Improvement Plans for H Street Retail Shops Andrew King, Talha Ocal, Mitsuru Misawa August 16, 2012 Agenda Summary Overview of Current Situation • Future Timeline • SWOT Analysis • Store Expansion History • Leakage and Surplus Factor Analysis Recommendations • Increase Retail • Security/Safety • Sanitation/Cleanness • Transportation/Accessibility 2 Summary Current Situation • H Street has great potential for retail shop owners. • Customers want more shops along H Street. • Restaurants have been saturated but growth continues. • Issues Recognized: Security, Sanitation, and Transportation Strategies for H Street as a whole • Increase retail shops • Resolve three main issues • Security/Safety Street Lamps, Security, Diversify businesses • Sanitation/Cleanness Volunteering • Transportation/Accessibility Partnership with Capital Bikeshare Parking and taxis • Possible BID formation 3 Major Project Overview (Timeline) 2012 • Construction of streetcar tracks from Node 1 to Benning 2013 • Giant will open (in between 3rd St and 4th St) • Streetcars will start to run from Node 1 to Benning in Summer 2013 [Long term future] • H street’s streetcars will reach Georgetown http://www.dcstreetcar.com/fact-sheets.html 4 SWOT Analysis Helpful Harmful I n t e r n a l Strengths • Performing Arts Institutions anchor H Street economy. • Node 1 is close to Union Station, the largest station in DC area. • Transportation infrastructure has been established (road & sidewalk improvements); trolley starts in 2013. • The street has beautiful scenery and uniformity. • Many food options (i.e. American, Mediterranean, African, Asian, etc) Weaknesses • Nodes 2&3 are far from Metro (around 1.5 miles or half an hour walking from corner of H St. and 15 th). • There are not enough parking lots. • Hopscotch bridge hides the street view from the west, which may be a business barrier. • The corridor has 13 blocks, which makes people use automobiles. • Empty lots and buildings cause negative impression. • Small restaurants have saturated the corridor, driving evening business only. E x t e r n a l Opportunities • H Street region has residential and business growth potential. • Streetcar will eventually be expanded along K Street. • Giant supermarket will attract people from outside the immediate H Street region. • Although limited, there are available spaces for parking. • Some of the retail types are not represented, there is a chance to start new businesses. Threats • Large national chains may damage small businesses in the street as well as its scenery. • Retail shops in Union Station, especially food shops and restaurants, are potential competitors. • NoMa and Capitol Hill BIDs are very close to H Street, have been improving their business circumstances. They may be regional competitors. • Lack of subsidy (ending RPAG) may lower attractiveness to entrepreneurs. 5 Retail Store Distribution/location 1 2 Node 1 Capitol Fine Wine & Spirits Dynamic Wellness Metro Mutts Murry's Food Store Beauty Supply Aspire Health Store Adobe Design [This survey was done in July 2012.] 6 3 Node 3 Auto Zone Atlas Vet Euro Style Thrift Store Mike's Thrift Store Rasheed Baitul Khair Node 2 Fashion One J & V Pawn Family Liquor Shoe City Foot Locker Sports Zone Rite-Aid T-Mobile Z-Mart Rent-A-Center H Street Pharmacy King's Beauty Supply GameStop Boost Mobile Stan's Discount Clothing Rainbow Styles DTLR Fashion Susan Fashion Jewelry Store Men's Fashion Center PK Hardware Cricket Wireless Picture That Dana Jewelry 3 Point Teks 7-Eleven C.A.T. Boutique Super Pharmacy & Medical Equipment North East Beauty Supply Convenience Grocery Thrift Store Daily Rider Me & My Supermarket Family Dollar Jumbo Liquor Retail Expansion Retail Growth in the H Street Corridor, 2009-2012 40 • Overall, Retail has increased Node 1: 4 to 6 Node 2: 12 to 36 Node 3: 3 to 7 • 38 shops have opened • 8 shops have closed • Node 2 retail tripled 35 30 25 20 15 10 5 New since 2009 