A bigger stake for small business

Whittier storefront could be kept affordable by new program

Plans for the city's first commercial land trust are underway, guided by program director Domonique Jones and advisory board secretary Coco.

A Whittier storefront between Little Tijuana and Yess Yoga has been empty for years, but it may become home to a new experiment. 

The City of Minneapolis purchased the tax-forfeited building in early 2019 with a pilot project in mind. The pilot aims to keep a storefront forever affordable by holding the property in what’s known as a land trust. 

In recent years, land trusts have been used to provide affordable housing at hundreds of sites across the city, including two nearby condo units at 26th & Nicollet.

Now the City of Lakes Community Land Trust is asking for exclusive purchase rights at 19 E. 26th St. to create the city’s first commercial land trust. 

“What we’re trying to do is really stop gentrification and displacement,” said Domonique Jones, the land trust’s program director. 

The vacant storefront pictured in green at 19 E. 26th St. could become the city’s first commercial land trust designed as long-term affordable space.

With a focus on North Minneapolis, Jones said, the City of Lakes land trust is strategizing to acquire land and keep it affordable for businesses long term, particularly for businesses run by people of color. 

The Minneapolis 2040 Plan for growth recommends commercial land trusts as a method for long-term affordability and better outcomes for people of color. Today, the city reports that less than 22% of Minneapolis businesses are owned by people of color, and when compared with the city’s population, Black- and Latino-owned businesses are underrepresented. Having an entrepreneur in a family increases family wealth by 600% for a Black family and 400% for a Latino family, according to the city.

The Land Trust’s first step is to find business owners who want help moving or buying a space, and the group plans to take advantage of bargain land prices. 

One early bargain could be 19 E. 26th St.

A previous tenant in the building was Los Gallos, a metro area business that accepts payroll checks to provide money transfers, bill payments and other services. It serves clients without state IDs who believe they’ve been overcharged at other cash-checking facilities, a business representative told the City of Minneapolis in 2004. At that time, Los Gallos said it was the largest money transmitter in the state operated by the Hispanic community. 

The city purchased the tax-forfeited land from Hennepin County last January for about $180,000. Above the storefront, a three-bedroom apartment stood on the second floor, according to the land trust. The city found evidence of illegal occupancy in the basement in 2002. The city investigated a similar complaint in 2007, but found no evidence of occupancy during an inspection. 

People voiced both skepticism and support for the commercial land trust concept at a recent community meeting in Whittier. 

 “I’m not comfortable with our neighborhood being a guinea pig for the commercial land trust experiment,” one attendee said, adding that he’d like to see more neighborhood control of the site.

Another disagreed, saying the neighborhood typically can’t control any building.

“I feel like this is a closer model of having some sort of intentional ownership of the space,” Matt Barthelemy said. 

Steve Wagner said he’s owned the Little Tijuana building for 27 years, and he’s seen property taxes increase from $5,000 to nearly $14,000. He asked how a space can remain affordable in that environment. 

“It’s been tough as hell for the last three years,” he said. “I’m waiting for a developer, to be honest with you, because I’m getting old. I’ve been at it over half my life, and I’m getting tired. … Sooner or later a developer’s going to flatten that corner. It’s a teardown. Look all around us, from here to Uptown. I don’t even recognize it anymore.”

Another meeting attendee said that if Whittier does host the first commercial land trust, neighbors could help create a new model for collaboration.

“The more involved we are, the more we’re creating what’s possible in other places,” said Scott Melamed.

The City of Lakes land trust’s main focus is affordable housing, and staff members said they’re on pace to become the largest urban community land trust in the nation this year. The land trust bridges financing gaps for new homebuyers by owning the land underneath a home, while a homeowner owns the building. If the homeowner later moves out, they keep their equity and 25% of any increase in value. The land trust retains the land and uses the remaining portion of a value increase to aid the next owner’s purchase. 

Jeff Washburne, executive director of the City of Lakes Community Land Trust, said that while they’ve mastered the residential side, they don’t have the commercial side figured out yet. 

The trust is working with an advisory board and a consultant to determine exactly how the program would operate. One idea is a lease-to-purchase option for business space, with the trust keeping title to the land. Other options include a co-op with shared equity, or a standard below-market lease. 

“What I do know is that the city is changing quickly,” Washburne said. “Who gets to live in the city, who gets to work in the city, who gets to own a business in the city is increasingly not being decided by folks in this room. It’s being decided by outside forces.”

A handful of places in the country have attempted to use land trusts for commercial space, and their operations vary widely, according to a 2017 report by the Center for Urban and Regional Affairs. One group in Anchorage has acquired key properties with a vision for an arts and cultural district. One in Berkeley rents to businesses and nonprofits at below-market rents. One on Lopez Island, in Washington state, has a resource room to demonstrate energy conservation strategies.

In the Rondo neighborhood in St. Paul, where highway development displaced hundreds of businesses, a land trust aims to help businesses survive with minimal debt on Selby Avenue as part of a $13.2 million development project. With plans to share profits, the trust rents to businesses like Golden Thyme Coffee & Cafe and the Neal family shoeshine business.  

In Black Ink recently moved in to its first independent storefront in the development. The nonprofit publishing house’s new release “Towards an African Education” focuses on quality education for students of African descent. Executive Director Rekhet Si-Asar said the move to Selby builds on a relationship with Golden Thyme, and they appreciated extra support to shape their new space in a neighborhood concerned about gentrification.

In Black Ink board members and advisors. Submitted photo

“There really needs to be more funding for small commercial development,” said Greg Finzell, executive director of the Rondo Community Land Trust. “You really have to piece funding from wherever you can find it. … When you’re working with people that are not necessarily bankable, there just isn’t much money out there for them.”

The City of Lakes commercial land trust currently has funding from the Jay & Rose Phillips Family Foundation (co-chaired by Rep. Dean Phillips). The trust also hopes to secure $50,000 in city funding set aside in 2017 for a commercial land trust pilot. A launch event is Jan. 16 at the Robert J. Jones Urban Research and Outreach-Engagement Center.

City staff said they want more information on the finances and details of how the land trust would work before sending a recommendation to the City Council. Staff said they would expect to see a tenant move in quickly after a sale, and they are committed to working with the land trust to make the idea work. 

The nonprofit hopes to acquire two commercial sites in 2020: the Whittier site and one in North Minneapolis. They would become the first projects of their kind in the state.

“If we’re able to own the land, we would be the first true commercial land trust in Minnesota,” Domonique Jones said.