Post covid-19: we need to bend the rules and create ‘new deals’ for small businesses

OPINION:

This is a call for government, business and landlords to action new and creative measures to help small businesses get back on their feet again in late 2020 and beyond.

As an urban planner I am motivated by the opportunity to help create and manage successful cities, towns and communities. 

Australia's cities and towns are currently facing social and economic threats that have never been experienced before in the lifetime of its citizens.

Urban planners have a critical role to play in not only immediately responding to the COVID 19 crisis but we also must have plans for contributing to the rebuild of our economy once the immediate threat passes.

An immediate focus must remain on supporting the continuity of construction activity - pushing on with planning approvals, getting rid of red tape and fast-tracking applications where necessary to ensure a development-ready pipeline of projects and the many jobs they create.

But we must also work on solutions now that can be deployed once the current lockdown requirements are lifted. This is likely to only be a matter of months away.

This article proposes some ideas to help the sectors that have been hit the hardest so far - retail, hospitality, tourism, the creative industries and arts, entertainment, recreation and many types of service industries.

These are enterprises who have had their revenues disappear in an instant, and the demand for these services will take time to build up again. Demand is likely to gradually re-emerge over maybe a 6-18-month period.

It will be a fragile time –the public will be wary about how they spend their time and money, and they will take a while to become comfortable with socialising in the wider community again.

A mix of re-emerging, re-imagined, and new businesses will step forward to meet this demand.

These businesses will need to operate as start-ups working off lean resources for potentially extended periods. Many won’t have great access to capital or an established customer base, and many will be building (or rebuilding) their company/product brand. 

But what they will have is a burning desire to succeed, a willingness to try new ideas, form partnerships and work hard, all on the smell of an oily rag.

So, what can urban planners do to help in this rebuilding process?

It is likely that there will be many vacant shops, cafes, restaurants, bars, offices and warehouses across our suburbs at the end of the lockdown phase. Landlords will be keen to get tenants back into these spaces as soon as possible, but there will be few tenants that will be able to take on the rent costs that existed in the pre-COVID 19 phase.

New businesses and those in a rebuilding phase alike will also be reluctant to take on rigid rent terms, particularly long leases. Even businesses that trade through the current period and negotiate the suspension of rent payments will be faced with significant debts that will affect their ongoing ability to trade once the grace period ends.

In this environment, the opportunity exists for planners, businesses, and landlords to work together on a 'lean urbanism' model for supporting new and re-emerging businesses to get going again. 

What I am proposing is that in designated locations, the State government, local councils and business associations work with landlords and businesses who are re-starting (or starting-up) to revitalise places suffering from (or at risk of) high vacancy.

This program would enable businesses to make low-risk and low-cost transitions from new and possibly interim operations into more sustainable and permanent arrangements during the recovery phase.  

The program would see urban planners, property owners and business associations band together to reimagine our suburban strip centres and industrial areas as places for the incubation and growth of new businesses. 

Such places can be designated as ‘enterprise zones’, experimental and opportunistic areas where start-ups can simply turn up and try new ideas in popup and temporary spaces, where they are supported by landlords and government to get up and running again.

Whilst these ideas could potentially be applied to any business operating anywhere, there are particular benefits to be gained in concentrating the initial efforts on creating local business clusters, where a shared amenity and collective identity can be created, and where marketing, programming, and business development efforts can be shared.

The clustering of complementary types of businesses together can have a powerful effect on drawing customers and rebuilding the social and commercial value of such places.

Local business associations would market and curate such places with events, activities, and promotions, providing a level of activation that supports business and provides opportunities for the community to re-engage with the outside world. 

Landlords would participate by agreeing to license space for start-ups on a low cost and temporary basis. Incentives such as reduced land tax, municipal rates or other COVID 19-related recovery funding could be offered to landlords who agree to participate in the program.

All landlords know it’s easier to find a long-term commercial tenant when you’ve got an occupied, well-presented site in a location with strong branding and footfall. Several progressive commercial property developers are already providing below-market-rate rents to amenity enhancing smaller tenants as they see the value these tenants bring in attracting larger anchor tenants down the line.

The small businesses themselves would provide sweat equity in fitting out spaces, as well as working together to create a definable character and identity for their business precinct. 

