of commercial tenants, the agreement for their long-term occupancy is not a one-size-fits-all strategy. Additionally, since managing the process of securing and moving into a long-term space is not necessarily the primary mission for small businesses and cultural organizations, MEDA, as owner, needs to spend more time preparing, evaluating and negotiating lease terms with the potential occupant.

For small ventures, the Community Real Estate team pairs up with our in-house Business Development coaches, who assess the owner’s unique situation and helps them build out their business model and forecasting. MEDA also now has a Community Development Financial Institution (CDFI), called Fondo Adelante, to create access to capital for business owners who cannot garner such monies from traditional lenders. As there are few culturally competent lending options, the character of the client is one qualification for receiving a loan — a criterion weighted as highly as their credit score.

For cultural organizations, MEDA relies on groups such as the Northern California Community Loan Fund (NCCLF), which has a real estate consulting arm to prepare organizations — structurally and financially — to be better prepared to engage in longer-term real estate. This includes strengthening their board structure and internal accounting controls, plus developing a business and succession plan. NCCLF also educates organizations on real estate terms and financing options.

What is the legal structure and status of your district? What is the oversight structure, if any, funding sources and what are the benefits/challenges?

San Francisco’s Mission District features a cultural district — one of a trio of major commercial corridors that form the boundaries of the neighborhood. The Calle 24 Latino Cultural District, along 24th Street, was established to foster cultural preservation in a limited geographical area, where gentrification can be controlled. After a six-year battle, Calle 24 was recognized as a City-level cultural district; it now has its own board and is attempting to be a 501(c)(3). Calle 24 can apply for direct funding to support its identity, including marketing and the re-leasing of vacant spaces. The current effort is to expand beyond Calle 24, with a cultural overlay that stretches along both Mission and 16th streets, two other vital commercial corridors of the neighborhood.

How is the community engaged in your work, and/or what has been the community response?

Comprehensive community engagement — with meetings to garner feedback — is an essential piece of MEDA’s pre-development work. It is paramount to abet edification of the community around proposed density, intended use, ongoing displacement issues and anticipated rehab work. MEDA’s work would not showcase a true community benefit without including neighbors in a discourse to identify need.

 

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