Street Food: Should the D.C. Government Help Fund Restaurants and Bars?
Posted by Jessica Sidman on Nov. 6, 2013 at 9:19 pm
When the owners of Ivy and Coney first set out to open their Midwest-inspired bar in Shaw, they planned for the small spot to serve only beer, Chicago-style and Detroit-style hot dogs, and a few other snacks.
But when it opens in the coming months, Ivy and Coney will have built out a full kitchen, expanded its food offerings to a longer menu, and installed a deck with a retractable glass roof, doubling its occupancy. Co-owner Josh Saltzman, who is also a co-owner of Kangaroo Boxing Club, says he and his partners initially planned to staff the place themselves. But with the additions, they expect to double their revenues, meaning that Ivy and Coney should be able to hire eight additional employees.
All that work—the kitchen, the retractable roof, and other small improvements—will cost around $85,000. But private investors, who typically fund restaurants, didn`t pony up for it. Crowdfunding, which has become popular with food entrepreneurs lately, isn`t to thank either, though Ivy and Coney also raised $6,220 on Indiegogo. Instead, the money will come from taxpayers via a District government grant.
That grant is part of the Great Streets Small Business Capital Improvement Program, which the Office of the Deputy Mayor for Planning and Economic Development first launched in late 2011 with the goal of growing and supporting small businesses in underdeveloped neighborhoods, while adding new jobs.
To date, the program has awarded 65 new and existing businesses more than $4.7 million in amounts of up to $85,000 each. The grantees include everything from pet stores to yoga studios to auto repair shops, but roughly a quarter are restaurants, bars, markets, or other food ventures. The grants are not meant to incentivize businesses to open in certain locations—they must already have leases or own property—but rather to fund expansions and renovations. The money has paid for new awnings and signage, electrical and plumbing upgrades, outdoor patios, and rooftop solar panels.
Last week, Great Streets announced its largest payout to date: $2.1 million for 29 businesses across 11 corridors, which spread from 7th Street NW to Benning Road NE to Pennsylvania Avenue SE. (The program was restricted to H Street NE in its first year, when it was known as the H Street NE Retail Priority Area Grant.)
In his weekly radio address Sunday, Mayor Vince Gray said the grants will help revitalize ``underutilized`` neighborhoods. He anticipates the 29 newest grantees will create 200 new jobs. Grant recipients past and present say they have hired or will be able to hire more people than they would have otherwise. Some also say that because of the extra money, they`ll have the potential to grow their businesses, adding more activity to their neighborhoods, and bring in more revenue, ultimately paying back the city in more taxes.
But the program also raises questions about whether the government should invest in notoriously risky businesses like restaurants and whether a new facade or a better roof deck will really transform a neighborhood. Ivy and Coney, in particular, raised some eyebrows about whether its retractable glass roof is the best use of government dollars when there`s so much need elsewhere.
The grant program has also been inconsistent in who it says is eligible to receive funding and who actually gets it. H Street NE is the only corridor that`s part of the Great Streets program where restaurants are not officially eligible. But one got the money anyway. In May 2012, ``restaurant and social gathering place`` DC Conscious Cafe at 1413 H St. NE was awarded $85,000 from Great Streets for facade improvements and to open its floor plan.
DMPED spokeswoman Chanda Washington says she was not around when the decision was made, and the one person who might be able to provide an explanation about why DC Conscious Cafe received the grant is out of the office all week.
DC Conscious Cafe, which planned to have book readings, live entertainment, and a retail component, was the first restaurant in the city to win the grant. But despite the financial assistance, its building remains vacant more than a year and a half later. The owners did not respond to requests for comment. According to Washington, the restaurant experienced some ``unexpected challenges`` due to a ``personal situation,`` which are delaying the opening.
Also ineligible for the grant citywide: bars, nightclubs, liquor stores, banks, and hotels. But two of the most recent grant recipients—Ivy and Coney and Pub and The People coming to 1648 North Capitol St. NW—will have tavern, not restaurant, liquor licenses. Restaurant licenses require food to account for at least 45 percent of the businesses` gross sales; tavern licenses, which bars typically have, require some food but no specific amount.