Stayed Open 0 Closed -5 7 Node 1, 2009 Node 1, 2012 Node 2, 2009 Node 2, 2012 Node 3, 2009 Node 3, 2012 Data Sources: 2009: WDCEP Report 2012: Direct Survey Retail Store and Restaurant expansion Leakage/Surplus Factor Analysis 120 100 80 60 40 20 0 -20 -40 -60 -80 Motor Vehicle & Parts Dealers Leakage/Surplus Factor 88.4 Furniture & Electronics Home & Furnishings Appliance Stores Stores 100 77.9 Bldg Materials, Garden Equip. & Supply Stores Food & Beverage Stores Health & Personal Care Stores 45.5 11.3 31.1 Gasoline Stations Clothing & Clothing Accessorie s Stores Sporting Goods, Hobby, Book & Music Stores General Merchandis e Stores Miscellane ous Store Retailers Nonstore Retailers Food Services & Drinking Places 80.6 -45.8 18.1 -31.6 -9.9 100 -54.5 Explanation of Graph • Negative (Surplus) – There is space for more customers at existing businesses. • Positive (Leakage) – Insufficient businesses to meet demand. Potential customers may go elsewhere. Implications • Clothing stores, restaurants, and bars are on the surplus side, which implies these categories may have been saturated. • Other categories are on the leakage side, which means H Street can attract more people if it has more businesses in these categories. 8 Source: Retail marketplace profile by ESRI and Infogroup Retail Stores and Restaurant expansion (cont) Quality of Life in 2010 250 Quality of Life Index 200 150 100 50 0 Quality of Life Index Amusement Culture Index Index Earthquake Index Education Index Medical Index Mortality Index (All Causes) Religion Index Restaurant Index Weather Index 20002 117 108 186 31 185 139 130 192 180 100 DC 117 85 196 35 181 138 104 196 192 100 United States 100 100 100 100 100 100 100 100 100 100 • Zip code 20002 area has almost same index number of restaurants as those in DC, and almost twice the national average. • This graph implies that 20002 area may have enough restaurants, and that it serves as a “restaurant destination area.” 9 Source: http://www.clrsearch.com/Washington_Demographics/DC/20002/Quality-of-Life Recent Retail Survey Results How would you rate H Street for the following? Poor 1.3% Below Average 0.3% 7.4% 10.9% 2.8% Average 2.6% 5.8% Good 1.3% 8.2% 20.4% 23.0% 22.8% Excellent 0.1% 2.1% 0.1% 5.5% 0.7% 6.2% 15.3% 11.3% 27.7% 28.6% 21.1% 32.3% 33.1% 34.2% This survey shows: 1. People are satisfied with entertainment and special events/festivals. 2. People want to shop more in H Street, and they want more variety of goods and services. In addition, they are satisfied with the price and ----quality of the goods and services they ----purchase. 38.6% 36.3% 52.9% 39.6% 50.7% 44.7% 48.2% 37.8% 48.0% 61.6% 44.8% 39.8% 32.2% 33.6% 39.9% 30.6% 23.8% 23.5% 20.2% 20.9% 16.4% 13.4% 10.4% 5.5% 10 9.5% 7.3% 0.7% 2.6% 3. More than half of the people think that the cleanliness of the street is lower than average. Cleanliness is one of the urgent issues to solve. 13.5% 13.2% 3.7% 3.0% 6.4% 1.6% Source: H Street Main Street Retail Survey done by Lauren Adkins 4. Also, about 60% of the people believe that safety in H street is lower than average. In addition, more than 60% of the people feel that shopping hours are short. Because customers may feel it is not safe around H Street at night time, store owners close early. 5. In summary, H Street has perceived safety and cleanliness issues. Summary of Current Situation • H Street has great potential for retail shop owners and the number of retail shops has been increasing since 2009. • Customers want more shops and variety along H Street. • Ordinary products seem to be needed rather than expensive or luxury goods. • Restaurants have been or are being saturated. • Three primary issues were identified. • Security/Safety • Sanitation/Cleanliness • Transportation 11 Strategies/Recommendations Retail Store Strategies for H Street 12 Forecasting: Retail Store Increase Retail Expansion Forecasting (2013&14) 60 52 50 44 40 36 30 20 12 10 0 Total 4 6 7 7 7 8 10 3 Node 1, Node 1, Node1, Node1, Node 2, Node 2, Node2, Node2, Node 3, Node 3, Node3, Node3, 2009 2012 2013 2014 2009 2012 2013 2014 2009 2012 2013 2014 4 6 7 7 12 36 44 52 3 7 8 10 • Based on the numbers of retail shops in 2009 and 2012, retail store expansion can be simply forecasted as above. Node 1: 7 (2013) to 7 (2014) Node 2: 44 (2013) to 52 (2014) Node 3: 8 (2013) to 10 (2014) • In the current situation of H Street, this forecast should be realistic. • However, by simply walking down H Street, it is apparent that the vast majority of new construction is restaurants. 