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Innovations in Community Wealth Policy
May 29, 2014
Denver, Colorado
Steve Dubb
Research Director
The Democracy Collaborative
[email protected]
Who We Are
Promote innovations in community economic development
that enhance democratic life
RESEARCH
FIELD BUILDING
ADVISORY
Write reports on
anchors, public
enterprise, community
wealth building, green
economy, etc.
Participate in anchor
institution task force,
metrics development,
webinars, education &
training, our
Community-Wealth.org
web information portal,
etc.
Develop community
wealth building
strategies linked to
“eds and meds” & local
philanthropy:
•Cleveland, OH
•Atlanta, GA
•Washington, DC
•Pittsburgh, PA
•Amarillo, TX
What is the Prevailing Economic
Development Approach?
Some of its characteristics and elements include:
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Tax beaks to entice corporations to relocate ($80B)
Workforce training not linked to actual jobs ($37B)
Regional trickle down strategies that do not reach lowand moderate-income neighborhoods
Low-wage job creation, often without benefits
Little opportunity for ex-offenders, others facing barriers
Gentrification and dispersal of traditional residents
“Throwaway cities” and their infrastructure
Privatization of publicly owned goods
What is Community Wealth Building?
• emphasizes democratization of wealth
• focuses on place & local economy
• promotes broader ownership of capital
• anchors jobs locally
• stops the leakage of dollars from communities
• supports individual & family wealth building
• reinforces stewardship over capital
• generates revenues to finance public services
• leverages anchor institutions for local benefit
• contributes to local economic stability
• total cost accounting of economic decisions
Continuum of Wealth-Building Strategies
BROADENING OWNERSHIP OVER ASSETS AND CAPITAL
Family Wealth
Building
Shared Equity
–Individual Development
Accounts
–Community Land
Trusts
–Microenterprise
–Limited Equity Housing
Cooperatives
–Family Self-Sufficiency
Program
–“Baby Bonds” & child
savings accounts
–Earned Income Tax
Credit volunteer
assistance programs
–Alternatives to
predatory lending
–Nonprofit financial
education programs
–Deed restriction
(inclusionary zoning)
–Mixed ownership
(Market Creek)
–Program-Related
Investments
–CDC/CDFI equity
investments or joint
ventures
–Community benefits
agreements
Community/Worker
Ownership
–Anchor institutions
(eds, meds, churches,
museums, libraries)
–ESOPs or worker
cooperatives
–Consumer, producer, or
purchasing co-ops
–Credit unions
–Community
corporations
–CDC or CDFI direct
ownership
–Social enterprises
–Commons-based
enterprises (e.g.,
Wikipedia, Creative
Commons licenses)
Public Ownership
or Investment
–Municipal enterprise
–State & local venture
investments
–Public pension fund
ETIs (economically
targeted investments)
–Public leases: land &
transit development
–Stock warrants in
exchange for granting
tax breaks (fair
exchange)
–Trustee ownership
(e.g., Alaska Permanent
Fund)
Rebuilding America’s Communities
(Democracy Collaborative, 2010)
Community
Wealth
Building
Policy
How we benefitted from employee
ownership between 2002 and 2010
(Source:
NCEO 2013)
Employee ownership center
– cost per job vs. conventional methods
(Source
OEOC
2012)
Building a New Alliance
Key Components
City
Government
Community
Groups
Progressive
Policy
Putting the Pieces Together
 Create worker. and community
owned businesses that provide
living wage jobs, anchor wealth,
and build a local tax base that
supports public pensions and
other needed services
 Use public procurement and
contracts to provide a support
economic ecosystem
 Finance the effort by redirecting
conventional economic
development tools (TIF, etc.) to
community-supported ends
Local Government
How Local Purchasing Can Help
• City contracts to local businesses foster local
business development, thereby increasing tax
collections from those businesses
• Purchasing locally creates more jobs, thereby
reducing social service costs, while also increasing
income of (and therefore tax payments collected
from) local residents
Key Concept: “Least Total Cost”
• The price paid is not the only cost of procurement
• If local government pays a little less, but, in so
doing, reduces the taxes it collects and raises the
cost of its social service expenditures, then it has
achieved a false savings
• Rethinking city contracting with “total cost
accounting” in mind is not just smart accounting,
but a vital step in building a vibrant local economy
Policy Examples: Washington DC region
• Washington, DC: 50 percent of expendable budget
(not including construction, personnel) is
prioritized for local “certified business enterprises”
• Montgomery County, Maryland: On smaller
contracts (roughly $250 million in total spending),
the County is able to target contracts to support
local small business. At present, 36 percent of
total contracts go to local small business, well
above the 20 percent required by law.
