| | | | | | | | TO: | Public Safety and Neighborhood Quality of Life Committee Members |
|
| FROM:
| Alina T. Hudak, City Manager
|
|
| DATE: | September 21, 2022
|
|
| SUBJECT: | DISCUSSION REGARDING THE ADOPTION OF A VACANT STOREFRONT REGISTRY ORDINANCE |
|
| | | | | | | | HISTORY:
| On June 22, 2022, the City Commission referred to the Public Safety and Neighborhood Quality of Life Committee (the “PSNQLC”) (item C4 G) a discussion item regarding the adoption of a Vacant Storefront Registry Ordinance. The sponsor of the proposal is Commissioner Rosen Gonzalez.
Storefronts are important to Miami Beach neighborhoods. They house local businesses, are a visible part of the street, and define the character and feel of the community. Active and well-designed storefronts enhance and give identity to Miami Beach’s diverse network of commercial districts. An active, attractive street becomes the center of a safe, stable, and thriving community. Storefront activation and improvement is a simple way to upgrade the visual and economic appeal of a commercial district, making it a place where people want to live, work, and play.
There are many issues and circumstances that may cause or prolong vacancies within commercial spaces including but not limited to:
- Absentee landlords;
- Foreclosure;
- Landlord preference for particular types of tenants;
- Legislative speculation (zoning ordinances);
- Neighborhood conditions making property unattractive;
- Non-leasable buildings (issues with code compliance);
- Normal turnover;
- Property disputes and transfers; and
- Rent speculation
Post-COVID-19, the City of Miami Beach continues to experience a growing number of vacant storefronts. As noted in the attached June 22, 2022 City Commission referral memo and accompanying City of Cambridge “Storefront Vacancies Best Practices” report, some cities, such as San Francisco, California, Washington, DC, and Arlington, Massachusetts, have adopted Vacant Property Registration ordinances. These ordinances generally require owners of vacant commercial properties to submit information to a City registry and pay an annual fee for each year that the property remains vacant. Accordingly, the municipality tracks and monitors vacant properties, establishes a dialogue with property owners to understand the nature of and cause of the vacancy, and develops strategies to help the owner to either lease the space, temporarily activate it, or else adhere to minimum standards for the appearance and maintenance of the vacant property.
The Cambridge report offered the following six (6) key findings:
- ordinances have typically improved communication between property owners/lending institutions and municipal agencies;
- the timetable a property owner is required to report a vacancy varies, but is typically between 30 and 90 days, with fees generally due at the time of registration;
- the fine structures for failing to register also vary, and tend to have the capacity to accrue rapidly for persistent and repeat offenders;
- exemptions and waivers for registration fees are typically discretionary and determined based on the proceedings of a hearing;
- most ordinances require vacant properties adhere to preexisting standards for sanitary, building, and fire codes; and
- all of the ordinances require that owner contact information be posted in a prominent and visible location.
Commissioner Rosen Gonzalez suggests that the City review and consider the adoption of similar legislation to address the numerous vacant storefronts located in Miami Beach's busiest commercial areas. Specifically, Commissioner Rosen Gonzalez urges exploring a Vacant Storefront Registry ordinance, that waives the fees and/or fines for non-compliance where owners voluntarily elect to participate in a relevant City program or take measures to activate their vacant spaces. The reasoning is that such an ordinance could be a powerful tool for the City to improve the quality of its commercial corridors and vibrancy of the City’s international brand.
|
| | |
| | | | | | | | ANALYSIS
| To address the rising number of vacant storefronts and the imagery and appearance of the different vacancies in Miami Beach business corridors (such as 41 Street, Lincoln Road, Washington Avenue, Ocean Drive, Collins Avenue and Normandy Fountain), the Administration continues to explore programs that encourage the leasing or activation of vacant storefronts and temporarily provide for a beautification alternative while the owners of the storefronts seek new tenants.
Vacant Storefront Cover Program
The current iteration of the Vacant Storefront Cover Program was introduced on July 27, 2018, to address immediate needs with vacant storefronts. The Finance and Citywide Projects Committee (FCWPC) recommended that the City provide immediate funding for a storefront cover program with approved City designs. The Program was not meant to be a long-term solution to blighted commercial corridors, but was intended to attract prospective tenants, increase property value, activate the street, maintain community integrity, encourage placemaking, and promote public safety.
