Set-Asides for Local Retail – Longfellow CBA in Minneapolis

Date: 1 Dec 2008 | posted in: Retail | 0 Facebooktwitterredditmail

In March of 2008, members of the Longfellow Community Council (LCC), a South Minneapolis neighborhood, signed a Community Benefits Agreement with a developer looking to redevelop an old feed mill.  The site comprises four blocks next to a city light rail station.

Alongwith green building standards, an affordable housing set-aside, and transit-centered elements, LCC negotiated a local business set-aside of at least 30 percent of the commercial tenant mix.  Furthermore, at least one-third of this set-aside must go to "community-based small businesses," defined as either new start-ups or businesses with only one existing location.  (The rest of the set-aside may go to locally owned, independent retailers that already have two or more locations.)

TheCBA stipulates that the developer seek out and recruit local businesses that fall into one of several categories preferred by the neighborhood, with the top preference being a local grocery store. The agreement further requires the property owner to provide LCC with the names of all prospective tenants and be available to meet with LCC, at the organization’s request, about any prospective tenant.

The CBA also protects the development from big boxes by capping store size at 30,000 square feet.  (See How Big is Too Big?)

Here’s the full text of the Longfellow CBA.  Below is an excerpt from the Economic Development section, which outlines the local business set-aside:

 


 

D. Commercial/Retail Tenant Mix. In order to ensure a mix of businesses that will meet the needs of the community, the Owner shall use both the LCC Community Values Survey and the results from LCC Consumer Surveys and the criteria listed in items 1-4 below to identify and recruit prospective commercial/retail tenants. At least 30 days before signing any lease agreement or other contract for space, the Owner shall provide the Executive Committee of LCC (by sending the information to LCC’s Executive Director as provided in Article 12.M) with the names of the prospective tenants and shall, if LCC requests, meet with LCC regarding the prospective tenant. LCC will treat the information as confidential.

1. Preferred Business Sectors. The specific business sectors identified by the community as ‘business sectors to solicit’ in order of preference are as follows:

  • small grocery store
  • merchandise retail
  • healthcare and wellness services
  • restaurants and cafes – especially offering live music
  • small hotel
  • music/entertainment venues
  • office space
  • light manufacturing

2.  Desired Business Types. The types of businesses the community desires include:

  • small local businesses, with the following preference ranking: (1) from the Minneapolis/St. Paul metropolitan area, (2) the State of Minnesota, and (3) the Upper Midwest
  • walkable, neighborhood-serving businesses accessible from sidewalk
  • socially responsible businesses – offering living wage jobs
  • financially viable businesses
  • smaller "unique" shops offering quality products/foods
  • small regional, rather than national, chains

3. Businesses Not Desired. The type of businesses the community does not desire are "big box" retailers because their scale does not fit within a residential neighborhood and because they require too much parking. Owner shall limit the size of any single commercial/retail space to 30,000 square feet or less.

4. National Franchises or National Chains. In selecting the commercial/retail operations at the Development, the Owner shall limit the amount of space occupied by national franchises or national chains to not more than 70% of the total retail/commercial space in the Development, with 30% or more of the commercial/retail mix as local businesses. For purposes of this paragraph, a local business is a business from the Minneapolis/St. Paul 7-county metropolitan area and does not include a local business owner of a franchise of a national chain. If Owner is unable to market 30% or more of commercial/retail space to local businesses, resulting in a vacancy greater than 60 days, or the Owner demonstrates to LCC that the Owner has actively marketed the space to local businesses for at least six consecutive months without being able to fill the space with a local business, the Owner may lease or convey the vacant space to a franchise or national chain business. However, the 30% or greater reserved local business space requirement is not eliminated, and Owner must continue to meet this requirement each time an open space becomes available in the Development. Owner shall provide to LCC proof of marketing efforts upon request.

E.  Opportunity for Community-Based Small Business. The requirements set forth relative to community-based small businesses (CBSB) are intended to ensure ongoing opportunities for these businesses. A CBSB is defined as a local business from the Minneapolis/St. Paul metropolitan area that is either a new start-up or second stage business (a metropolitan area business with one existing location that wishes to expand to a second location or relocate to the Development).

1. Provision of Space for Community-Based Small Business. The Owner shall ensure a minimum of 10% of the Development’s total commercial/retail square footage is reserved for CBSB ("CBSB Space"). Preference shall be given to CBSBs that are minority and/or female owned. Owner must ensure the continuation of the CBSB Space with subsequent owners of the Development in accordance with Article 12.D of this Agreement. As in Article 7.D.4. above, for purposes of encouraging development of local, entrepreneurial businesses, a business is not considered to be a CBSC if it is a franchisee of a national franchise or chain. The successful lease of the 10% CBSB Space shall be credited towards the 30% or greater local businesses provisions in Article 7.D.4. above.

2. If all or any portion of the CBSB Space has been vacant for at least 60 days or the Owner demonstrates to LCC that the Owner has actively marketed the space to community based small businesses for at least six consecutive months without being able to fill the space, the Owner may lease or convey the vacant space to a non-CBSB business. However, the 10% CBSB Space requirement is not eliminated, and Owner must continue to meet this requirement each time an open space becomes available in the Development. Owner shall provide to LCC proof of marketing efforts upon request.

More:

  • Longfellow Community Council
  • Community Benefits Agreements: Growing a Movement in Minnesota – January 28, 2008
    The Alliance for Metropolitan Stability recently released this report on CBAs to further develop local understanding of the potential of these agreements to yield significant, community-desired results from large-scale redevelopments and other projects. The report profiles ongoing CBA discussions in metropolitan communities, including the Longfellow CBA.
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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.