13 Source: http://www.mta.info/news/stories/?story=762 Issue: Security/Safety Crime Risk Index 20002 Washington DC • National 6.47 5.72 • • 5.63 4.7 • 4.56 3.83 3.54 2.85 1.88 1.81 1 Total Crime Risk • 1.81 1 1.21 1 1 Murder Pape Risk Robberry Risk Risk 1 Assault Risk 1.31 1.121 Burglary Risk 1.42 1.29 1 Larceny Risk 1 Motor Vehicle Theft Risk Nationwide average crime numbers are indexed at 1, and compared to average levels in 20002 and DC as a whole. 14 Crime Statistics: http://www.fbi.gov/stats-services/crimestats • 20002 area has higher rates of some types of crime than DC. This data coincides with the survey. Bars on front doors may cause people to feel insecure. Gates keep the restaurant and bar crowd from recognizing retailers Possible Solutions: • Increase street lamps • Replace bars and gates with protective window wrap • Hire private security • Increase police patrols All these solutions require funding: capital improvements require large payments up front, and patrols require funding in perpetuity Issue: Security/Safety Low visibility of retailers at night is a negative – we want to capitalize on the vibrant night life of the corridor as much as possible! Expanded retail hours (The Daily Rider) • Increased convenience for customers • Increased visibility of business could help with growth Shared front end space / multi-use space • Shared storefronts: branching out • Dynamic Wellness & Raw Juice Bar • Sidamo’s recent “Lending Library” • Restaurant or bar hosting Trunk Sales during the daytime • A vacant building could be rented out as a venue for traveling sales, suit fittings, etc 15 Issue: Sanitation/Cleanliness Recommendation: Clean Team Volunteers • Gathering volunteers to form clean teams is one solution • Consistency and sustainability are a concern • Volunteer labor may work better on a specific-project basis Another solution: BID formation • Forming a BID may also work to address these issues • The stable funding of a BID would help ensure sustainable Clean Team activity 16 Issue: Transportation/Accessibility Recommendation: Capital Bikeshare • Streetcars: Will run through H Street NE, but the west end is at 3rd St NE. Streetcars cannot pull people from downtown DC to H Street. • Trains and buses: Changing and/or adding lines would be expensive and the decision making authority rests with other agencies. These alternatives are not realistic. Promoting and advertising Capital Bikeshare may be the best alternative. • Already established: Numerous existing stations and aggressive expansion of the program • Inexpensive fees • • First 30 minutes for free (for members) Popular with both tourists and locals 17 Issue: Transportation/Accessibility Recommendation: Capital Bikeshare Capital Bikeshare is not fully utilized in H Street Area even though it is difficult to access the area for people who do not have cars/automobiles. There is much space to utilize Capital Bikeshare in H Street. How to promote? Becoming a sponsor of Capital Bikeshare might not work, since only one fifth of the people are aware that the DC government and other institutions are sponsors of Capital Bikeshare. However, collaborating with Capital Bikeshare would work by, for example, 1. Giving one day pass as gifts/rewards to H Street customers. 2. Spreading ad papers for H Street around Union Station, Chinatown and elsewhere. 