Washington did not know exactly how DMPED defines ``bar`` and again said the person who might know was unavailable this week. But Pub and The People co-owner Jeremy Gifford says even he wasn`t sure how the grantmakers were distinguishing what was a bar versus a restaurant. ``We called to say what`s the difference? Who`s ultimately making the decision `No, you`re a bar, no, you`re a restaurant?``` he says. ``And they didn`t really seem to have an answer, quite frankly.``
Great Streets has a 100-point scoring system to evaluate applications, which takes into consideration financial viability, previous experience running a successful business, the market for the products or services provided, new jobs created or retained, and commitment to using D.C.-based contractors.
But in the grant`s early stages, Great Streets Program Executive Director Polina Bakhteiarov says they`re trying to reward ``every business that is eligible,`` as long as they`re located in one of the approved corridors and have their finances in order. Of those ``eligible,`` no type of business is prioritized over another, Bakhteiarov adds, meaning a market isn`t given more weight than, say, a hair salon or a photo studio.
The grant recipients aren`t just given blank checks: The city reimburses their expenses after they submit receipts, which means the businesses still need to have some upfront cash. But in terms of what kinds of renovations or expansions are permitted, there aren`t too many restrictions. ``We look at it from a more holistic perspective,`` Bakhteiarov says. The few no-nos include using the money for things like product inventory, rent, payroll, and day-to-day operations.
Gifford says the $85,000 grant for Pub and the People will allow them to dig out a full basement, which will be used for storage, at their once-blighted building in Bloomingdale. Without the grant, Gifford says they probably would have just dug out a very small part of the basement rather than the full thing. The extra space will allow them to double the occupancy upstairs, which will mean they can hire four or five additional people, most of whom will likely come from the neighborhood.
The extra clientele, in theory, also means more feet on the street. ``People don`t sell drugs on the corner when there`s that many people walking around,`` Gifford says. He anticipates that having nicer and busier places to eat and drink will help draw other businesses to the neighborhood. ``Restaurants tend to be the first in,`` Gifford says, ``and then you start getting hardware stores and artsy things.``
Since the grant program is so new and many of the businesses are still in the process of opening, it`s too soon to see much of a neighborhood impact—or really be sure there is one.
The money is definitely helping some individual businesses. Three Little Pigs Charcuterie & Salumi in Petworth was awarded $62,500 in June. Carolina Gomez, who runs the shop with her husband, Jason Story, says they`ve used part of their grant for a new air-conditioning system and renovations to the basement, which gives them more space for production and charcuterie-making classes. Between savings on energy costs and extra production capabilities, Gomez says Three Little Pigs has been able to hire a part-time baker and a part-time farmers market representative, who have the potential to become full-time.
Gomez and Story also plan to use some city funds for a larger meat grinder and an automatic sausage stuffer so they can make more product faster. Other future investments will include a more visible sign out front, a mural on the side of the building, and a new deli case, which will allow Three Little Pigs to become more of a grocery store than a charcuterie shop, with butchered meats and local dairy and produce. Gomez says it will take about a year to make improvements that would otherwise have taken five or six years.
At Ivy and Coney, Saltzman says the grant will fast-track improvements that would have taken at least three years. The result? The city should get its money back in sales, employee, and property taxes in a year and a half, he says, ``and then they`re going to continue to get that money.`` But more than that, Saltzman says the grant is providing a much better space for the community, not to mention the addition of jobs.
``It`s not like it`s a handout,`` Saltzman says. ``This is something that we and the other grant receivers worked to show to the city small business department that we`re going to have an effect on people`s lives, and this is a good thing. This is helping neighborhoods.``
Still, some are cautious of how loudly they boast about what the city has given them, even though the city promotes the grant recipients through press releases and events. ``We debated whether we wanted to publicize that we got this grant and how people would look at it, whether it was right for the government to help bars open,`` says Pub and The People`s Gifford. ``I totally get both sides.``
But, Gifford argues, it`s not like the money was removed from the budgets to help children or the homeless. ``This is a budgeted line item in Mayor Gray`s budget,`` he says. ``Ultimately, it`s a good thing, but I see where people have a tough time swallowing it when we see need in other parts of the city for services.``
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