How to Keep Construction from Killing Businesses

Scaffolding, closed roads, hidden store signs, you name it. Public works projects annoy customers and hurt businesses. But there’s a lot cities can do to soften the blow.
by | July 2014
Public construction in San Francisco.
Public construction in San Francisco. FlickrCC/torbakhopper

With all the new public works construction underway in my hometown of Charlottesville, Va., it can be tough avoiding traffic jams these days. The main thruway, the U.S. Route 250 bypass, can be a particular nightmare because of construction on an interchange. For a nearby retail center, though, the construction has been a downright business killer. An article in the local newspaper quoted a coffeehouse owner as saying he had lost customers and was cutting staff; other businesses’ sales have dipped by 40 percent.

Certainly, this is a common problem everywhere as growth leads to numerous infrastructure improvement and repair projects. But can anything be done to help affected businesses?

One idea might be to form something that doesn’t yet exist in Charlottesville: a construction mitigation program (CMP). Designed by cities to help businesses through the public construction process, CMPs are fairly rare and seldom discussed. No real blueprint exists on the subject, nor much literature. The only well-documented study was done in 2010 at the University of Wisconsin-Madison when researchers surveyed several U.S. cities about their CMPs. All of the 33 responding cities said that they took minimal measures to help businesses impacted by construction. Before projects began, nearly all of them conducted community awareness campaigns and about half of them provided liaisons for negotiation between contractors and the affected businesses.

Meanwhile, few cities offered financial reimbursements to businesses: Thirteen provided advertising, and only nine offered loan programs or compensation, often on a case-by-case basis. But generally, these efforts were made in scattershot fashion, and “no cities used a systematic evaluation system.”

Although Charlottesville wasn’t surveyed, its measures are relatively advanced compared to most cities. Charlottesville provides businesses with liaisons and “marketing match” funds that equal the revenue paid on extra advertising, according to economic development director Chris Engel. But the city’s strategy also mirrors the informality found elsewhere. No official CMP has been written, and efforts are handled piecemeal from across multiple departments. (Consultants and a six-figure marketing campaign were used when the city renovated its downtown pedestrian mall, for example, but haven’t been used elsewhere.)

The University of Wisconsin-Madison study recommends CMPs. Researchers found that such programs could be effective, and would improve under greater evaluation. A first step for local officials could be to at least establish baseline provisions. By doing this, cities would bring some formality to the construction process and ultimately help improve a city’s business climate -- increasing predictability and fairness -- by providing owners with key information about projects and giving them a place to communicate any concerns or problems.

CMPs might even increase political support for infrastructure projects. Business owners, after all, will often join the opposition to avoid the short-term losses caused by construction even though proposed projects could help them in the long run. If they knew that plans existed on their behalf, they might be more likely to offer support, creating an alliance between two groups -- businesspeople and public officials -- who recognize the value of infrastructure.

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