Community organizing is one of the more difficult activities to get funding for, but it is necessary for successful commercial stabilization. Changing a district to make it more livable while maintaining the existing community's cultural identity is a delicate balance. Without the active involvement of a broad set of community members, hitting that balance is practically impossible.
Facilitating merchant involvement is very time consuming, but can be very valuable. Merchants know what is happening on the street. The best merchants know a lot about their customers, why they shop there, and often about other needs in the community. Merchants often know before anyone else when a business is about to close or a landlord is planning renovations.
If organizing residents is challenging, however, organizing merchants is even harder. People who succeed at operating neighborhood businesses often do not like to spend time in community meetings. Even if there is some ongoing merchant participation in merchant associations or Main Street program meetings, involving merchants requires visiting them in their stores for one-on-one conversations.
A good commercial leasing agent can look at a vacant office or retail space in a familiar neighborhood and almost instantly make an educated guess about how much it will lease for and how quickly it is likely to lease. Commercial brokers, however, are frequently not willing to list space in tougher neighborhoods. This means CDCs are left to their own devices when it comes time to find tenants for commercial space in struggling neighborhoods. It also means they are forced to finance and build that space without the reassuring voice of an experienced broker establishing the value.
In many disinvested neighborhoods there are so few broker-assisted transactions that no one knows what the market rent is. The process of rebuilding these commercial real estate markets requires a growing network of people with personal experience building and leasing these spaces.
The field of community development has grown to include a very wide range of financing sources-from tax credits to loan funds to community development financial institutions. Though many are useful in developing commercial or community facilities, most were developed primarily to finance affordable housing production. Community- serving retail space, however, is much riskier than affordable housing, and many of the housing-specific financing tools do not adequately address that difference.
Housing lenders often see commercial development as an afterthought and attempt to limit the risks of retail development in mixed-use projects in ways that also limit the economic development potential of the project. Nonprofit developers will need new financing tools to realize their full potential as developers of neighborhood stabilizing retail space. See Appendix for more details.