social clubs: neighborhood commercial revitalization from ... · overcome selfish desires, thus...

The ADRR Andrew Dane

The American Downtown Revitalization Review / Fall 2020 / Volume 1 / Number 2

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Social Clubs: Neighborhood Commercial Revitalization from the Inside Out

By Andrew Dane, President of Neighborhood Planners

Abstract: Economic development leaders across the U.S. face a common challenge: how to fill empty storefronts in their downtowns and neighborhood commercial districts. Most approaches fall into two general categories, both of which target assistance to individual businesses. Entrepreneurship programs focus on mentoring and business planning. Incentive programs typically comprise grants, rent subsidization, or other forms of financial assistance to business or property owners. Reconceptualizing the challenge of filling brick and mortar retail stores from a narrow focus on the individual toward a more inclusive approach that engages, and leverages neighborhood assets and expertise can help frame innovative, cost effective approaches to filling empty storefronts.

The famous French thinker Alexis de Tocqueville believed that “through associating the coming together of people for mutual purpose, both in public and private, Americans are able to overcome selfish desires, thus making both a self-conscious and active political society and a vibrant civil society.”i This tendency to form informal associations to solve problems manifested itself in many cities through the United States with the formation of social clubs, which grew to prominence in the late 1800’s and early 1900’s. In Madison, WI, the Italian Working Men’s Club formed as a mutual aid association, where members could borrow and share tools.ii Today, we think of these clubs as dying vestiges of a bygone era, but could they help us fill empty vacant storefronts and kick start revitalization efforts within neighborhood and downtown commercial districts? Or are they simply another means of privatizing our collective spirit, reinforcing social and economic divisions within the community as some authors have warned against?iii The story of the 602 Club suggests the former. In the summer of 2014, an acquaintance of mine walked past a blighted building in a neighborhood commercial district in Appleton, WI, and had an idea: “Someone should buy that building and do something with it.” Within five years, the building (and the one next door) had been fully renovated resulting in a neighborhood social club, three remodeled apartments, two Airbnb rentals, a café, an office, and two artist studio spaces. A backyard littered with dog poop had been replaced with outdoor seating, flowering gardens, and public art installations. How did it happen? That summer four people (myself, my wife and another couple) formed Neighborhood Investments LLC and pooled $60,000 to purchase a blighted non-conforming commercially zoned residential duplex on the corner of a small neighborhood commercial district. Despite barely knowing the other couple, we had one thing in common: we lived in the same neighborhood and wanted to see positive change occur there. Imagine how great this neighborhood would be if we had a little coffee shop where people could gather, we asked



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ourselves. Imagine if kids and neighbors did not have to nervously dart past barking attack dogs chained to a tree every time they visit our treasured neighborhood corner store (Jacob’s Meat Market) across the street? We had no business plan, no construction skills, and no interest in dumping a ton of money into a “passion” project that would not be financially sustainable long term. What we did have was the interest of our neighbors, who helped us haul out decaying mattresses, rip up rotten carpet, and replace urine-soaked floors. The downstairs tenants had moved out at closing, so like most owners of investment property, we started to market our property to new tenants. We spoke with the owners of all of the coffee shops in town. Our top choice, Seth’s Coffee, was very interested, until he got a quote back from the builder for the remodel – over $200,000. A large sum, yet not that atypical for remodeling older buildings and non-conforming structures to meet current code requirements. Wisely, he decided to pass on the opportunity. That same story kept repeating itself, leaving us scratching our heads. As the economics of opening a coffee shop became more illusory, we pivoted our approach. If opening up a neighborhood café didn’t make economic sense, what did make sense for the neighborhood? What types of uses or activities would the neighborhood support? We created a list and began to brainstorm ideas: art classes, music events, Packer viewing parties, card games – the list grew and grew. In October 2014, we held a pumpkin carving party, our first event. Neighbors and friends of friends showed up, including people we had never met before. There was excitement in the air, as we explained what we were doing and people offered up their own thoughts and suggestions for what the space should become. As winter set in, we put the idea of luring in a new business startup on the backburner and instead started focusing on events to engage the neighborhood and build community support for our “project.” That fall one of our neighbors stepped in to organize weekly Packer viewing parties, regularly drawing 15-20 people. Music faculty at Lawrence University, just down the street, played jazz to a packed house. Our friend Amy organized a crafting class for kids. Our neighbor John put together a teen drop in night. At each of these events we passed “the silver stein” to accept donations. We used the donations to buy paint and supplies and continued fixing up the building. Friends, neighbors, and passerby joined in to lend a hand.

