Closing the Wealth Gap in Miami—and Across the Country

“This program saved my business,” says an enthusiastic Aquino, one of more than 2,500 businesses in the Allapattah district, who now dreams of owning his store—which is also his workshop—so he can revamp it without fearing a rent hike.

“Foundations like Rockefeller have an inimitable role to play—a crucial role—in leading the way toward achieving justice, which is beneficial not only for one community, not only one city but the entire country,” says the Collaborative’s Chief Operating Officer Francesca Escoto. “Think of us as a body. You can’t cut off an arm and imagine you are fine. You are not fine. Everyone pays when productivity and creativity are stifled.”

Considered only from a dollars-and-cents perspective, the racial wealth gap is expensive to the U.S. as a whole. Systemic disparities have cost the U.S. $22.9 trillion over the last 30 years, according to a Fall 2021 paper from the Brookings Institute authored by the president of the Federal Reserve Bank of San Francisco and others from the bank.

“The growing wealth gap between Black and Brown folk and white folk is an existential threat to our country,” says Gregory Johnson, The Foundation’s Managing Director for the Equity and Economic Opportunity initiative (EEO) who leads the place-based work. “Investing in small businesses closes that gap, unlike any other lever.”

This is why the Allapattah neighborhood, one of Miami’s oldest whose name derived from the Seminole Indian word for alligator, is at once unique and emblematic of the challenges facing small businesses in Black- and Brown-communities nationwide—and the country as a whole. With a total population of about 43,900, including 80 percent Latino and 18 percent Black, some 80 percent of the homes are tenant-occupied, with a median income of $26,023, according to the Collaborative.

Commercial properties can be transferred across generations. They help business owners withstand shocks, whether due to the pandemic or gentrification. And when local businesses own their properties, communities gain more control over local development, increasing economic stability for all.

But the numbers, while persuasive, don’t tell the full story. Sometimes for that, we have to go right to the individuals.

In 2010, the shop was put up for sale for $300,000. Balmaceda had managed to save $80,000, but the owner wanted $100,000—one-third of the total cost—as a down payment. Balmaceda pounded the pavement seeking a loan for that last $20,000, and repeatedly heard “no.” Still committed to his shop, he used much of that cash for property improvements, even as he now pays $4,500 a month in rent.

When the pandemic hit, Balmaceda got a frighteningly bad case of Covid-19 early. He had to shut down his shop for months, and this father of three spent all his savings to support himself and his family.

Stories like these are what encouraged the indefatigable Burgos-Flores to think even bigger. She and her Allapattah Collaborative have initiated a “Thrive In-Place Fund,” with the goal of raising $100 million by 2025 and partnering with the South Florida Community Land Trust to buy up storefronts in Allapattah and resell them affordably to the longstanding businesses.

But she knows time is short.

Miami claims one of the country’s hottest commercial real estate markets, and Allapattah is attracting investors. In fact, in the Wynwood community which abuts Allapattah and is now known for its Art District, redevelopment already displaced the Puerto Rican American community who lived and worked there.

Gentrification that displaces communities, Burgos-Flores says, is the result of unjust economic development policies, public disinvestment in historically marginalized communities, and lack of protection for existing residents.

Until recently, investors turned up their nose at Allapattah, which was devastated after May 1980 riots sparked by an all-white male jury’s decision to acquit four Dade County police officers in the killing of Arthur McDuffie, 33, a Black insurance salesman and U.S. Marine who was beaten to death after a traffic stop.

Most of the burned storefronts never reopened, turning the area into a ghost town. Dominican immigrants led the way in rebuilding even as the community’s struggle with poverty and violence continued. The neighborhood’s violent crime rate remains 125 percent higher than the national average.

“By Myself, the Challenge Would Have Been Too Great”

“A lot of my classmates are in jail or dead,” says Allapattah native and entrepreneur Melissa Guzman, 34. Guzman escaped the streets by spending time in the library across from Miami Jackson High School, and in her guidance counselor’s office. “That saved me.”

After becoming a Gates Millennium Scholar, Guzman was admitted to Howard University. “But my worldview was so limited,” she says. “I only knew I didn’t want to be poor. Sports or entertainment seemed the only way out of poverty. So I prepared myself to be a radio announcer.”

Then at age 28, she abruptly fell ill and was diagnosed with multiple sclerosis. “I was hospitalized seven times in four months. The last time, a procedure went wrong and I lost a lot of blood. I was in a wheelchair. I couldn’t walk or open my left fist. I knew I had to find a way to change something, or I was going to die.”

Research convinced her that her eating habits triggered the inflammation in her body, so she adopted a fully vegan diet. As she stunned the doctors by getting better and better, she vowed to make this her work. With a business partner, she launched The Caribe Vegan food truck—plant-based dishes with Caribbean spices.

But with the start of the pandemic, the partner pulled out of the venture. Guzman needed help.

Enter Allapattah Collaborative.

“When the shutdowns began and my partner left, I was backed into a corner. They helped me get the funds I needed to survive, and then connected me to a lawyer to help with some issues with my former partner,” Guzman says. “If I’d been doing this by myself, I think the challenge would have been too much.”

Now Guzman is working to get her products into grocery stores to make her business stronger and more resilient, and Burgos-Flores dreams of a community commercial kitchen for all of Allapattah food entrepreneurs, similar to La Cocina in San Francisco’s Mission District.

“I know the people, and they know me,” he says. “That matters. My mother worked 30 years at General Motors, and bless them, we had a good life. But this is different. Here, we are on the front lines.”

Diaz recalls the “discouragement and uncertainty” that came with the pandemic shutdowns and credits the Collaborative with working to save not only his business, but the entire business corridor, and along with that, the community itself.

“They helped me with my business structure, building a website, and getting loans,” he says. “They also helped us connect as a community. Those of us in business here didn’t know each other because we were all so busy trying to make it. Now we support one another, and we have pride in being in something together.”

Diaz knows owning his storefront is the best path to security. His landlord, he notes, “makes us contribute to property taxes, and often tacks on other fees.” Owning, he said, would give him more control over his own destiny.

Support and mentoring provided by the Collaborative have allowed him to expand from five chairs to nine, and these days, Don Barber Shop is busy most of the time. He also lives five blocks away, so the community is his life.

Each of these individual business owners is part of a larger story. Across the United States, small Black- and Brown-owned businesses face an unequal path to post-pandemic recovery as well as the challenges of historic redlining and disinvestment. At the same time, they are a significant source of employment while simultaneously supporting the vibrancy of their communities. What’s good for them and their families is good for the country as a whole.