OLD BUSINESS  2.

COMMITTEE MEMORANDUM

HISTORY:

This item was referred to the Finance and Citywide Projects Committee at the April 11, 2018 City Commission meeting. 

At the April 20, 2018 Finance and Citywide Projects Committee, the Committee discussed the issue of ground floor storefront vacancies throughout many of the major commercial corridors in Miami Beach. There was discussion on ways to create registries to track vacant properties along with possible incentives to help landlords lease out their properties. 

The Committee directed City Staff to create a catalog of the number and location of vacancies among major corridors - North Beach 63rd-70th, 41st Street, Washington Avenue, Ocean Drive, and Lincoln Road. Additionally, they requested that Staff look into creative ways and ideas to address such vacancies and increase vibrancy throughout our commercial districts. 

Florida State Statue does not provide legislative authority to impose taxes on property owners with vacant storefronts. Therefore, the City cannot impose a vacancy tax on empty storefronts without the approval from State legislature.  Staff has researched other possible solutions to encourage better management of vacant storefront windows, and has included several options in the Analysis herein.

City staff completed a ground floor storefront survey within five commercial corridors (41st Street, Lincoln Road, Washington Avenue, Ocean Drive, and the North End 63rd to 70th). A complete list of those vacancies along with their full address and corresponding photos for each is attached (Exhibit A). 

The following counts were concluded: 

41st Street:                                                     8 vacancies

Lincoln Road (100 block - 1100 block):         23 vacancies

Washington Avenue (5th-15th Street):          55 vacancies

Ocean Drive:                                                 10 vacancies

North End (63rd to 70th Street):                    21 vacancies 

Concurrently, Staff began further reviewing and researching background information for each of the vacant storefronts, with the specific intent to identify the reason for extended vacancy and to identify any barriers that might be alleviated at the City level. This study includes cross-referencing each address with the City's BTR registry along with vetting each address through property appraiser and Sunbiz to determine ownership. We also reviewed all permits that are currently active with the Building Department. A full spreadsheet of this information is attached (Exhibit B). Through this process we were able to identify that 15 of the properties mentioned above had active permits and were currently under construction or in the process of redevelopment. 

This information allowed for Staff to begin outreach to better understand the challenges and issues brokers and property owners have been facing in finding new tenants. Staff contacted all of the brokers that were identified through Sunbiz and/or property appraiser that represented the properties surveyed. Unfortunately, many of these representatives did not provide information or respond to our inquiries. Therefore, we began to survey additional industry professionals in the community (Business Improvement District, Miami Beach Chamber of Commerce, and individual property owners in Miami Beach). 

We used the following set of questions to guide the conversations within our outreach: 

1.   How long has this property remained vacant?

2.   What have been some of the challenges you have faced in leasing this space?

3.   Did the previous tenant disclose to you why they decided to leave this space?

4.   Do you have any ideas for how the City could help better support your efforts in finding a new tenant?

5.   Do you represent other commercial spaces in Miami Beach? If so, do you have the same challenges in leasing those spaces?

Below is a summarized list of the feedback and its associated corridor: 

• The current conditions of the street do not attract new and emerging businesses (Washington Avenue, 41st Street)
• Creative marketing and branding of our City needs to be a priority to increase and promote businesses (North Beach, Washington Avenue)
• People are leaving for the mainland, they can receive a better value (more space for less) with less traffic (City-wide)
• Poor lighting and lack of parking are a barrier (North Beach)
• Miami Beach used to be the dominating municipality for entertainment, the competition has grown throughout the County 
• Capital improvements in the pipeline will be able to address many of the issues the streets are facing sidewalk enhancements, increased lighting, bike lanes (41st Street, Lincoln, Washington)
• Independent stores are competing in the world of Amazon, they are struggling to maintain the rent with loss of demand (Lincoln Road)
• Starting a business and converting a property from one industry to the next (retail to restaurant) is financially burdensome, especially for small startups (City-wide)

The Administration reviewed the aforementioned feedback with the Committee at the July 27, 2018 meeting. The Committee directed staff to further explore the internal processes and barriers to business start-up.

ANALYSIS:

The Administration is working in partnership with the Small Business Task Force to identify City measures that would help streamline the business start-up process (including Business Tax Receipt, Sidewalk Cafe Permitting, and other City regulatory requirements). To better identify the current challenges faced by small businesses opening, expanding or relocating in Miami Beach, a Small Business Survey has been developed and will be distributed at the end of August as a way to inform the Task Force. This survey will be sent electronically by the City as well as distribution by the Miami Beach Chamber of Commerce. The survey is attached to this memo (Exhibit A).