18 Source: Capital Bikeshare 2011 Member Survey Report June 14, 2012 Issue: Transportation/Accessibility H Street NE already has four Capital Bikeshare stations, but to increase density and convenience, one or two more stations can be added. 19 Source: http://capitalbikeshare.com/stations Issue: Transportation/Accessibility Parking options • Look into possibility of grant funding for turning vacant lots into parking areas • Mixed use of the incoming Giant parking garage which will have 250 – 270 parking spots Taxi Stand • For many errands, or for parents, Bikeshare won’t work • Partner with a private company to have a taxi stand in a central and convenient location 20 Source: http://capitalbikeshare.com/stations BID Formation BID formation • BID can help fund security and sanitation solutions • Community support is required H Street can satisfy this requirement Assessment (funding) comes from community BID could provide services similar to Main Street • Existing 8 BIDs in DC and BID Council may be informative in terms of expenses, services, and best practices 21 BID Formation Existing 8 BIDs Financial Data Adams Morgan Income BID Assessments Other Total Capital River 616,460 Expenses Administration Marketing Cleaning&Safety&Maintenance Infrastructure Community Building Economic Development Transportation Other Total 204,382 • 22 317,634 148,059 511,249 Georgetown Golden Triangle Mount Vernon NoMa 1,309,659 10,384,523 3,177,475 167,573 3,345,048 4,576,979 103,792 4,680,771 546,413 92,850 639,263 1,735,134 227,535 1,962,669 882,981 1,007,347 1,336,918 5,480,131 796,165 542,021 979,274 924,880 695,247 719,198 435,602 1,881,126 403,906 241,424 371,953 39,316 141,090 304,415 389,075 742,256 249,431 680,335 443,864 592,855 10,337,615 3,141,422 124,739 3,805,995 97,400 649,759 150,622 1,835,799 33% 20% 21% 67% 10% 10% 16% 17% 15% 19% 58% 57% 16% 17% 8.5 34 100 400 20.25 81 120 480 35.5 142 43 172 19 76 35 140 $10,901 $11,417 $2,099 $6,513 $3,817 $10,937 $4,181 $1,856 $4,894 $5,302 $2,174 3 4 20 42 45 42 7 9 2 12 40 6 6 8 13 Blocks Blockfaces • • 1,572,666 33,051 1,605,717 Downtown 150,216 222,424 80,309 66,912 1,496,803 Administration/BID Revenue Ratio Administration/BID Expense Ratio Clean&Safety&Maint cost per blockface Administration cost per blockface Administrative Staff Hospitality Staff Maintenance Staff Capitol Hill n/a $6,011 1 1 5 $1,278 n/a $794 6 2 7 There are 8 BIDs in DC Most BIDs disclose their financial information in annual reports Some data obtained from 990’s Source: http://www.dcbidcouncil.org/map/ H Street Area Limitations of Corridor Financial Analysis • Data Availability • Lack of historical property data means no accuracy in forecasting • Lack of SF / linear frontage in OTR data • Leads to use of “Assessed Value” model for projecting assessments • Assumptions • Relative stability of assessed values • Same assessment method used for each corridor • Costs for similar services do not vary across BIDs • Future Analyses • Compare multiple assessment models: LF, SF, Assessment, Hotels • Different assessment models are more appropriate in different areas • Always keep in mind: resident/merchant impact! Corridor Analysis: H Street Assessed Value Model $120 per residential unit $0.15 commercial rate per $100 assessed $0.05 vacant rate per SF Land Area H Street, 2011 # registered Land Area Restaurant 20 35,014 Retail 127 418,262 Commercial 23 243,319 Parking Lot 18 87,976 Vacant 57 148,451 Other 11 99,377 Residential Single Family 748 1,191,788 Residential Multifamily 588 267,414 Apartment Units 229 Total 1592 2,491,601 Assessed Value $ 11,194,580 $ 99,247,210 $ 110,590,220 $ 21,259,100 $ 26,844,270 $ 25,728,390 $ 567,071,460 $ 240,899,340 Mean Value $ 559,729 $ 781,474 $ 4,808,270 $ 1,181,061 $ 470,952 $ 2,338,945 $ 758,117 $ 409,693 $ 1,102,834,570 Projected Annual BID Assessment: $372,450 Mean daily cost to H St restaurant: $2.30 Mean daily cost to H St retailer: $3.21 Data Source: 2011 