Mayor offers $10K to businesses squeezed by construction

San Francisco Mayor Ed Lee has proposed the city adopt a construction-mitigation program, favoring businesses negatively affected by city construction.

One prime example: The ongoing Central Subway with grants of up to $10,000 to make up for lost revenue during the working period.

The mayor’s office has not finalized the proposal, and several city lawmakers have similar plans in the works. The program would offer other services beyond cash, such as business consultations.

In a statement to the San Francisco Examiner, Lee said, “I have directed all city agencies to develop a new standard for projects moving forward—big and small—that will minimize the effects of construction work.”

In a 2013 paper, Oakland-based nonprofit PolicyLink suggested that similar actions in other cities have worked sometimes.

For example, Seattle offered grants and loans to small businesses—up to $150,000 over five years—to make up for the hassle of nearby light rail construction:

Robert Pierce

“In a 2008 survey of the businesses, all businesses reported a drop in revenues, and half of them reported reduced revenues of 50 percent,” writers PolicyLink.

But “by the end of the construction period in 2009 , the retention rate was 85 percent for all businesses and 90 percent for businesses that had received assistance.”

A 2010 the University of Wisconsin-Madison study surveyed 33 major cities about their CMPs and found that only nine offered “direct compensation” in the form of grants or loans and that they seemed only marginally effective.

In fact, the study says that San Jose eventually canned its loan program because too many businesses who accepted the aid went under anyway.

But although the report offered a lukewarm take monetary intervention it cautions that “no cities used a systematic evaluation system” to determine how effective such measures were in the end, so it’s hard to say empirically how well they worked or not.

In any case, UWM researchers favor at least doing some form of CMP, ranging from consultation to free advertising. If only so that local merchants don’t feel they’ve been left to twist in the wind.

• Lee Introduces Aid For Merchants [Examiner]
• PolicyLink Study
• UWM Study