The results of the survey, with a projected timeframe of end of September 2018, will be analyzed and reviewed by the Task Force and further presented to this Committee. This will allow the administration to determine which internal process(es) presents a barrier to the business start-up process.

In addition, staff is exploring other creative alternatives for better supporting our small business community in addressing storefront vacancies. Below are concepts for consideration:

Curated Storefront Initiative: Create a series of ongoing exhibitions that will activate unused storefronts through multimedia art installations. Options include inviting local arts organizations to activate the windows; working with Cultural Affairs to commission artist installations, and working with local BIDs to provide funding for either or both of these options. The Lincoln Road BID has partnered with Miami City Ballet and the Botanical Garden to create similar activations recently.

In addition,  the 41st Street Committee specifically recommended that the curated storefronts include activations by cultural organizations, with preference for local Miami Beach cultural organizations.  The Committee also recommended the idea of commissioning local artists and put forward a new idea of promotion of art and photography by Miami Beach schools.

Some of these activities may have an associated cost if the City were to subsidize the cultural organizations or the artists. In this case, the estimated cost would be $5,000 per window.

The City could pilot this concept out in three commercial corridors -- North, Mid, and South Beach, activating a number of storefronts in each corridor.

Estimated Cost: $15,000 - $75,000 depending on a range of 1 to 5 windows in each area.

Encourage Small-Scale Manufacturing: Review of current zoning regulations and expand the industrial/warehouse zoning allowance to other commercial corridors. Encouraging more small-scale manufacturing (textiles, breweries, coffee roasters, tech labs) on main streets can foster entrepreneurship and homegrown industries. These business create well-paying jobs for people with a variety of education and skills levels and brings vitality to commercial districts. This also helps diversify our employment base from just food and beverage.

Estimated Cost: Not applicable, this would require zoning changes through the approval of the City Commission.

Pink Zones: Designate key commercial corridors in a state of transition as a "pink zone". The City could pilot this concept out in either 41st Street, Washington Avenue and Town Center. By simplifying zoning and building codes we are apply to better support businesses to emerge. 

Cost: Estimated $50,000.00 to hire a consulting agency to assist the Administration in creating and implementing a pink zone.

Storefront Coverings: Previously, the City had allocated some funding to produce CMB designed window coverings for vacant storefronts, and provided these at no cost to vendors, landlords and tenants. The last completed order was in April 2017, for 30 window wraps it cost the city $18,908.00. However, that funding is no longer in place, so the City currently provides the template for this printout, and costs of printing must be borne by the storefronts. 

Administration recommends that the current the code be changed to only allow the following -- with all borne at cost of storefront owner not City:     

• storefronts are expected to use the approved Miami Beach window covering
• any other window covering must be approved by the Planning department
• storefronts may use white panels provided that they cover windows from top to bottom as a single panel

Under this scenario, brown paper is no longer a viable option.

Estimated Cost: Not applicable, this would require changes to City Code through the approval of the City Commission.

Anchor Tenant Incentive Program: Create an incentive grant based program for commercial property owners and/or commercial tenants to assist with interior building improvements and business start-ups. As a way to attract high quality businesses to our commercial corridors this program, modeled from the Clearwater CRA, would allow eligible participants to apply for funding to help offset interior building improvements and business costs that are typical barriers for new and emerging businesses. The link below is the program model from Clearwater, Florida: 

http://downtownclearwater.com/wp-content/uploads/2018/01/CRA-Anchor-Tenant-Program_Final.pdf

Estimated Cost: Up to $25,000.00 in grant funds to eligible establishments. First year allocation of $125,000.00 to allow for five grants in designated commercial corridors. Require a 2:1 match. 

Grand Opening Assistance Program: A significant portion of the feedback received was regarding the brand and narrative around Miami Beach and the increased competition throughout Miami-Dade County. This program which has been adopted through the West Palm Beach Downtown Development Authority, provides small grants to new businesses to help with their grand opening and marketing. This would allow for them to create their unique narrative and help increase their visibility. The link below is the program model for West Palm Beach, Florida: 

http://www.downtownwpb.com/grand-opening-assistance

Estimated Cost: Up to $3,000.00 per grant provided by the City. First year allocation of $30,000.00 to allow for ten grants in designated commercial corridors. 

CONCLUSION:

Staff will continue to conduct outreach and work with the BID's and business associations to develop programs to help increase downtown vibrancy and business retention, including updating this Committee on the Small Business Survey results and initiatives recommended by the Small Business Task Force. Should any of the above recommendations be adopted or pursued, funding would need to be identified to support these programs.