In January, the Town of Chapel Hill announced that it made grants to three business as part of its Downtown Small Business Relocation Grant Program. The grant program is targeted at for-profit and rent-paying downtown businesses facing imminent displacement due to redevelopment.

The town, which was criticized by Adam Searing and others during the 2023 election for not supporting small businesses facing displacement, has actually been working on ideas like the grant program since 2020.

We have written before about the need for the town to find ways to build a modern economy and downtown while protecting the sorts of small businesses that give a place soul. These grants help do just that, though on a small scale and using a one-time infusion of APRA funds that the town will not be able to rely on if it wants to continue the program. Still, the town should be commended for a promising step in building a healthier downtown that supports both existing and new businesses.

The three grant recipients are:

Nine businesses began applications to receive the grants, seven of which submitted complete applications. The total funding pool was $100,000 and three recipients received grants of $20,000 or more that they can use for a variety of relocation costs, such as moving costs or space improvements at a new location.  To be eligible for a grant, businesses must relocate within downtown, as shown below. 

I recently spoke with Katie Bowden, Economic Development Manager for the town, to learn more about the origins, implementation, and future of the program

The idea the program originated in 2021 as the town researched ways to recover from the pandemic and gained momentum as several large redevelopment projects were proposed downtown. The town’s ReVive Chapel Hill Recovery & Resiliency Plan, which emerged from efforts to build a more sustainable economy during and after the pandemic, called for “grant programs to support strengthening business during redevelopment projects and as a part of post-pandemic recovery.” (In addition to the relocation grant program, the town previously supported small businesses via ReVive Recovery Grants and support for Garden Spot, a pop up event behind Lantern I previously wrote about).

The relocation grants were funded via ARPA funds. The town looked to similar programs in Austin, Seattle, and Laurel, MD to help design the program guidelines. The town considered whether to award grant recipients relocating anywhere in Chapel Hill but ultimately decided to require recipients to stay downtown because small local businesses can help attract new businesses there (a sentiment Longfellow, the developer of a new wet lab on Franklin Street, seems to agree with).

To ensure the grants went to businesses facing imminent relocation, applicants had to have a new location lined up – demonstrated with either a long-term lease or letter of intent – and detail how they intend to use the grant funds. The application process was not extensive, with most applicants completing in within an hour, but some businesses applied despite not being eligible for assistance.

The town acknowledges that the grant program is limited in its ability to address displacement pressures on small businesses. Relocating a business is a costly endeavor, especially if a tenant needs to upgrade a new space.

What’s next?

The town intends to survey all businesses that applied and will evaluate the effectiveness of the grant program over the coming months.

There is currently no plan to continue the grant program, nor funding earmarked to do so. Katie Bowden noted, however, than town council is increasingly aware that affordable commercial space, like affordable housing, is an ongoing challenge the town will need to help address.

The town was fortunate to have ARPA funds available for these grants but probably won’t have that option again. That means that if we want a vibrant downtown that attracts new residents, keeps businesses that spin off from UNC here rather than RTP or Durham, and supports existing small businesses, it will need to find the right approach and resources to do so.

That could involve investing taxpayer money and staff time in something like this grant program, or using other tools, like tax increment financing or creating community benefits agreements with developers.

We are optimistic that this grant program – the likes of which are not commonly found in the U.S. – demonstrates that the town is serious about building a downtown that keeps what we want and adds what we need.

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Stephen Whitlow lives in Chapel Hill. Trained as an urban planner at DCRP, he works for a research, evaluation, and technical assistance firm and focuses on the areas of housing affordability, fair housing,...