2.3. Types of businesses and leverage of private sector involvement

Analysis of the responses to the question ‘What kinds of businesses are involved in the case study area?’ would indicate that the majority are small scale commercial businesses – mainly retail and services rather than manufacturing or publicly owned or third sector. ‘Local businessmen and their specific organisations; especially retail and services; house owners and privately organised public controlled housing companies; private housing companies; start-ups from the creativity industries; privately organised, but publicly financed labour market companies’ (Berlin). ‘Public and private companies, developers and private investors, and local business organizations, traders etc. The public sector business involvement is through State property agency OPW (Office of Public Works manages state property portfolio) and city council’ (Dublin). ‘Private Owners; retailers mainly participate in the business sector.  One main emphasis lays in the revaluation of shopping streets, for example Marktstraße; also in the service sector networks are being built to promote competitiveness. One further main emphasis lays in the promotion of start-ups.’ (Hamburg)

Few businesses appear to be national or international companies. In looking at businesses, it is also worth noting that there are businesses that expect to have a long term relationship with the area, and businesses that have a short term interest in the neighbourhood – e.g. developers and contractors.

The publicly owned or third sector businesses are very important for jobs in the local area. ‘Housing, Economic development, Community development, Education & training, Cultural. These are also major employers in the area – e.g. the Nautical College employs 400 people, many of whom live locally. Social economy organisations often give priority to local employment’ (Glasgow) (see appendix 4).

The approach that is being taken by the public sector to long term commercial businesses in many areas is three-fold:

• Encourage existing local companies to grow and develop by providing employment assistance (including job selection and training). Examples of this were found in Berlin, Copenhagen, Dublin, Glasgow, and Hamburg.
   

• Provide ‘start up’ facilities for new businesses often in workspaces either purpose built or converted buildings (One of the current ways of re-using buildings that have lost there original purpose is to convert them to business centres or workspaces. This was demonstrated in almost every city – artists using surplus shops (Berlin); railway arches converted to workspaces (Glasgow); ex meat factory to start up offices (Hamburg); Digital Hub (Dublin); ex light factory to workspaces (Vilnius); church to stock exchange (Malta))
   

•  Attract established businesses to the neighbourhood (e.g. Nokia and other international companies (Copenhagen); Hotel chain (Glasgow). These might require some financial inducement – e.g. direct subsidy or brownfield land prepared for development and the costs absorbed.

The short-term commercial business is also important for job creation and training for local people, provided that some arrangement is made in contracts. ‘They provide owner-occupied housing – attracting new people into the area as well as enabling local people to stay in the area as owner-occupiers; as contractors, they provide local employment” (Glasgow)

We do not have detailed business analysis for the case study areas – we did not seek this information – and it may not be readily available. Therefore we do not have a complete picture about what leverage tools are exactly to be used and at what scale.

A traditional way of attracting the private sector into run down neighbourhoods is to provide some financial incentives. A number of the Entrust cities have used financial incentives, with good success.

•  “…grant used to attract house builders to build for owner-occupation in areas that the house builders thought too risky. As time has gone on, the amount of grant has been reduced – now no grant required – houses selling off drawings! (Grant used to reduce the normal sale price to attract buyers) … ERDF funds to attract investment by Railtrack to refurbish railway arches as workshop units.” (Glasgow)
    

•  “There are two different target groups. On the one hand real estate investors, who get financial support for infrastructure related investments. On the other hand – the different business communities (creativity industries; retail and services), who are supported to form networks to sustain the projects initiated with ERDF money”. (Berlin)
    

•  “Public sponsorship programmes are being used differently by the private sector:

  • Regarding the apartment modernisation and apartment new building sponsorship means can be granted as favourable building credit. The sponsorship means lay between 30 and 50 %.

  •  The use of ERDF money as well is being placed at disposal for the private sector. Here, small businesses up to 30 % can be promoted. The money is being granted as investment subsidy and is stated for commercial and constructional investments. (EU limit 100.000 €).

  • The modernisation programme is determined for existing enterprises. Small businesses can receive an investment subsidy of 20 % in disadvantaged neighbourhoods.

There is also the possibility of a special sponsorship for key projects with city wide effects. For example an investment subsidy of 40 % has been granted to one private investor with the start-up centre Sprungschanze. (see appendix 4).” (Hamburg)

In Lisbon, “Several financing programs were available for different purposes:

• PROCOM (community fund for revitalising commerce in urban areas), bearing costs of the improvement and renovation work on commercial premises, the equipment and vocational training of the agents involved.

• FUNDO DE TURISMO (community fund granted by the Ministry of Culture) bearing costs of exterior refurbishment of façades and roofs of all buildings.

• RECRIA/REHABITA (joint funding systems awarded by the National Institute of Management of State-owned Dwelling Resources, (IGAPHE) and the Lisbon City Hall) financing up to 65% of the total cost of works carried out on privately owned or municipal residential buildings (in the case of rental contracts pre-dating 1980) including reduction of Value Added Tax at 5% of the total cost of works on recuperated buildings with State support.

• LEI DO MECENATO, allowing sponsorship by private companies.” (Lisbon)