Income & Employment Winner / 2013
LA Street Vendors: A Better Economy through LowIncome Entrepreneurs
Though recognized for its street food scene, Los Angeles is the only city of the 10 largest cities in the US that does not have formal regulations around street vending. Street vending, as a widespread practice, is simply illegal. Vendors can be fined up to $1,000, be jailed for 6 months, and have their carts—their entire business—confiscated. This is bad for business, bad for customers, and bad for families.
East LA Community Corporation (ELACC) and Leadership for Urban Renewal Now (LURN) will expand income and employment for low-income Angelenos and small business owners through the Los Angeles Street and Sidewalk Entrepreneurs Initiative or LA-SSEI. LA-SSEI will promote partnerships between businesses and street vendors, start a venture capital fund that will provide working capital that will help support the growth of LA’s approximately 10,000 street vendors. By 2050, LA will decriminalize street and sidewalk vending integrate them into LA’s social and cultural life, providing Angelenos with affordable, convenient and healthy retail options. A developed pathway to success will allow a vendor to begin as an off-street market entrepreneur and end up as a fixed stall, certified farmers market retailer, or commercial tenant.
Politically, the support of established businesses is crucial to bring a policy change to the city. In this next year, the Street and Sidewalk Entrepreneurs Initiative will:
1. Build support for street vendors among brick-and-mortar businesses along major commercial corridors in Los Angeles;
2. Bring street vendors and local businesses to the same table in order to better support one another through listening and stakeholder sessions such as ELACC’s Policy con Pan Dulce and LURN’s PLUS2 conferences;
3. Create a venture capital fund for low-income entrepreneurs to allow street vendors to grow and further legitimize their businesses.
With these pieces in place, we expect to see:
1. A City-wide policy that supports street vendors, created in partnership with existing brick-and-mortar businesses who would benefit from street vendors marketing their businesses to pedestrians and passersby;
2. Closer coordination between businesses and vendors that increase profits for all involved;
3. A “Venture Capital for the ‘Hood” program that provides street vendors technical assistance and equity that allows them to scale their businesses and grow their bottom line.
ELACC and LURN believe this is a tremendous opportunity for the City to transform low-income business corridors and lift thousands of people out of poverty and unemployment through profits from vending as a source of household income. An IBISWorld Market Research Report identifies street vending as a national growth industry, with $1 billion in revenue and 8.4% annual growth between 2008 and 2012. Street vending creates employment and income opportunities for immigrant families with little start-up capital and low prospects in the formal sector. For many, street vending is the only way to legitimately take care of their families, break the cycle of poverty, and meet the demand for food in these communities.
The process for becoming licensed as a street vendor in Los Angeles is close to impossible to complete since there are many agencies to deal with and too many requirements that close opportunities to vendors. The best way to improve income and employment for these families is to give them the tools they need to legitimize their activities in the underground economy and formalize their businesses. And the only way to achieve this legislative change is through a ‘win-win’ partnership between street vendors and established brick-and-mortar businesses.
What are some of your organization’s most important achievements to date?
ELACC has been serving the Eastside of Los Angeles since 1995. On an annual basis, we provide affordable housing, community services, community organizing, and wealth building services to over 2,000 residents. ELACC’s track record includes leveraging over $135 million of investment to the Eastside and housing over 1,000 residents in safe, habitable, and affordable housing throughout East Los Angeles. We mobilize a Community Organizing base of over 1,300 members annually, and have helped over 3,000 families to purchase their first homes, avoid foreclosure, establish savings, and build and sustain wealth.
ELACC, community residents, and partner organizations have now come together to form the “Los Angeles Street Vending Campaign” to push the Los Angeles City Council to implement a policy that will provide a licensing process for vendors to sell foods without the fear criminalization. The coalition has already conducted numerous town halls throughout Los Angeles neighborhoods where there is a high concentration of street vendors, in order to begin educating and engaging them on what the City’s first comprehensive vending policy could look like.
Please identify any partners or collaborators who will work with you on this project.
ELACC’s main partners in the LA Street and Sidewalk Entrepreneurs Initiative is Leadership for Urban Renewal (LURN). LURN is dedicated to building community capital through advocacy, innovative community development strategies, and advisory services for change agents. LURN has been a leader in the Los Angeles Street Vendor Campaign and has been an important partner in researching the conditions of street vendors in the City, and designing financial products that meet their needs. Together, ELACC and LURN will work on developing policy and a sustainable system that supports low-income entrepreneurs that contribute to the economy and a better City in the year 2050.
More information on LURN at their website: http://www.lurnnetwork.org/
Please explain how you will evaluate your project. How will you measure success?
