Equitable Economic Development: Examples From The Field

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Equitable Economic Development Examples From The
Field

• September 23rd 2006
• Presentation for the National Resource Center for
  the Healing of Racism
• Calhoun County Summit On The Healing of Racism
• Denis Rhoden Jr.
• Associate
• Kirwan Institute for the Study of Race and
  Ethnicity
• The Ohio State University
• http//www.kirwaninstitute.org/
• rhoden.8_at_osu.edu

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Todays Presentation

• A Dynamic, Global Economic Landscape
• Equity and the Economic Development Process
• Equitable Economic Development Initiatives Across
  the Country
• The Regional Significance of the Inner City
• Calhoun County Collaborative Advantage
• Pulling It all Together

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The American Worker Paradox

• American workers now produce over 30 more each
  hour they work than ten years ago, yet the wages
  of the typical American workerthe one at the
  very middle of the income distributionhave risen
  less than 1 since 2000.
• The typical worker earns only 10 more in real
  terms (adjusted for inflation) than 25 years ago,
  even though overall productivity has risen much
  faster.
• Source Economist Inequality in America The
  rich, the poor and the growing gap between them.
  June 15th 2006.

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Our Charge

• Domestically the response to the global
  interdependent economy has been episodic and
  reactive reflecting a failure to accept the
  changing competitive landscape.
• Federal Reserve Chair, Ben Bernanke, recently
  urged local political leaders to seriously
  acknowledge the costs of globalization, and
  help their constituents come to terms with
  them.
• Source Andrews L Edmund Fed Chief Sees Faster
  Pace for Globalization New York Times August 25,
  2006

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Reducing Volatility Inclusion Integration

• We are challenged at every level, to be more
  inclusive and integrated
• Bernankes comments encourage policymakers to
  pursue strategies that meet two conditions
• 1. The benefits of global economic integration
  are sufficiently widely shared, and
• 2. Displaced workers get the necessary training
  to take advantage of new opportunities.
• Source Andrews L Edmund Fed Chief
  Sees Faster Pace for Globalization New York
  Times August 25, 2006.

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A Unified Response

• Action is being taken in regions throughout the
  country to implement policy that promotes
  collaboration to generate productive needed to
  adapt to changing conditions and global economic
  hierarchies
• Broadly, we need to define what the future should
  look like with our collective imagination
• A New Paradigm! Targeted Universalism
• What is our alternative vision?
• A model where we all grow together
• A model where we embrace collective solutions
• This vision requires collective action and will
  require coalitions to be successful

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A Framework For Disparity
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Policy Mismatch?
Economic Development Is Not Simply IncentivesIt
is Public Policy Aimed at Crafting Place Level
Advantage. Who Chooses What to Invest in?
ECONOMIC DEVELOPMENT POLICY
REGULATION / LEGISLATION
PROGRAMS / PROCESSES
CONDITIONS
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The Web of Opportunity

• Opportunities in our society are geographically
  dispersed or clustered
• This distribution is the basis for our
  understanding of a good or bad neighborhood -
  - high and low opportunity communities
• Your location within this web of opportunity
  plays a definitive role in life potential and
  outcomes
• Individual characteristics still matter but the
  environment plays a systematic role
• Often impacting individual decision making

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Opportunity Is Dynamic Layered
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Capturing Equitable Economic Development

• Equitable economic development is a policy
  strategy focused on correcting policy mismatch
  from the perspective of distribution and access
  to opportunity.
• In particular establish regional the economic and
  equity case for areas (e.g. neighborhoods,
  cities, counties) and groups (e.g. African
  American, rural) disconnected from opportunity.

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Why Equitable Economic Development?

• Equitable outcomes in economic development are
  equally concerned with the ability to access and
  the presence of opportunities
• Households, businesses and individuals are being
  challenged to create local opportunities within a
  structure that does not that purposefully impacts
  the fluidity of assets and capital.
• Practices such as poaching in economic
  development are the unintended consequence of
  mismatches in a web of policy impacting the
  fitness and productivity of assets.