Following a hiatus during the COVID-19 pandemic, the Economic Development Department relaunched the Vacant Storefront Cover Program in May 2021 to improve the appearance of vacant street-level commercial spaces and support the activation and development of commercial corridors. The initiative allows property owners, on a voluntary basis and at no cost, to have their vacant storefronts covered with preapproved artistic designs fully subsidized by the City.
To increase awareness in the community, the Program’s application form and guide have been shared with business improvement districts, business associations, and the Miami Beach Chamber of Commerce. The Department performs targeted outreach and contacts property owners and commercial real estate brokers to market the Program. Although most participating properties to date are in South Beach, the Department has made significant progress in the Mid-Beach and North Beach commercial areas, in collaboration with the Code Compliance Department. The Program has helped businesses and property owners upgrade their storefronts’ visual appearance, draw attention to available vacancies, enhance the neighborhood business corridor and support Miami Beach’s business retention and attraction efforts.
The current designs were created by local Design and Architecture Senior High (DASH) students. To increase community participation in the program, the Administration would like to augment the design options. For the next phase of designs, the Department is planning a local Call to Artists to procure additional designs.
Miami Beach Open House Program
The City launched the Miami Beach Open House Program on January 21, 2021 to activate vacant spaces through Summer 2021. The Tourism and Culture and Economic Development Departments collaborated on the Miami Beach Open House Program to offer an innovative artist residency program that activated vacant Miami Beach storefronts with artistic workspaces, studios, exhibition spaces and multi-disciplinary performances. The Miami Beach Open House Program leveraged the Administration’s partnerships with the Miami Beach cultural community and property owners to provide space to local artists, activate commercial corridors with arts and culture, and benefit the entire community.
The Open House Program successfully provided thirty-three (33) artists with studio space in vacant commercial properties as well as the opportunity for their work to be installed at Miami Beach public cultural institutions including The Wolfsonian, The Bass, Miami Beach Urban Studios-FIU, and the Miami-Dade Public Library System. The program augmented the dynamic cultural atmosphere and highlighted available spaces for temporary and long-term economic opportunities. Selected artists received a $2,500 stipend to realize their project and assist with incidentals like materials, moving expenses, insurance, utilities, marketing and publicity. Where possible, participating property owners offered use of their storefront spaces for below-market rent and the cost of operating expenses such as insurance and utilities.
As the retail market changed post-COVID-19, property owners began to to seek market-rate tenants with longer leases versus subsidized cultural tenants. Alternatively, some property owners preferred to keep spaces vacant rather than activate with up-and-coming artists paying limited amounts of rent that may not fully cover the landlord’s operating expenses. The Open House Program was a successful cultural initiative, but it was challenged by limited participation from property owners.
Pop-up Activations in Vacant Storefronts
In 2019, the City introduced "Pop Up" Special Event Permits (PU-SEP) as temporary and fast-tracked licenses for businesses interested in pressure testing the Miami Beach market for possible long-term activation. The program’s premise recognized that a long-term lease, with its associated requirements and costs, could act as a barrier to entry for newer or smaller businesses looking to test the market with a new concept or limited capital. The Program was designed to activate retail spaces on a temporary basis to promote and sell products of all types, from food and beverage, clothing, or unique retail merchandise. Compared with the business tax receipt (BTR) approval process and its comprehensive review of compliance with regulations, the PU-SEP is implemented quickly and safely. As a result, the concept has the potential for businesses to extend reach and gain exposure with less risk and overhead. This initiative remains active and continues to attract market-curious businesses.
Although government is limited in how it may restrict or control private property, the Administration continues to explore and examine innovative initiatives aimed at activating vacant spaces that detract from the livelihood of commercial areas. The Administration continues to engage with property owners, businesses, and business organizations on a regular basis, through roundtable meetings, outreach events, business corridor walks and visits, newsletters and social media, to understand their concerns and perspectives on business conditions and to promote the City’s various economic development programs.
Proposed Vacant Storefront Registry
The creation of a vacancy registry that allows property owners and brokers to self-enroll when their property becomes vacant could be conceived as an interactive online portal that allows the Administration to track and manage vacancies, residents or other businesses to report vacancies, and allows prospective tenants to view available spaces. Registered properties could be tracked periodically by Code Compliance and Economic Development to ensure compliance in terms of fines/fees and identify potential challenges and solutions.
