Development in Worcester’s Main South would bring affordable commercial storefronts for local businesses to build generational wealth
July 21, 2022 : MassLive.com, by Trea Lavery
A proposed commercial development in Worcester’s Main South neighborhood would give local small business owners the opportunity to build generational wealth by helping them purchase their own brick-and-mortar space.
The project, at 807-815 Main St., would turn a currently vacant lot into seven affordable rent-to-own commercial spaces, giving local businesses like shops, boutiques, restaurants, salons or even grocery stores the chance to establish a permanent home without the threat of paying monthly rent.
“This district has been characterized by smaller, minority business owners occupying storefronts that had been left to run down,” said Steve Teasdale, executive director of the Main South Community Development Corporation, the proponent of the project. “Landlords hadn’t put investments into them. The rents were somewhat affordable, but they had no security of tenure, they were not gaining any capital, no equity appreciation and were in a tenuous position of security.”
Teasdale explained that like with many other economic challenges, these business owners’ struggles were exacerbated by the COVID-19 pandemic, making the problem even more urgent to the CDC.
“This was a community who hadn’t been able to access the (Payment Protection Program) and other federal resources because of lack of documentation in terms of financial records,” he said. “We decided that we needed to create economic stakeholders in the neighborhood if in fact we were going to sustain revitalization efforts.”
The plan was developed in partnership with MassDevelopment, which had established a Transformative Development Initiative in Main South a couple years before. The agency’s TDI program involves working closely in a community for three years to build economic development opportunities; the Main South TDI program had already established the Main South Business Association, but there was more to do.
The CDC has been successful in the past with creating homeownership opportunities through a rent-to-own model, so Teasdale said that they began to think outside of the box about how something similar could work in a commercial context.
“Presumably, if we can create economic incentives to stay here, to be vested in the neighborhood, to participate in the business association, to continue to work to advocate at the city level for the municipal services necessary to address some of the challenges in that area, then the goal is that this is a better way of sustaining improvements in the area at the same time as addressing the racial equity is in access to capital and generational wealth,” he said.
The Main Street lot has been vacant since the 1980s, Teasdale said, when a rooming house that had occupied it was destroyed in a fire.
The development will include seven units ranging from 1,200 to 1,900 square feet, which Teasdale said will sell for about $125,000 on the low end to $190,000 on the high end. The units will be marketed to local businesses, with priority going to those who have been active with the Business Association.
The model gives tenants the opportunity to rent for a few years while they prepare to qualify with a mortgage. The CDC has already begun working with local banks to find creative ways to finance these mortgages to keep them affordable for the property owners.
In addition, there will be resale restrictions on the units, requiring the owners to hold them for ten years before profiting from their sale, to prevent speculation.
“It’s not people who come in from Boston and buy properties and never see them,” Teasdale said.
Jessica Velez, president of the MSBA, said the association is also working with banks to come speak with local business owners about how to prepare to get a mortgage on the properties and are helping businesses get their financial documents up to date.
“This project is going to open up doors to a couple businesses to gain access to own your own prop, so it’s really exciting for us,” Velez said. “We are looking forward to this opportunity. It doesn’t happen all the time.”
Noah Koretz, TDI director at MassDevelopment, said that while this project takes inspiration from aspects of other economic development projects, it is unique in Massachusetts. If all goes well, it could become a model for projects in other areas.
“In cities like Worcester that have seen development booms and prices increasing for the truly small, unique, culturally significant businesses for that neighborhood, there’s a lot of conversation around anti-displacement in housing, but not as much when it comes to business,” Koretz said. “Small businesses, especially in immigrant communities, are the lifeblood of the economy of the community. We’re creating a unique model that hasn’t really been tried before, but part of what we’re trying to learn by our support of this project is, is this something there’s an appetite for in other neighborhoods?”
He added that Main South CDC’s work in economic development is something that he already sees a need for throughout the state.
“There are CDCs in neighborhoods in gateway cities throughout Massachusetts and … they focus on housing, but more and more were starting to see that this income generation and entrepreneurial support is critical to the communities’ economic health,” Koretz said.
The $3 million project is being funded by MassDevelopment, American Rescue Plan Act funding, and construction financing from UMass Memorial. It has already received approval from Worcester’s Planning Board. Teasdale said he hopes to have the project out to bid by mid-August, with a groundbreaking by mid-September.
“We’re super excited,” Velez said. “We’re going to see how everything comes out, and hopefully this is one of many in the area. We need more of this. Hopefully, we can be an example for other communities.”