Case Studies

Some things don't happen on their own.  People have to get together to make them happen.  Stabilizing a neighborhood is one of those things: it takes coordinated effort on the part of many neighbors, businesses, government, and local institutions. And this kind of coordination requires a strong organization. The Fruitvale Main Street Program in Oakland provides an example of the kind of change that is possible when there is a strong organization ready to lead.

Fruitvale Neighborhood, Oakland California

The Fruitvale district is a low-income, multi-ethnic, predominantly Latino neighborhood in Oakland, California. Fruitvale was once a thriving urban neighborhood-the kind of place people came to from all over the Bay Area to shop.  But then came the freeways and the malls and gradually businesses left the neighborhood.  Over time, Fruitvale's business district became the kind of place where people were afraid to walk around at night.  The stores that remained struggled to survive; it's hard to run a successful business surrounded by boarded up or dilapidated storefronts.  The neglected buildings discouraged investment in occupied buildings, and this lack of investment led to more deterioration.  It was a vicious, though familiar, cycle.  But all of that is changing.  People are coming back to Fruitvale.

The Unity Council

The Spanish Speaking Unity Council was formed in 1964 and over time has become the lead organization in the revitalization of the Fruitvale neighborhood.  The organization has built housing for families and senior citizens in the neighborhood, and it operates child care centers for hundreds of neighborhood children.  Over the years the Unity Council has grown from being a service provider, responding to the immediate needs of the community, to a new role leading the physical transformation of the neighborhood.

In 1999, the Unity Council broke ground on a dramatic investment that will serve as a centerpiece of the community.  It is building a new housing, service, and retail development at the neighborhood BART transit station.  The "Fruitvale Transit Village" will provide housing, a senior multi-service center, a library, a new home for the neighborhood's community health clinic, and new community-serving retail space.

Fruitvale Main Street

In 1997, the Unity Council was selected as one of five groups across the country to pilot a new approach to community economic development as part of the Local Initiatives Support Corporation's Neighborhood Main Street Initiative.  The Initiative is a partnership between LISC and the National Trust for Historic Preservation , which created the Main Street model as a tool to preserve the historic downtowns of small cities.  The Main Street approach represents a new way of working for urban community based organizations.  Rather than being providers of direct services to the community, the Main Street host organization becomes a conduit of information and a facilitator for the development of a shared strategy.  The Fruitvale Main Street Program is a broad collaboration between the Unity Council and a number of public and private institutions with a stake in the success of the neighborhood, including the local businesses, banks, the city, the police and parks districts, and, of course, concerned neighborhood residents.

The results of the program (see sidebar above) have been very impressive; over a hundred new jobs have been created and millions of public and private dollars have been invested in the community.  But these large scale results are achieved though the coordination of hundreds of very small actions.  The Main Street approach emphasizes the long-term impact of small things.  For example, the Fruitvale Main Street program coordinates a matching grant program for storefront improvements. The program staff identify merchants and property owners in need of assistance and help them find architects and contractors.  With funds provided by the city, the program is able to provide very small grants to match the building owner's investment.  Some of these façade projects are entirely new storefronts but others are as simple as new signs or awnings.  Already the program has touched most of the buildings in the commercial district and the net result of all these small investments is immediately noticeable. 

At the same time that they are improving the appearance of the district, the program is drawing new customers into the area.  Every year over a hundred volunteers come together to organize the Fruitvale Main Street's Dia De Los Muertos festival. Merchants report that this is their busiest day of the year.

While some results from improved physical appearance and promotion of the district have been immediately visible, strengthening the economic base of the district is a much longer term effort. While the Fruitvale Main Street Program may eventually undertake a coordinated effort to attract new business, the initial focus of staff and volunteer efforts has been on strengthening the locally owned businesses that are already there.  The program offers several formal opportunities for assistance, including an annual conference attended by nearly 200 businesses, but the greatest impact seems to come from informal assistance.

Such informal assistance made the crucial difference for one Fruitvale restaurant, for example.  Like other businesses in the district, most Fruitvale restaurants are leasing their space on a month-to-month basis.  One of the more successful, newer restaurants recently decided to purchase its building.  Owning the building would give the restaurant owners the stability they need to invest in growing the business.  Unfortunately, the property owner set an unreasonably high price for the building-50 percent above the appraised value.  Of course, the restaurant owner could not obtain financing for that price.  Rather than lower his price, the building owner raised the rent on the restaurant space in hopes of forcing the restaurant to buy it at the inflated price. 