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Our Response

• Geographic differences in the ability to put
  assets to work because capital does not impact
  the same assets the same way across space.
• Largely episodic and fragmented
• Easier access to credit
• Tax Incentives
• Many More
• Where is the systematic broader policy change to
  revive unproductive assets and inspire enterprise
  and innovation?

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Policy Mismatches Prevail To Date

• Regions that are the most fragmented are more
  economically depressed. Why?
• No unified strategy for economic development
  (infighting over jobs and new businesses)
• A less qualified and educated work force due to
  educational disparities in the region
• Entry level and low skill work force spatially
  isolated from suburban job opportunities
• More likely to exhibit sprawling growth that
  wastes public resources on new roads, sewers,
  schools in undeveloped areas, while existing
  resources are left to deteriorate

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Noted Concerns of Existing Paradigm

• Hyper Competitive Policy Structure
• Zero-sum game A gain is offset by another
  groups loss
• Jobs traveling across taxable boundaries
• Inefficient use of subsidy to meet concerns
  within a typically short political life-span
• Very few incentive programs allow for broader
  wealth redistribution to reduce inequity

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Narrow Focus Masks Opportunities

• Static Policy Mechanisms and Underutilized
  Integrated Solutions
• Policy reflects perspective. Many policies are
  narrowly defined (e.g. Eco. Devs Attraction,
  Retention, Expansion). Few policy integrations to
  address the factors impacting opportunity.
• The result is competency and competitive
  disparities between residents captured by
  neighborhood boundaries.
• Economic development professionals have limited
  tools to provide comprehensive incentives
• At worse forced to compete across jurisdictions
  (suburban, urban), at minimum inefficient or
  under leveraged use of public investment dollars.

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Poor Spatial and Racial Distribution Weakens
Collaborative Advantage

• Not seriously addressing the geographic (and
  racial) outcomes
• The most isolated geographiesinner city, rural
  and first-ring suburbs face similar decline yet
  few policy solutions exist to reduce problems
  from common sources, (e.g. land use management,
  infrastructure investment, education).
• Joblessness, poor education are among the factors
  resulting in economic and social isolation limit
  meaningful interactions and sustain negative
  stereotypes across groups and places.

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Regional Economic Health

• Sprawl and fragmentation harm all residents of a
  region inner-city, suburbs exurbs
• Equity-based regionalism can positively impact a
  regions economic health
• Research suggests regions who utilize regional
  policies are economically (and socially)
  healthier
• Outside of the West, there is only modest local
  action in developing incentive-based affordable
  housing programs. Nearly two-thirds of the
  municipalities have incentive programs and half
  have dedicated funds established. No other region
  comes close to these figures
• Source Pendall et al (2006). Traditional to
  Reformed A Review of the Land Use Regulations in
  the Nations 50 largest Metropolitan Areas.
  Brookings Institution

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Equitable Economic Development In Practice
Industry-focused workforce development
Stakeholders and Policymakers focused on these
areas
MBE/SBD development
Equitable Economic Development Practice Areas
Leveraging and distributing resources
investments
Neighborhood development
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Equitable and Productive Policy

• Concern about fairness,
• BURA Predatory Loan Program
• encouraging productivity in the core, and
• Land Value Taxation (Pittsburgh and Harrisburg)
• Integration for equitable opportunity
  distribution
• Multiple partners and policy infrastructure
  connections integrating economic and workforce
  development policy (i.e. WIRED)

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Equitable Economic Development is Multi-Faceted
and Interdependent

• Tax Based Sharing Plans (Twin Cities)
• Fair Share Housing Laws (Montgomery County)
• Metropolitan-Wide School Districting
  (Charlotte-Mecklenburg)
• Anti-Sprawl Initiatives (Portland)
• Regional Public Transportation
• (Indiana Interfaith Group)

