New grant program aims to preserve State Street's unique retail businesses

To prevent small, independent retailers in the State Street area from being squeezed out of existence by proliferating bars and restaurants, Madison is acting to preserve the quirky nature of its best-known retail district.

The Retail Improvement Grant Program, announced in early February, will offer retailers matching grants of up to $50,000 to assist with the costs of interior and exterior renovations. The program's goal is to encourage property owners and independent retailers to reinvest in downtown.

“The strength of the downtown has always been in our mix of locally owned businesses," says Susan Schmitz, president of Downtown Madison Inc., which works closely with the central Business Improvement District.

The face of downtown Madison has changed in recent years, as millennials have flocked to new condo and apartment towers near cultural centers. As a result, the funky flavor of the city’s most densely populated area is changing, too.

Downtown Madison Inc. regularly surveys its market. In 1998 there were 47 restaurants and specialty foods/drink establishments. Today there are 99.

In 1989, food and drink establishments accounted for 21 percent of all State Street's business space. That  doubled to 42 percent by 2014. During the same period, food and drink businesses skyrocketed from 8 percent to 24 percent of  ground floor space in the Capitol Square area.

Facade improvement at 1602 Gilson St. in Madison, made possible by a city program that’s now expanding to include interior improvements. (Photo: City of Madison)

Ruth Rohlich, the city’s business development specialist, witnesses the same trend in Austin, where her family lives. “(Austin's) Sixth Street experienced a kind of turn like this,” she says. Shops gave way to restaurants and bars. There was a move there to revive retail, but “the difficult thing is that once that expense has occurred — in turning a retail space into space with restaurant/bar capability — it’s just so hard to turn those back.”

The Retail Improvement Grant program is designed to prevent such conversions from happening in the first place. Restaurants and bars are not eligible for the grants. Franchises are accepted if they can demonstrate a specified level of local control. Funding will come from the downtown Tax Incremental Financing district.

Madison is not alone in advancing such assistance. “Many major urban areas have some program like this,” says Rohlich. “The City of Milwaukee has a program like this. There are a number of cities where they call them ‘white box projects,’ where they’re more designed for business districts that maybe have some blight, and so it’s to help encourage retail to move in by helping to pay for some of the costs of initial improvement.

“Ours is a little bit different in that we do have a really successful, very hot market area, so ours is more geared toward preserving some of that independent retail flavor as more and more restaurants and bars begin to take up some of those spaces.”

The retail program uses the city’s Facade Grant Program as a model.

That program was launched in 2001 and deals only with exterior improvements in selected areas. “Since then we have done 84 grants totaling $1.1 million,” says Craig Wilson, housing rehabilitation specialist with the city’s community development division. “That investment has leveraged over $3.2 million in improvements to business facades in many of Madison’s oldest and most visible business districts.”

Another benefit, which is more difficult to measure, “is how the (façade) grants have facilitated businesses to make use of vacant, sometimes neglected buildings,” he says. “Transforming an eyesore into an integral part of the neighborhood adds not only to the tax base, but enhances overall health and desirability of those neighborhoods.”

Facade grant recipients include the Madison Children’s Museum and the oldest Alcoholics Anonymous clubhouse in the state. Another is State Street’s iconic Orpheum Theater, owned by the Paras family. The 1927 vaudeville and movie palace today is a venue for rock and other live concerts.

“The Facade Improvement Grant Program has been great,” says Mary Paras. The Orpheum received matching funds up $10,000 for each of its two entrances.

“On State Street we used the matching funds for installing a granite front, which more closely represents the original design,” she says. “On Johnson Street we used the matching funds to replace a large set of five doors. You could see the cars pass on Johnson Street through the cracks of the old doors, so the new doors are beautiful and help with energy costs.”

Rohlick is already helping several existing businesses with the new grant process. “We’re hoping as we market the program and work with the commercial brokers, we might get some new businesses as well,” she says.

“Our Facade Improvement Program is already a great success, helping small business owners as they strive to maintain the vitality of our community," says Mayor Paul Soglin, who’s made the health of State Street a priority. “I'm pleased that the city is able to extend this further opportunity. We look forward to working with them.”