Figure 1 Lawrence University Jazz Trio Plays the 602 Club



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As momentum grew, we needed a name for our venue. The address of our building, 602 N Lawe Street, struck a chord. “The 602 Club,” someone suggested, as a nod to a former legendary bar of the same name in Madison, WI. The name was catchy and stuck. It seemed to fit what we were doing, and by later that fall we had incorporated as a social club, a 501C6 tax exempt organization. Our mission statement:

“Bring people together in active participation and provide a space to support culture and the arts, share creative passions, and provide intellectual and educational opportunities; spend time with loved ones and make new friends; foster acceptance and understanding of our individuality as well as our membership in the communities of family, the Lawrence-City-Park neighborhood, the City of Appleton, and the world.”

Our fledgling board established a one page set of by-laws and established a dues and donations structure. Within a few months we had 30-40 dues paying members, and with donations from events the Club was generating enough money to pay rent to Neighborhood Investments LLC, which continued to own the building. As time went on, more and more people expressed interest in joining the club and hosting events. Our business model was simple: join the club to support the revitalization of the building and help host events. An initial focus on music events evolved over time, and today the Club hosts a winter movie series, sport viewing parties, house concerts, art receptions, farm to table dinners, neighborhood barbecues, book readings, church gatherings, aldermanic meet and greets, puppet making workshops, and other artistic and social events. Event hosts are given the passcode to the back door and become administrators of our google calendar to avoid double booking events. There is no manager or volunteer coordinator required to keep the place running. In addition to hosting neighborhood events, many neighbors stepped up to help us remodel the property itself. Many of them were older, retired or semi-retired residents of the neighborhood, eager to share their skills and contribute to the 602 club’s transformation. Through this network many of our neighbors developed new friendships and found ways to share their skills with each other. The club concept, along with rental income from two upstairs apartments, allowed us to continue making incremental improvements to the property. Our neighbor, the third-generation owner of Jacob’s Meat Market, took notice. He liked what we were doing and decided to help. He donated meat for neighborhood barbecues, provided discounted gift cards for our AirBNB guests, and purchased a basketball hoop for the club. Meanwhile, the improvements we were making gave him confidence, and in 2018 he invested over $500,000 to expand his business, adding more carryout and deli items to our cherished neighborhood store. During this period, we continued to dialogue with the City, developing a better understanding of applicable code requirements for converting our “club” into a commercial space. Despite our success establishing the club, we remained focused on the end game – a neighborhood café. The City was helpful, clearly communicating the immense challenge of converting a residential



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use into a commercial use. At the same time, the City’s building inspector became concerned we were operating a business illegally. We explained that the club was only soliciting donations and there were no beer or wine sales at our events. We continued to meet periodically with the City as we fixed up the building gradually making ADA and other code improvements as funds would allow. We continued on, envisioning a day when someone (perhaps a fellow club member?) would step forward and make the dream of a neighborhood café a reality. By the fall of 2018, we had renovated most of the building, including two apartments and a couple extra rooms which we rented out as artist studios. One day the owner of the mixed use 4-plex next door, whom we had become friendly with, approached us. He was ready to sell, and wanted us to have the first shot at purchasing the building. By this time, 602 N Lawe Street had doubled in value, and would appraise at roughly $120,000. With no additional money down, we were able to take out a commercial loan for the new building that would finance the purchase as well as improvements to our second property. Neighborhood Investments LLC now owned a second building in our neighborhood commercial district. This building was already in commercial use, and came with two tiny apartments, one vacant first floor commercial space, and a dog groomer in the second commercial space. The front porch was falling down, and the building lacked charm, but we realized it would be easier to convert an existing commercial space into a café than it would a residential duplex. We set out with renewed optimism to identify a potential business operator. After hundreds of conversations over four years we finally hit pay dirt. Over drinks at a neighborhood bar, we discovered another neighbor, Shannon, who lived in the neighborhood and spent her life in the restaurant industry. She had been dreaming of starting her own neighborhood café for years. In fact, she had imagined our new building as an ideal spot. The timing was perfect, as the dog groomer had recently moved to a larger building. Using the same frugal approach we had cultivated next door, we began building out Moonwater Café with volunteer labor, using paid contractors only as a last resort. Six months later the café opened, and our dream had finally become a reality. To maximize our tenant’s chances of success we offered a low rent structure, starting off at $100 per month and incrementally increasing to $500 over 6 months. Converting the upstairs apartment units to AirBNBs allowed us to maintain a low rent structure, and soon after another neighbor stepped forward to open a yoga studio, which unfortunately had to close in summer of 2020 due to COVID-19. Today, our cash flow from both buildings is sufficient to allow us to waive rent for Moonwater Café through COVID.