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Staking Claim East Baltimore

• Scale varies but the interventions are leading
  to more equitable results.
• In Baltimore, neighborhood economic development
  resulted in an 80-acre, 800 million neighborhood
  redevelopment over an 8-10 year period
• 1,200 Housing Units (new and rehabilitated,
  homeownership and rental)
• new retail facilities a set of supportive
  services
• and community building activities
• up to 6,000 new jobs will be created for skill
  levels ranging from high school to those with
  advanced college degrees

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Local Interventions

• Layers of Policy Infrastructure
• City Ordinance
• Economic Inclusion Plan
• Cross-Sector Partners
• Anne E. Casey
• Johns Hopkins Hospital (located in neighborhood)
• Private Developers
• Planners
• Community Development Corporation
• Implementation
• Local compliance administration (East Baltimore
  Development Inc.)

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Level of Greater Impact

• Regional interventions aimed at increased
  productivity, equity-aware
• In the Northwest North Carolina corridor
  (includes Greensboro and Winston Salem, NC
  regions).
• Conducted CEDS funded by Dept. of Labor
• Brought together regions eight counties to
  create a unified economic development strategy
• Reconnected former manufacturing employees into
  the design industry through educational
  interventions increasing worker preparedness for
  employment in the field

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Regional Interventions

• CEDS planning process occurred county to county,
  local leaders in each county leveraged resident
  awareness to pursue good ideas while they were
  fresh
• Among the themes which emerged was to take
  aggressive steps to reduce social disparity.
  Their research revealed, as disparity decreases,
  the potential to attract new investment increased
  
• Receiving additional federal funding from DOL to
  pursue policies aimed at linking workforce
  investment and economic development

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Business Accelerator

• The Cincinnati region is about 43 percent African
  American, yet African American enterprises
  account for only two percent of the aggregate
  revenue
• The Minority Business Accelerator approach is to
  deliver more sizable and scalable MBEs to the
  market place (supply-side) as well as create a
  more aggressive and robust corporate MBE
  procurement environment (demand-side).

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MBA Outcomes

• Minority Business Accelerator provides an example
  of a privately-led, regionally and racially aware
  economic development intervention.
• MBA does maintain connections with academic
  institutions in particular the University of
  Cincinnati and University of North Kentucky
• The Cincinnati MBA generated 200 million dollars
  in commitments from 15 companies regionally
  located or headquartered in Cincinnati
• Responsibility of tracking and reporting remain a
  high priority to the MBA and its corporate
  partners. Reporting is completed through a
  confidential process, verified directly by
  partner CEOs

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Community Benefit Agreements

• Emerging economic inclusion tools for property
  development by real estate developers and
  coalitions of community organizations
• CBAs have been effective against limiting
  potential negative externalities which can
  further destabilize neighborhoods

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CBA Create Value Capacity

• Past CBAs have been successful in negotiating the
  following investments in residents and
  neighborhoods
• a living wage requirement for workers employed in
  the development
• a first source hiring system, to target job
  opportunities in the development to residents of
  low income neighborhoods
• space for a neighborhood-serving childcare
  center environmentally-beneficial changes in
  major airport operations
• construction of parks and recreational
  facilities
• community input in selection of tenants of the
  development and
• construction of affordable housing
• CBAs are a market based, community oriented
  development tool they do not require a
  legislative process and provides the basis to
  develop legislation that supports broad
  applications based on performance

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Stakeholders in Action

• To recap, Equitable Economic Development
  interventions utilize policies that address
  inequity in a variety of ways.
• Private Equity
• Land Use
• Worker Preparedness
• Institutional Grants
• Infrastructure
• Advocacy
• Compliance
• Business Accelerators

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Place and Life Outcomes

• Equitable Economic Development is broad,
  integrated and its interventions intend to
  enhance and distribute prosperity and reduce
  barriers to capital for households and
  businesses
• Housing location determines the quality of
  schools children attend, the quality of public
  services, access to employment and
  transportation, health risks, access to health
  care and public safety
• Greater access to risk capital (dynamic policy
  infrastructure and an active network of deal and
  policy makers) to reduce friction-barriers and
  increase productivity.

