Two years ago this month, the newly formed Downtown Retail Merchants Association petitioned the D.C. City Council for help in retaining viable small firms in the central business area. Since then, the merchants group has made similar pleas for government intervention, but little has been done to prevent small retail businesses from being displaced by large office buildings.
Help may be on the way, however, thanks to an imaginative legislative approach to sound economic development by D.C. Council Chairman David A. Clarke. A bill recently introduced by Clarke would empower the city to foster the retention of small merchants in some areas of the District. The bill would amend the Street and Alley Closing and Acquisition Procedures Act of 1982 to provide for relocation assistance to businesses forced to move because of private development.
Specifically, Clarke's proposal calls for developers to offer retail tenants the opportunity to return to new or rehabilitated buildings, or to provide them with relocation assistance if the new development involves the closing of a street or an alley.
Clarke explained that the purpose of the legislation is to "help retain viable small merchants in the District, particularly those retailers in the downtown area who stuck it out during the years of recession, urban decay and subway construction." Those retailers stayed in the District and "provided valuable goods, services and taxes," while "others fled to the suburbs," Clarke recalled.
Now that downtown and other areas have been revitalized, many of the merchants who stayed during difficult times are being displaced by new development, the council's chairman correctly observed. Clarke noted that his bill will help those merchants to relocate to other sites in the District "without costing the government a penny."
Normally, the District would have no leverage to force developers to accommodate displaced merchants where the closing of a street or alley is not an issue, according to Clarke. But closing public streets and alleys is "a discretionary action of the government," he emphasized.
By approving the closing of a street or an alley for a construction project, "We are giving developers something, and we have the right to exact some social cost," Clarke said. "The philosophical point is that a door is open for government to do something," to guide development in commercial areas of the city.
An earlier suggestion that the D.C. government offer developers incentives to foster the retention of small merchants in downtown Washington prompted a "Let-them-eat-cake" letter from an executive of a local development firm. The executive not only rejected the idea as preposterous but insisted that small retailers should strive to be more competitive if they want to survive. The fact that many small retailers managed to survive the setbacks cited by Clarke says a great deal about their ability to compete.
Passage of Clarke's bill should enable some merchants to survive the development boom downtown. While the bill might seem inconsequential at first, it could have a significant impact on the development of some parcels where the closing of all or parts of alleys is crucial to building plans.
Under Clarke's bill, approval to close all or part of a street or an alley for demolition or major rehabilitation that would result in displacement of existing retail tenants would be contingent upon a developer's agreement to:
*Offer each eligible retail tenant a preferential opportunity to return to the new or renovated structure.
*Provide, without cost to existing retail tenants, a market survey listing other locations that are available in the District at the time of relocation.
*Assist, without cost, in negotiating new leases at new locations.
*Reimburse each existing retail tenant up to a maximum $3,000 for moving expenses associated with relocation to another site.
To be eligible for relocation assistance proposed in Clarke's bill, a retailer must have been a nonresidential tenant of the structure in question at least three years prior to introduction of the legislation. In addition, a tenant cannot accept relocation assistance provided for in any other D.C. law, must have had annual gross revenue of less than $1 million in the year preceding the date of displacement and must agree to relocate in the District.
To be sure, Clarke's proposal is no panacea for dealing with the very real threat of displacement faced by dozens of small retailers in the central business district. It is, however, an example of the kind of creative legislative remedy that can be applied to an economic development problem that has dragged on far too long.