OTR data BID Formation Human Resource Expense Assumption Mount Vernon (Benchmark) Assumption 1 (No PT assistant) Assumption 2 (1 PT assistant) Assumption 3 (2 PT assistants) • • • • HR Cost Admin /HR Cost Executive Assistant (FT) Assistant (PT) $70,000 $50,000 $35,000 Cleaners $40,000 Landscapers $40,000 $360,000 33.3% 1 1 0 3 3 $360,000 33.3% 1 1 0 4 2 $395,000 39.2% 1 1 1 4 2 $430,000 44.2% 1 1 2 4 2 Benchmark: Mount Vernon (because of similar area and business size) • 2 administrations and 6 maintenance stuffs • Assume there are five positions: executive, full-time assistant, part-time assistant, cleaner, and landscaper In H Street corridor, In total 6 members should be enough for cleaners and landscapers. Total HR cost depends on how many people are needed for administrations. Also, other expenses should be considered. 25 TIF model • The idea: Because BIDs cause property values to increase, set up a TIF to capture that value in order to help fund the BID • The model: “Low-growth” or normal model for 10 years for corridor compared to “Higher-growth” post-BID model for same time frame and area • The result: The NPV of the difference in tax revenue is the “incremental gain” which is then adjusted for a general fund carve-out to establish the TIF fund. • This is a small TIF because the growth models are very conservative. 26 TIF Model Assumptions Discount Rate Homestead Exemption Owner Occupancy Rate General Fund Carve-Out Growth Rates Base Case Annual (continuous) Initial (from BID foundation) With BID formed Annual (continuous) Initial (from BID foundation) 5% Does Not Change Does Not Change 50% Restaurant/Bar Tax Rates Property Tax Class I Residential Property Tax Class II Commercial Property Tax Class III Vacant Homestead Exemption Retailer Commercial $0.85 $1.85 $5 $67,500 per per per /Occupied Unit $100 $100 $100 64% Owner-occupied Vacant Residential Multi Residential Single Homestead Exemption 2% 0% 2% 0% 2% 0% -6% 0% 2% 0% 2% 0% 3% 0% 4% 3% 4% 3% 3% 3% -10% 0% 2% 0% 2% 0% 3% 0% Growth rates are estimates, need historic data to be able to forecast Currently uses the H Street Corridor, but could be adapted to other corridors 27 TIF Subsidy Payments TIF money establishes a fund and uses an amortization table to fund BID activity during a multi-year setup period. This takes the initial burden off of their constituents and creates a funding mechanism with a definite end. NPV Gain General Fund Cut Net from TIF $2,618,296.19 $1,309,148.09 $1,309,148.09 5-year Subsidy TIF Portion 0.33 $ BID Tax Portion $ Estimated Individual Tax Burden Restaurant Retailer $ $ 8-year Subsidy TIF Portion 0.22 $ BID Tax Portion $ Estimated Individual Tax Burden Restaurant Retailer 28 $ $ 100% 436,383 $ 0% $ 80% 349,106 $ 20% 38,242 $ 60% 261,830 $ 40% 141,012 $ 40% 174,553 $ 60% 244,403 $ 20% 87,277 $ 80% 348,437 $ 0% $ 100% 453,143 $ 0% $ 100% 471,268 $ 0% $ 100% 490,119 $ 0% $ 100% 509,724 $ 0% 100% 530,113 $ $ 242 $ 338 $ 504 $ 703 $ 786 $ 1,097 $ 1,090 $ 1,521 $ 1,416 $ 1,978 $ 1,473 $ 2,057 $ 1,532 $ 2,139 $ 1,593 $ 2,225 $ 1,657 2,314 100.0% 290,922 $ 0.0% 81,528 $ 87.5% 254,557 $ 12.5% 132,792 $ 75.0% 218,191 $ 25.0% 184,651 $ 62.5% 181,826 $ 37.5% 237,130 $ 50.0% 145,461 $ 50.0% 290,253 $ 37.5% 109,096 $ 62.5% 344,047 $ 25.0% 72,730 $ 75.0% 398,538 $ 12.5% 36,365 $ 87.5% 453,754 $ $ 100% 509,724 $ 100% 530,113 151 $ 211 $ 315 $ 440 $ 491 $ 686 $ 681 $ 951 $ 885 $ 1,236 $ 1,105 $ 1,543 $ 1,341 $ 1,872 $ 1,593 $ 2,225 $ 1,657 2,314 - - $ $ 0% 0% THANK YOU! Any Questions? 29 Appendix: Alcohol Moratorium • One possible strategy to stabilize the number of restaurants and bars in the corridor is a moratorium on licenses to serve alcohol • The procedure for this involves a petition by community organizations • Covering the entire corridor would require two moratorium zones • This strategy is not recommended unless restaurants and bars begin “taking over” the neighborhood and become a legitimate nuisance 30