The LA Street and Sidewalk Entrepreneurs Initiative will continuously evaluate its activities to ensure it is meeting its goals. Success will look like:
• Direct engagement with over 250 businesses around street vending, including providing material and invitation to attend mixer events. Measured by reviewing ‘street team’ organizer calendars and reports of field action.
• Building connections between at least 50 vendors and small businesses. Measured by taking participant lists in at least two mixer events (such as Policy con Pan Dulce or Plus2) and conducting brief one-on-one follow-up interviews with at least 10 vendors to assess new connections and improve future events to better foster cooperation.
• Founding “Venture Capital for the ‘Hood” by going through the necessary process to become an authorized investor and developing a process to vet entrepreneurs in order to identify the best investment opportunities. In contrast to traditional lenders, LA-SSEI will not lend, it will invest. In exchange for capital, the initiative’s managers will negotiate terms with vendors for a minority “equity stake” in their business. A program staff will be assigned as an advisor or “board member,” and help the business grow over time. At an agreed upon point, vendors will have an opportunity to “buy out” the fund’s shares and resume 100% ownership of their business.
• Securing at least two other investors for the fund to support low-income entrepreneurs.
• Maintaining high standards for LA-SSEI activities and personnel. Measured by records of weekly check-ins between staff and managers, quarterly assessments of Project progress, and a comprehensive year-end report detailing successes, areas for improvement, and next steps.
How will your project benefit Los Angeles?
Street vendors are already an iconic part of Los Angeles’ national reputation for culinary excellence and innovation, as well a daily part of city residents’ lives. In low-income communities, almost everyone has a neighbor, a friend, or a family member who at least supplements their family income with street vending.
Although street vending as an occupation has existed for hundreds of years, it is often part of the underground economy, which means that it is a highly insecure line of work. Currently vendors are under constant threat from both the city and petty crime, which vendors cannot stop out of fear of police persecution. In addition, because vending is illegal, the city makes no tax or licensing revenue from it and pays fees for policing and storing confiscated equipment.
Through partnerships with small business, vendors gain a powerful ally in exchange for helping to revive and adorn empty LA sidewalks in front of those businesses. The creation of a forum that brings formal and informal businesses together will strengthen both sectors through idea-sharing and collaboration. Vendors will increase the capacity of their businesses and be more effectively able to fill market niches by understanding the existing business landscape.
In 2050, legalized vending will have moderate costs in the short-term from creating and enforcing new licensing, but will lead to tremendous long-term economic growth benefits. Entrepreneurs on the street operating will no longer fear legal repercussions and for the first time will be able to sustain and grow their businesses, invest more in equipment, and build meaningful relationships with small businesses. And, for those who wish, a legal system for street vendors will create an entrepreneurial pathway for them to grow into their own brick-and-mortar businesses in the City—businesses with a high likelihood of re-investing locally. Additionally, the whole City will benefit from new income from licensing and tariffs.
Developing of a venture capital fund to support street vendors will allow the City to invest in its low-income entrepreneurs. The fund will provide capital for vendors to buy new products, certified equipment, hire staff, or even pay for permits. Financial support will not be provided as a loan, but as an investment, in exchange for a minority stake in the business and a commitment from the vendor to work with a “board member” or “advisor” to support the growth of the business over time. At an agreed upon point, the vendor will have the opportunity to “buy out” the minority stake sold; money that will be re-invested into the fund to support other entrepreneurs.
Ultimately, support for vending has the potential to organically bring investment streams into the poorest areas and communities of LA. It will allow enterprising individuals to lift themselves up by their own bootstraps, creating their own jobs to provide for their families.
What would success look like in the year 2050 regarding your indicator?
Success will be a city in which every entrepreneur has an opportunity to grow and excel at their craft.
Imagine an LA filled with entrepreneurs, looking north to Silicon Valley and south to Mexico for inspiration. Imagine tamale makers with Ipads, their fingers on the community’s pulse, tweeting freely about their gourmet, safe, organic food. Imagine fruit vendors like personal trainers, tracking their clients’ nutrition and making sure they get their ‘5-a-day.’ Imagine coming for the food and staying for the shopping. Imagine safe, walkable streets with a pair of eyes at every major intersection that have the community’s best interests at heart, and the force of the LAPD behind them instead of against them.
In our 2050, street and sidewalk entrepreneurs meet with business owners to grow their clientele, and share trade secrets on how they can serve entire communities with fresh, homemade, healthy food. They will have access to business coaching and training, working capital for necessary purchases such as equipment, marketing and outreach assistance. Pockets of incubation along commercial corridors will build a supply network for consumers as mobile as the city of LA, and vacant lots in the projects will fill up with tried-and-tested businesses started in the streets. In our 2050, street and sidewalk vendors will be seen not as “hawkers” or “peddlers” but as specialty entrepreneurs utilizing patterns of urban movement throughout the day aimed at meeting the affordability needs of Angelenos.