It has been done before, so it can be done again.

There are precedents for this approach that we can draw from. 

Similar strategies were deployed in Christchurch after the earthquake, and in New Orleans after Hurricane Katrina. 

Pop Brixton in the United Kingdom is another successful example of a temporary project that has disused places into an event venue and a community of independent retailers, restaurants, street food start-ups, and social enterprises. With over 30 enterprises on-site (including 17 restaurants and cafes) it is huge population local destination in London.

Holzmarkt in Berlin is another such example, where the community has worked with the government and the private sector to create a vibrant, self-built space for business, arts, and culture.

Locally the success of Renew Newcastle provides a homegrown example of how destitute shopping strips can be transformed by creative thinking and adaptable agreements between landlords and local enterprises.

The role of the urban planner in all of this is to work with landowners and businesses to agree on a place-based plan for these activities and to remove the red tape by allowing businesses to turn up and start trading. It will also be necessary to remove or streamline various other forms of regulation relating to things like outdoor dining, liquor licensing and building regulations.

Urban planners within local government are perfectly positioned to take a lead role in coordinating the government input to such a program.

We can learn from the experiences of places like the City of Detroit in the use of lean urbanism. It has adopted an innovative ‘Mix Tape’ planning ordinance to facilitate the revitalisation of 36 miles of commercial corridors across its municipality. This new ordinance allows for a wide mix of ‘as of right’ uses, and it eases parking requirements, and it sets a series of simple minimum design standards. It is accompanied by targeted streetscape improvements and the removal of other types of business regulation.

We already have this type of tool available in Victoria - the Commercial 3 zone was specifically developed with a nimbler, lower-barrier economy in mind.  

Whilst implementing this zone would be an outcome worthy of pursuing many locations, we need not wait for this to happen. Instead, we can trial new ideas via the temporary use of space, and/or by suspending certain planning and other regulations in designated locations. 

In the short term, it would be possible to make progress by designating places in Melbourne where uses are allowed to just start happening on an interim basis. Just like we allow markets and events as temporary uses, we could allow a range of other commercial activities to occur on an interim basis. 

The Queensland Government has already initiated legislative reforms along these lines in response to COVID 19, by creating temporary use licenses for certain types of businesses.

Sorting out the ultimate zoning and regulatory arrangements can be a job for another day.

It would even be possible (if there was enough will amongst regulators) to allow spaces to be temporarily used as live and work-spaces – so that the cost of living and working for start-ups was kept as low as possible. 

Of course, certain minimum standards relating to amenities, health, and human safety would have to be adhered to, but it would be possible to suspend the need for a change of use permits and many other types of approvals on the basis that the uses were temporary in nature.

Time for new ‘Neighbourhood Deals’ ?

In the great depression of the 1920s US President Franklin D. Roosevelt initiated the ‘New Deal’ – a series of programs, public work projects, financial reforms, and regulations aimed at getting that nation back on its feet.

In Australia today, the various State and Federal Government reforms are already taking on a similar character and magnitude to Roosevelt’s original New Deal. There will be more national and state-led recovery programs to follow in the coming months.

We can add to this effort at the local level by creating ‘Neighbourhood Deals’ between government and landowners whereby neighbourhoods are designated as special enterprise zones where the priority is to support and nurture start-up business activity. The Deal would be that the Government would agree to eliminate red tape and invest in local amenity and placemaking activities, and landowners would agree to make space available to re-emerging and start-up businesses on low-cost and flexible terms.

All signatories to the Neighbourhood Deal would sign on to the principle that decisions will be made that are in the best interests of growing local businesses ahead of other things.

These neighbourhoods would function for a time as temporary urban incubators of new enterprises, and after a period of re-establishment those enterprises that prove to be viable would transition into ongoing commercial leases, and the city would work with them to ensure that the necessary permits and licenses were put in place. 

Buildings could then be upgraded in a more substantial manner, backed by business banking loans and potentially government stimulus programs.

There is a pandora's box of complexity to be unpacked with an initiative like this. But recent events have shown that if there is a need and a will, there is a way. A crisis can provide clarity and promote creative ways in challenging old problems.

If we want to trial the idea of establishing this type of lean and nimble approach to supporting the recovery and growth of enterprise in Australia, then we need to start working out the details right now.