Funding to rebuild businesses in riot-damaged Twin Cities is at a turning point
Insurance claims have been paid. Pandemic relief dollars have dried up. Online fundraising has declined.
Many businesses damaged or destroyed in the riots after the police killing of George Floyd have reopened in the two years since. But for those who haven’t, there are fewer places to turn to for financial help, and inflation is driving up the cost of starting all over again.
“Right out of the chute, there was this wonderful multilevel response,” said RT Rybak, chief executive of the Minneapolis Foundation, which helps distribute state-funded grants to businesses in the cities area. binoculars.
“But what became clear very quickly was that this was going to have to be a long-term effort that required more partners than just the private sector,” he said.
In the aftermath, with damage estimates hovering around $500 million, insurance companies have largely responded to claims, though the process has not always been smooth.
About $227 million in insured losses were paid out last summer to businesses damaged by the unrest, according to data collected by the Minnesota Department of Commerce. Tens of millions more have likely been paid out by insurers since.
Overall, property damage is far from the most covered by insurers in Minnesota. Weather-related disasters sometimes cost more: A 2017 hailstorm in Brooklyn Park and Coon Rapids resulted in $3.2 billion in insured losses.
Insurance companies may have played a role, but many businesses that were damaged by the Troubles had no insurance or were underinsured, leading to large funding shortfalls.
State aid has only just begun. About $45 million in state grants approved by the Legislative Assembly a year ago will go to damaged businesses in the Twin Cities. It took public agencies months to develop the technical aspects of the program, solicit proposals and select community groups to distribute the funds.
To stay afloat or rebuild, companies have rolled out a hodgepodge of resources, including bank loans and donations from customers, friends and relatives.
“The individual burden that business owners have taken on, sort of on behalf of our community and that kind of reckoning that we’ve had, is a lot,” said Allison Sharkey, executive director of Lake Street Council, l trade association in the area hardest hit by the destruction in late May and early June 2020.
The council has raised $12 million in its We Love Lake Street fund and has already awarded nearly $9 million in small grants to more than 400 businesses.
MA Mortenson Co., a construction company, led another effort called the Restore-Rebuild-Reimagine Fund, which raised $14 million for exterior work, such as window replacements and painting. Other companies, businesses and philanthropic groups have raised additional millions which have been distributed to affected businesses.
More than 1,500 businesses along Lake Street and West Broadway in Minneapolis and University Avenue in St. Paul were damaged by the riots. By this time last year, recovery was well underway in all areas except the eastern half of Lake Street, where 40% of damaged businesses had closed or not restarted.
Since then, the worst fears about Lake Street – that it would be too costly for all but the biggest businesses to return – have not materialized. The City of Minneapolis estimates that there has been more than $175 million in permit activity related to the recovery of damaged properties across the city.
“We’re about halfway there, we think, of things coming back from what was there,” said Erik Hansen, the city’s director of planning and economic development.
Edgar Hernandez, owner of the Pollo Movil Mexican Grill on Lake Street, had no insurance to replace damaged windows and stolen cooking equipment. And he was ineligible for pandemic relief assistance.
But he received a $10,000 grant from Lake Street Council and $5,000 from Urban Ventures, a local nonprofit. And his network of family and friends came to his aid so he could reopen a few months after the initial destruction.
“A family member says I can help you with $1,000 and another family member says I can help you with $5,000, and then a window opens for you,” Hernandez said.
It took Midori Flomer much longer to reopen her restaurant, Midori’s Floating World Cafe, which was near the burned-out Minneapolis Third Ward train station.
She first received some insurance money, but it wasn’t enough to fully fix the space. A former employee started an online fundraiser that raised over $55,000, but it still wasn’t enough. Last April, the cafe finally reopened in a new building on Lake Street after receiving grants from local nonprofits, including the Lake Street Council.
“If they weren’t there, we would have been finished,” Flomer said. “It’s been a frustrating few years. But we’re finally here.”
Ray James’ barber shop, called Fade Factory on West Broadway Avenue in north Minneapolis, had been in his family for four decades when a fire broke out during the riots and destroyed the building. James, who said he was underinsured, received an insurance payout of more than $200,000 as well as a $10,000 grant from singer Beyonce’s BeyGood foundation and the NAACP.
These funds paid for the demolition and clearing of debris, but they were not enough to rebuild. James said he worries he’s already missed out on grant opportunities.
“I just wouldn’t want the funding to run out and I didn’t even get my shop back,” said James, who added that he felt some of the biggest loss businesses had been overlooked.
But government assistance is just beginning. Democrats initially called for $150 million in state aid for damaged businesses. The Legislature ultimately decided to provide $80 million across the state to also include pandemic relief and economic revitalization. Slightly more than half of this sum is intended for businesses in the Twin Cities.
“I think this is the biggest investment the state has ever made in downtown redevelopment in Minneapolis and St. Paul. I can’t think of anything but stadiums…on this scale. “, said Rybak.
It comes in the form of matching funds and requires businesses to raise $2 from other sources to get $1 from the state. This has been an obstacle for some candidates.
Separately, the city of Minneapolis spent $4.5 million to help companies clear rubble, get technical help and waive fees. It also reduced property taxes for damaged businesses by more than $1 million.
The St. Paul Housing and Redevelopment Authority has allocated $1 million in civil unrest funds to help small businesses with insurance issues and to buy or repair their buildings.
Both cities have also provided small grants or repayable loans to businesses in areas that have experienced civil unrest.
Meanwhile, one of the goals of the GroundBreak Coalition, a new initiative led by the McKnight Foundation, is to help spur further reconstruction in areas damaged by the riots.
The coalition has brought together financial institutions and foundations that it wants to connect with projects that need funding. It has identified around 200 proposed projects – some of which are more ambitious than simply rebuilding what existed before – along the affected corridors that would cost $700 million to build.
While some of the larger developers and nonprofits may know how to access various financial resources, it’s small business owners who need more help, said D’Angelos Svenkeson, a real estate manager at the head of the GroundBreak reconstruction committee.
“It’s different applying that to the neighborhood cafe, the hair salon, the furniture store, or an innovative housing project,” he said.
For Hernandez, owner of Pollo Movil, the recovery calculation is simpler. If people want to help businesses affected by the riots, they should patronize them, he said. The restaurant has been robbed twice this year. Customer traffic continues to be slow.
“I want customers, in my case, more than money,” Hernandez said.