Figure 2 Opening Day at Moonwater Cafe



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CONCLUSION Over the past two decades a significant amount of private investment has helped revitalize many downtown and neighborhood commercial districts across the U.S. However, much of the revitalization has occurred in just a handful of cities. Just five downtowns accounted for nearly 40% of the growth in downtown population nationwide between 1980 and 2018.iv Many smaller, suburban, and non-metro downtowns struggle to simply maintain their current populations and associated commercial activity, capturing only a very small percentage of the community’s overall growthv. Filling empty storefronts in these districts is particularly challenging because many older buildings require large sums of investment to renovate, so that even in places with high vacancy rates there are often very few affordable code compliant spaces for new businesses to take root in. New businesses which are able to locate in these areas often have insufficient cash flow to sustain operations over their first few years. Too often they unable to weather unforeseen financial challenges or scale their businesses up in sync with growing market demand to achieve long-term profitability. Oft cited comprehensive revitalization strategies include an emphasis on promoting walkability, creating an attractive streetscape, luring downtown employers, making zoning adjustments, ensuring equity, and incentivizing downtown housing.vi While these strategies may all be important, they may not directly address the core real estate and business development challenges facing most downtowns and neighborhood commercial districts – how to cost effectively upgrade existing buildings and establish sustainable business enterprises. Like many downtown or neighborhood commercial buildings, the two buildings Neighborhood Investments LLC purchased were probably going to be torn down or continue functioning as blighted rental properties, negatively impacting the image of the district and neighborhood. Both buildings required a level of investment that simply wasn’t justified based on the expected returns of the small businesses likely to inhabit them. By tapping into neighborhood expertise and pursuing an incremental development approachvii our team was able to transform two highly visible buildings into positive neighborhood assets over a period of six years. The initial idea of a neighborhood café remained central, but we were flexible in how we got there. The 602 Club provided seed money, and the duplex and fourplex building format provided cash flow we needed to slowly bring these buildings up to code, effectively subsidizing the neighborhood café buildout and monthly rent. The fallout from COVID is accelerating and compounding many of the challenges small and independent businesses have faced for decades. Cities striving to fill empty storefronts and revitalize their downtowns and neighborhood commercial should ask themselves how they can better support cost effective, incremental, neighborhood led development. What neighborhood assets can be tapped? What types of opportunities to strengthen neighborhood serving commercial districts will emerge in a post-COVID world?



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Some cities are responding to the challenge by partnering with non-profits to offer small scale developer training. Others are conducting stress tests to see how their zoning codes support (or inhibit) small scale development such as “missing middle” building types.viii Loosening parking requirements and streamlining special use permitting also help. Perhaps most importantly, cities must hire and support savvy planners and commercial inspectors that understand how to creatively approach and solve development challenges, including ADA, site planning, and zoning requirements. Staff should be encouraged to bring forward text amendments to the Comprehensive Plan and Zoning Code on a regular basis to spur change and allow market forces to function for the City’s benefit. Finally, City leaders can host periodic visioning sessions with neighborhood leaders and city staff to explore and discuss appropriate strategies for supporting small scale development and neighborhood led economic development initiatives. While there are many things cities can do to facilitate small scale development, there is no reason to wait. Most neighborhoods and smaller downtowns have blighted, vacant, and low-cost buildings for sale today. These same communities also have many residents, artists, and entrepreneurs all looking to make a positive impact on the community. By working together, neighbors wanting to see positive change occur can tap into local assets and expertise to make an immediate impact. Creating opportunities for residents to tangibly support neighborhood and downtown commercial development, either by investing financially or through volunteer labor, immediately enhances the image of the district and creates a sense of neighborhood ownership that can help small business startups succeed.

i https://en.wikipedia.org/wiki/Alexis_de_Tocqueville ii http://sar.eaa.mybluehost.me/about/ iii https://www.fastcompany.com/90350407/the-death-and-unlikely-rebirth-of-the-american-social-club iv https://www.brookings.edu/research/big-city-downtowns-are-booming-but-can-their-momentum-outlast-the-coronavirus/ v https://www.ndavidmilder.com/category/suburban-downtowns vi https://smartgrowthamerica.org/introducing-rebuilding-downtown-a-guidebook-for-revitalization/ vii https://www.incrementaldevelopment.org viii https://missingmiddlehousing.com

social clubs: neighborhood commercial revitalization from ... · overcome selfish desires, thus...

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