The vacant storefronts of downtown Santa Cruz.
(Via City of Santa Cruz)
Recovery

Putting some pop back into downtown: Santa Cruz initiates pop-up program to stimulate a rebirth

The “Downtown Pops!” plan spearheaded by the city’s economic development department has been in the works for several months as part of a larger effort to revitalize the local economy after a year that devastated not only lives, but Santa Cruz’s bottom line.

In an effort to breathe new life into downtown as Santa Cruz recovers from the pandemic, the city will subsidize up to a dozen pop-up businesses in vacant storefronts.

The “Downtown Pops!” plan spearheaded by the city’s economic development department has been in the works for several months as part of a larger effort to revitalize the local economy after a year that devastated not only lives, but Santa Cruz’s bottom line.

Eight to 12 businesses will be selected from a pool of applicants for a six-month residency in an empty downtown storefront. The city is fronting up to $200,000 to offset rent costs and give landlords an incentive to participate in the program, and businesses will have a chance to transition to brick-and-mortar with lower overhead costs and less risk.

Bonnie Lipscomb
(Kevin Painchaud/Lookout Santa Cruz)

Downtown has been particularly hurt by the pandemic economy, Economic Development Director Bonnie Lipscomb told the city council this week.

In the first part of this year, vacancy rates for downtown retail spaces were at 31.5% — more than three times the number of empty storefronts there were in downtown at the start of 2020, before the pandemic.

Currently, there are 37 vacant spaces in downtown, with 18 of them on the main street of Pacific Avenue, Lipscomb said. Some of those units were empty before the pandemic began and some recently opened up as part of new developments, but others housed local businesses that had to shut down, downsize or move in 2020. In the last year alone, 17 businesses left downtown, Vice Mayor Sonja Brunner said.

The city is seeking creative, experimental and well-thought-out business concepts to fill those gaps and attract shoppers to downtown. A children’s toy store, pop-up restaurants, artisan food producers and even an indoor skate park were all mentioned at Tuesday’s meeting as possibilities.

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Businesses run by people of color and women, as well as businesses that intend to pay employees a living wage, will be prioritized during the application screening period in May and June.

Councilmember Martine Watkins also asked city staff to explore the potential for pop-up childcare services in order to accommodate the needs of business owners with young children.

The city will work to pair entrepreneurs with unique ideas with spaces that are appropriate for their business, Lipscomb said.

For the pop-up program, the city will act as an intermediary, controlling the six-month leases and subletting spaces to chosen businesses. The city will also collect rent from tenants — up to 5% of the business’ monthly taxable gross income — and pay landlords.

But what makes the program unique is that the city sets a maximum rent amount of $2 per square foot (lower than the downtown average). If a business doesn’t sell enough to pay the rent by itself, the city will foot the rest of the bill using money from the Economic Development Trust Fund. Santa Cruz city staff will also help connect the business owner to resources that can help make the venture profitable.

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“So this is really both a stimulus program and recovery program, and that’s what it is geared toward,” Lipscomb said Tuesday.

If a business makes more money than it needs for rent, the city will stash a portion away in a fund the tenant can use for payments in future months.

And if a business is doing so well that it can consistently pay rent, the city will cut itself out of the equation and encourage the landlord and business to enter into a long-term lease — the ultimate goal of the program, Lipscomb said.

Interested businesses will be able to apply for Downtown Pops! on the city’s website once the application period opens next month.