After review of the City of Cambridge report and additional outreach to the various municipalities cited, the following summary table is provided for purposes of comparison.
Municipality and Date Ordinance Enacted
|
Registry Fees Assessed
|
Fine Structure for Failure to Register
|
Staff Feedback
|
Arlington, MA
2017
|
Initial and renewal registration fees are $400 per storefront annually (based on estimated cost to the city of $100 for quarterly inspections).
|
Failure to register or other infractions are fined at $100 per day in total. Failure to pay registration or fines will result in a lien against the property.
|
· Heavy administrative workload.
· It is effective, but it does not work as well as everyone would like it to work.
· Overall, the program has helped to fill many of the identified vacancies and improved communication with property owners.
· It requires substantial administrative time and is difficult to enforce effectively in a community of a certain size without a subscription to a commercial real estate database. But within a year of the bylaw being promulgated and enforced the commercial vacancy rate in our central business district fell by 12%.
· It doesn't bring about the end of long-term vacancies in a community, but it's definitely a good prod for some less motivated property owners. This is not a one-size-fits-all solution.
|
Lowell, MA
2008
|
Fees build cumulatively. Initial registration fee is $1,000 per storefront, and increases by an additional $1,000 with each subsequent year.
|
Failure to register is punishable with a fine of up to $300, with each successive week constituting a separate offense.
|
· The ordinance has been relatively successful in allowing the City to be aware of the scope of vacant/foreclosed properties.
· The ordinance has created better awareness of the problem but does not provide any incentives for lenders to work to get properties rehabilitated or occupied.
|
New Bedford, MA
2008
|
Fees build incrementally from year to year, beginning at $500 per vacancy. $500 if vacant less than one year, $1,000 if vacant for at least one but less than two years, $2,000 if vacant for at least two but less than three years, and $3,000 if vacant for three years or more
|
Any person failing to register a vacant building, failing to pay the registration fee or otherwise, shall be subject to a fine of $300 per offense, with each day constituting a separate offense.
|
· The program is successful due to the monetary value that it brings to the city.
· About 400 registration invoices a year, not all of them are paid as landlords end up finding tenants within 45 days.
· The contact between city and property owner is much better as well.
|
San Francisco, CA
2009
|
Initial and renewal registration fees are $711 per storefront annually. No proration or refund of registration fee is allowed.
|
If the owner fails to register within the first 30 days of vacancy, a final warning is issued, providing another 30 days to come into compliance. If the owner still fails to register, a hearing date is set, wherein the hearing officer either issues an abatement or lien on the property. Failure to register and pay the fee can result in a fine of $6,399.
|
· The ordinance has not been effective as the Department of Building Inspections (DBI) does not pro-actively identify vacant commercial properties" and has largely relied on citizen complaints and self-reporting by the property owner.
· There is also little to no monitoring of the vacancies after registration and overall enforcement is weak.
· Additionally, DBI has failed to post the registry online or provide a portal for the public to view and report vacancies.
|
Washington, DC
2010
|
Initial and renewal registration fees are $250 per storefront annually.
|
Failure to register is punishable with a fine of $2,000 per occurrence. A Vacant storefront must be registered within 30 days after it becomes a vacant building. After notification of the property owner, DCRA will visit the property twice within a 45-day period to make a determination of vacancy.
|
· The major benefit of the program is the money it saves property owners by registering (rather than paying the fines).
· There is a significant fine structure for unregistered properties.
· The Program was approved to beautify blighted communities.
· There is a 50/50 split of vacancies between commercial and residential.
|
|
|
| | |
| | | | | | | | CONCLUSION:
A Vacant Storefront Registry Ordinance could be beneficial in tracking ground-level commercial properties. Property owners may be encouraged to lease or activate spaces if caused to register vacant spaces and pay fees and/or fines. The requirements defining a vacancy and the fee structure are variables that could influence program success. Another factor is the level of administrative and operational resources, including staffing, dedicated to tracking, citing, and promoting activation. With an assessment of staffing needs and resources, the Administration is supportive of evaluating the feasibility of a Vacant Storefront Registry Ordinance to include a sunset provision to determine program success.
| | |
| | | | | | | | Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? | | Does this item utilize G.O. Bond Funds? | | No | | No | |
| | |
| | | | | | | | Strategic Connection
| Prosperity - Revitalize targeted areas and increase investment. |
| | |
|