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Americas Inner City in Context

• Between 1990-2000 grew to 21M residents from 17M
  (or 24)
• Poverty in the inner city declined to 31 from
  35 during the same period.
• Much of the reduction can be attributed to the
  movement of poverty outside of the inner city.
• Inner city economies in the 100 largest cities
  are a substantial portion of the U.S. economy
• 8 of U.S. private employment (9 million)
• 814,000 establishments
• Source ICIC SOICE Teleconvening
  Presentation February, 2005

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Regional Productivity the Inner City

• While some inner cities are doing well in terms
  of employment growth, 90 out of 100 are
  under-performing their MSAs. With a wide range of
  performance, on average inner cities generated 1
  annual job growth (vs. 3.4 for the MSA
  exclusive of IC.)
• Inner city/MSA income gap is 50 (25K vs. 52K),
  wage gap is 0 (both at 38K).
• 77 of jobs in IC are not held by IC residents
  (42 are suburban commuters and 35 are from
  the rest of the city).
• Source ICIC SOICE Teleconvening
  Presentation February, 2005
• Notes Figures above are for the nations
  100 largest inner cities

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Jobs the Inner City

• Inner cities gained jobs in the 1990s but lagged
  behind the rest of the U.S.
• Job growth in inner cities grew at an average
  annual growth rate of 0.8 from 1995-2001, but
  this lagged behind the rest of the city and MSA
  (2.1 and 3.7 respectively) Sixty-one inner
  cities gained jobs between 1995-2001. Of these 21
  grew faster than the rest of their cities. Six
  grew faster than the rest of their metropolitan
  areas, including Tulsa, San Jose, Boston,
  Winston-Salem, Charlotte, Augusta
• The average salary of jobs located in the inner
  city is 38,500, compared to 41,000 in the rest
  of the city and 35,000 in the rest of the
  metropolitan area. But inner city residents do
  not hold the higher paying jobsinner city
  residents are only half as likely to hold
  professional positions as rest of city and rest
  of metropolitan area residents 22 of inner city
  residents are professionals, vs. 41 of rest of
  central city residents, and 37 of rest of
  metropolitan area residents
• In 2001, at the onset of the economic downturn,
  inner cities experienced a 0.2 decline in
  business employment. Employment in the rest of
  city and the rest of metropolitan area continued
  to grow at 2.4 and 0.3 respectively.
• Source ICIC, State of Inner City
  Economies, 2004

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Inner City Competitiveness Drivers
Source Initiative for a Competitive Inner City
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Collaborative Advantage in Calhoun County

• Concerned with the creation of meaningful
  synergies between organizations resulting in
  networking, coordination, cooperation, and
  collaboration.
• Collaboration is information exchange, altering
  activities, sharing resources, and enhancing the
  capacity of another for mutual benefit and to
  achieve a common purpose.
• What Calhoun County institutional assets can be
  leveraged to create collaborative advantage?
• What would you organize around to effectively use
  the newfound synergies?
• Source Diebold et al. (2000) Building an
  Intervention A Theoretical and Practical
  Infrastructure for Planning, Implementing, and
  Evaluating a Metropolitan-Wide School-To-Career
  Initiative Journal Of Educational and
  Psychological Consultation Vol. 11 Issue 1 pp 159

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Metropolitan Economy

• Between 2000 and 2003, the Battle
  Creek-Kalamazoo, MI metropolitan area lost nearly
  8700 jobs (an average of nearly 2900 per year).
• 15 of the African American population (nearly
  6,000 people) left the region from 2002 to 2004.
• Source U.S. Census Bureau, American
  Community Survey

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Poverty A Multi-racial challenge