This kind of thing happens all the time, holding back the development of successful businesses and, by extension, successful neighborhoods.   Fortunately, in this case, the Main Street Economic Restructuring Committee provided a way out.  The Main Street Manager in Fruitvale was able to bring in a committee volunteer who is also a commercial broker to help the restaurant owner negotiate a fair price.  Without a Main Street Manager on the street getting to know the merchants, this kind of problem would never have been identified and this business would have simply disappeared.

Elmwood Theater, Berkeley California

Written by Amy Cohen, LISC

In many struggling commercial districts, old, abandoned theaters remain as monuments to a thriving past.  The loss of a theater can mean the end of foot traffic and, subsequently, the failure of restaurants, cafés, bars, and surrounding retail establishments-not to mention the loss of neighborhood character altogether.  When Berkeley's Elmwood Theater closed due to fire damage in 1988, neighbors and merchants feared the lasting impact that tragedy would have on the two-and-a-half-block commercial strip of College Avenue between Stuart and Webster.  When United Artists, the owner of the theater, put the Elmwood up for sale, the neighborhood was faced with both a unique opportunity and a difficult challenge.

A special committee of the Elmwood Merchants Association came together and decided to buy the theater.  The task was daunting, however, as not only would the merchants need to come up with the purchase price but also the funds to repair and seismically upgrade the theater, as well as convert it to multiple screens.  They decided to approach the City of Berkeley for the purchase amount.  Though they presented a compelling argument for why the Elmwood was critical to the neighborhood's vitality, the city was only willing to make a loan if the merchants could guarantee it would be repaid.  Out of this dilemma, an idea for the Elmwood Theater Business Improvement Area was born.

Elmwood's BID

In exchange for a $215,000 loan for purchase of the theater, the merchants agreed to tax themselves, through a business improvement district (BID) model (see financing section), in order to repay the entire loan to the city at 6 percent interest over 20 years.  They needed to raise approximately $20,000 per year.  So the Berkeley City Council established an advisory board composed of merchants and property owners to figure out the most equitable way to levy an assessment, taking into account the varying levels of benefit different types of property would be likely to receive from the theater's restoration.

The advisory board assigned area businesses to either a Core Benefit Zone or a Broad Benefit Zone. The boundary of the Broad Benefit Zone was drawn to include the Alta Bates Medical Center and nearby medical offices.  In the first year, 1993-94, the additional property tax rate was $.05 per square foot in the Core Zone and $.01 in the Broad Zone.  This amount would total about $15,000 annually.  For the additional $5,000, a surcharge was added to the business license tax on businesses in the neighborhood that derived particular benefit from the theater restoration because they were open at night at least five nights a week.  These included restaurants and bars, other late-night stores, and financial institutions with automatic teller machines open 24 hours.

The Value of Theaters

Theaters-especially those of historical significance (Elmwood is a landmark)-play a unique role in commercial districts, and their multiplier benefits are widely recognized. It was not surprising that merchants were willing to finance the purchase of the theater, given the research that has been done on the importance of theaters in commercial districts, plus their own experiences.  The National Association of Theater Operators had shown that about half of evening moviegoers can be expected to have dinner at a restaurant located within blocks of the theater.  Studies also showed that a high proportion of patrons also visit coffee houses and dessert establishments.  Further, the volume of ATM transactions at a bank in the neighborhood surrounding the Elmwood declined by more than 1000 per month after the closing of the theater. It was evident to area businesses that it was in their self-interest to revive the theater as a main attraction in the neighborhood.  Their investment is paying off.

While the Elmwood Business Improvement Area's story is inspiring, it begs the question: Can this be replicated?  It is not so likely. According to state law, BIDs must support public improvements in commercial districts.  These improvements can include parks, sidewalks, or street maintenance but they are not intended to support a particular private business. 

Lessons from Elmwood

However, the story of the Elmwood is worth telling for the following reasons:  First, BIDs should be considered a potential resource for some kinds of commercial revitalization work.  Although using BID revenues to finance a particular business may not be a replicable strategy, BID revenues could be used for marketing or improvements that aid a district and, possibly, for financing some kinds of community facilities.

Second, the BID strategy illustrates the power of local merchants to bring about neighborhood change and stabilize their own commercial district.  Even without the framework of a BID, merchants in a struggling commercial district should be viewed as potential resources for revitalization efforts.  While they may be more willing to dream up creative financing solutions and invest their own money for theaters than for commercial properties with less obvious impact on their own businesses, they are stakeholders with political and financial power not to be overlooked.

Finally, the Elmwood Theater Business Improvement Area is a testament to the benefits of "thinking outside the box" when considering, and in this case creating, financing options for commercial development.  The spirit behind the Elmwood Theater Business Improvement Area, if not the model itself, provides an important example of how creative problem-solving can lead to more vital neighborhood commercial districts.