Business Preservation Assitance Program
BPAP is designed to help DC’s culturally-vital small businesses avoid displacement as neighborhoods rapidly gentrify. In gentrifying communities, businesses face the risk of permanent displacement due to rapid escalation in property-related costs. As these costs become untenable, many small businesses are forced to close or move to more affordable properties outside DC. Losing these businesses further disintegrates place identity resulting in cultural homogenization of neighborhood commercial corridors disproportionately impacting entrepreneurs of color. Since the COVID-19 pandemic necessitated emergency closures, many brick and mortar businesses are unable to meet their rental payments, causing upstream problems for commercial property landlords and their mortgage holders. A fragmented response will further imperil recovery efforts from the necessitated closures. District Bridges has convened an ad hoc working group of stakeholders to propose a systematic phased approach for ensuring equitable treatment of all parties that will provide for the preservation of otherwise viable small businesses considered to be the ultimate drivers of economic growth as well as job retention and creation.
BPAP Implementation Plan
District Bridges is convening an ad hoc working group of stakeholders to propose a systematic phased proposal for ensuring equitable treatment of all parties that will provide for the preservation of otherwise viable small businesses considered to be the ultimate drivers of economic growth as well as job retention and creation. We anticipate a three-phased response:
Phase 1: Prevent tenant eviction and loan default (1-3 months)
- Develop criteria for and triage of viable businesses, as determined by performing leases and mortgage loans prior to the crisis vs. loans/leases that were not performing prior to the crisis.
- Temporary suspension/deferment of rent payments for tenants.
- Lender deferral of mortgage payments from landlords per DISB requirements.
Phase 2: Forbearance (2-12 months)
- Renegotiation of leases to reflect new realities of revenue potential and ability of tenants to pay, based on post-COVID cash flow.
- Forbearance/modification of commercial mortgages to reflect underlying payment stream from tenants, based on post-COVID cash flow.
- Review options for payment of real estate taxes, based on post-COVID cash flow.
Phase 3: Restructure (12-36 months)
- Longer-term restructuring of leases, mortgages, and property taxes as the economy regains momentum and tenants and landlords recover.
There are approximately 38,000 small businesses in Washington, DC according to the DC Policy Center (DCPC). DCPC defines a small business as a one with fewer than 100 employees. Among these small business owners, there is roughly 21% female ownership, 58% male, 8% equal male/female ownership, and 31% minority ownership. While income data for these business owners can vary widely the target group for this work would likely be small business owners from low- and medium-income backgrounds or those who lack high levels of household wealth as we know that these business owners are the ones who are most vulnerable to eviction.
While the desired outcome of this effort is to preserve the tenancy of these small businesses the challenge we face is a systemic one that can only be addressed through a systemic multi-sector approach engaging all the active stakeholders. These stakeholders include small business retail tenants, commercial property landlords and property managers, commercial mortgage lenders – regulated and private, governmental stakeholders such as Department of Investment, Securities, and Banking (DISB), Department of Small and Local Business Development (DSLBD), Deputy Mayor’s Office of Planning and Economic Development (DMPED), Office of Tax and Revenue (OTR), policy researchers, analysts, and business advisory organizations.
As this crisis is imminent, swift decisive action will be required. We have already identified and started our engagement with the necessary stakeholders and plan to host a convening shortly to begin a coordinated response.