• Calhoun County poverty suffers the same
  challenges found around the U.S. (15,000 in
  poverty or 11 of the total population)
• African Americans are over represented 2x more
  likely to be in poverty than Whites (23 versus
  9)
• However, there are substantially more Whites in
  poverty than any other group (10,000 Whites
  compared to 3,000 Blacks)

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Calhoun Collaborative Advantage

• Agency policy integration of Workforce and
  Economic Development (State to Local)
• State of Michigan Office of Labor and Economic
  Growth
• Barry / Branch / Calhoun County Workforce
  Development Board
• Calhoun County Economic Development Council
• Calhoun County Area Technical Center
• WIA Youth Program
• Calhoun County Intermediate School District
• Career Preparation
• Michigan Works! Workforce Development Team
• Innovating Private Partners (Pharmacia Upjohn
  Company, Eaton Corporation, Stryker Corporation,
  Dana Corporation, Kellogg Company)
• Identify economic intersections to create policy
  goals and tools from the Calhoun perspective.

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Reviving Dead Capital

• Informal sources of risk capital are critical for
  entrepreneurial and start-ups.
• What is informal risk capital?
• In 2003, a major source of risk capital,
  household wealth represented over 325 Billion
  dollars to households (about 9,084 for every
  owner-occupied home in the nation)
• By directly addressing how land use creates
  wealth for some opportunities can be created for
  all.
• Source Parisi, Michael and Hollenbeck, Scott.
  (2005) Individual Income Tax Returns, 2003
  Statistics of Income Bulletin. Fall 2005 Vol. 25
  Issue 2

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Capital Formation is a Housing Issue

• Calhoun County account for 1/6 of 1 percent of
  the federal mortgage credits (approx) 491M in
  2003
• Nearly eighty percent of the owner-occupied
  units are White, with potential to access
  approximately 322M.
• In contrast, Black householders had about 27M in
  potential funds that could be invested in
  enterprise (12 times less than Whites)
• Exactly the difference in homeownership between
  Blacks and Whites in Calhoun County.
• Although the credit is not cash, much like home
  value represents capital that can be put to work.
  
• Source DataPlace, U.S. Census Bureau, Parisi,
  Michael and Hollenbeck, Scott. (2005) Individual
  Income Tax Returns, 2003 Statistics of Income
  Bulletin. Fall 2005 Vol. 25 Issue 2

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Regional Assets, Equity Focus

• Isolation comes in many forms. Urban Calhoun is
  not being infused with private capital and
  investment at the same rate as peripheral
  communities.
• Evidence suggests however, the strongest regions
  look to the core as a source of jobs, capital and
  innovation. The lack of urban investment has a
  powerful and negative effect on the vitality of
  the entire region.
• Private capital ability to reach under
  productive assets is imperative to creating
  strong regions and efficient markets
• Examples Affordable owner-occupied housing,
  expansion of CEDC role, EBDI (integration among
  public and private intermediaries)

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The Need to Think in Terms of Opportunity

• A disparity model is a less-than-sufficient
  framework for stimulating collaborative advantage
  and broader solutions to lift all groups out of
  weak economic conditions
• In the global market, it is less relevant for us
  as a nation to view the White experience as THE
  benchmark of prosperity, because we are all
  losing ground.
• Opportunity structures are the resources and
  services that contribute to stability and
  advancement
• Fair access to opportunity structures is limited
  by segregation, concentration of poverty,
  fragmentation, and sprawl in our regions for
  low-income households and families of color
• Because opportunity structures exist as a web a
  multi-faceted, equity-grounded approach is needed

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Linked Fate

• Why should those living in inner-ring, outer-ring
  suburbs, and exurbs care about inner-city
  disparities?
• A region and all its residents share a linked
  fate
• This issue is particularly important today
• To thrive, regions must be competitive in the
  global economy
• Regions cannot compete with
  wasteful and redundant services,
  and fragmented governments

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