Policy Example: Cleveland, Ohio
• City of Cleveland has a policy that favors contracts
for LPE (Local Producers) and SUBE (Sustainable
Businesses), giving up to a 2% bid discount for
each designation (maximum total discount of 4%)
• 146 subcontractors and 41 prime contractors that
qualified under this ordinance obtained City
contracts in 2012
• 2012 business volume: $85 million
Making It Happen
“Over 80% of businesses in our County are small business
... We’ve unbundled large contracts. We had large
custodial services contracts – all my public buildings (250
buildings) were serviced by two companies. Now we have
contracts for five regions with local opportunities. It is
more contractual management on our part, but it is a
bigger benefit for the local business community.”
Metro DC local government procurement director
Evergreen Cooperatives
Governance Structure
Evergreen
Cooperative
Development
Fund
Evergreen
Cooperative
Corporation
Evergreen
Business Services
Evergreen
Real Estate
Corp.
EBS Board
Green City
Growers
Co-Op 5
Evergreen
Energy
Solutions
Evergreen
Cooperative
Laundry
Individual Co-op Boards
Co-Op 4
Evergreen Cooperatives
from the City perspective (1)
“HAVE WE EVER THOUGHT
ABOUT TELLING RESIDENTS OF
POOR COMMUNITIES, WHY
DON'T WE MAKE YOU THE
EMPLOYER”
- Ron Sims
Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012
Evergreen: City perspective (2)
Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012
Evergreen: City perspective (3)
Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012
Green City Growers
Land Assembly
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Project Site:10 Acres, Approx. 60 Parcels
City owned approx. 40 parcels (7 acres)
Remaining Parcels:
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4 Occupied Houses
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2 Business Owners
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Many Vacant Parcels
Worked w/ HUD & local CDC to create a Relocation Plan
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3 Owners – purchased new home
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R. Atkins – senior living, purchased new personal items
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Business owners – 1031 Swap
Vacant Parcels
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Used Land Bank for acquisition
Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012
Community wealth across the nation
First business: large-scale greenhouse to
grow and process lettuce (early 2015)
First business: stormwater management
maintenance and monitoring (late 2014)
Community Wealth
Building Initiative
Community wealth in Indian Country
Multi-year collaboration with
Native American
communities in four
communities (2 urban, 2
rural) to build and retain
wealth by developing
effective strategies that
foster ownership of
enterprise, increase access
to local assets, and create
and anchor jobs locally
Mayor Jones’ Anti-Poverty Agenda
($3.3M+ initiative, announced April 15, 2014)
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$1 million for Affordable Housing Trust Fund
$436,000 for City Center for Workforce Innovation
$255,000 for wrap-around services (child care, etc.)
$200,000 for public housing service navigators
$357,000 for education improvements
$350,000 for bus rapid transit line planning
$300,000 for new Office of Community Wealth Building
$450,000 for job creation for low-income residents,
including $150,000 in social enterprise development
Policies to Support Co-ops and
Employee Ownership
• Legal recognition of worker and multi-stakeholder
cooperatives
• Linked deposits to finance conversions
• Business succession program to encourage
“baby boom” firm owners to sell to their
employees
• Funding for an employee ownership center
• Right of first refusal
• Tax credits for co-op investments
• Expanding small business offices to serve co-ops
• Investment in “Evergreen” type initiatives
Additional Community Wealth
Building Policies
• Community benefit legislation
• Urban agriculture overlay zoning
• Support for asset building coalitions
• Partnering with local CDFIs on loan funds
• Land banking
• Public ownership of local utilities (as in Boulder)
• Responsible banking
• Pension fund investment in local projects
• Public bank
• Office of Community Wealth Building
Thank you!
For more information:
www.community-wealth.org
Steve Dubb
Research Director
Democracy Collaborative
[email protected]